Posts Tagged ‘bonuses’

Does an increase in summer bonuses mean a healthier economy?

Saturday, June 21st, 2014

It’s that time of year again, the season when employers, both public and private, hand out their summer bonuses. In recent years the recession has kept the amounts down despite the fact that regular employees tend to consider them as an integral part of their annual salaries. In fact, society in general thinks that, as proven by the practice of incorporating bonuses into repayment schedules for home loans. Technically, however, bonuses are literally bonuses: Employers are not obliged to pay them, and actually use them as a kind of safety valve to adjust personnel expenditures twice a year.

Josei Jishin lists 35 of the  top 55 major corporations in terms of size of summer bonus for 35-year-old regular employees

Josei Jishin lists 55 major corporations in terms of size of summer bonus for 35-year-old regular employees

This summer the news sounds good. Bonuses are, on average, higher than they were last year, by about 8.8 percent, according to a survey of 74 companies carried out by Keidanren, Japan’s biggest business lobby. The average bonus for a 35-year-old regular worker will be ¥1.5 million, while that for a manager in his 40s or 50s is above ¥3 million. It’s the highest year-on-year increase on record.

According to Josei Jishin magazine, the biggest bonuses are being given out by trading companies, which makes sense. Trading companies, who do all their business overseas, enjoyed a huge windfall after the government’s monetary easing policy forced down the value of the yen.

Export-oriented manufacturers also did well for the same reason. Toyota’s average summer bonus for a 35-year-old employee is ¥1.23 million, though that sounds sort of stingy considering that the company saw a 73 percent rise in profits. Securities companies, which also benefited from Abenomics, were high on the list (Daiwa Shoken ¥1.35 million), but their employees’ compensations tend to be based more on personal accomplishments rather than corporate achievement, which is the classic definition of a bonus.

In 13th place on the Josei Jishin list is NTT DoCoMo, at ¥935,000, the highest company to record a drop in average bonus pay compared to last year. In fact, only two companies on the list of 55 companies announced a decrease.

What’s notable about the list is that all the companies are big. Smaller firms, it should be noted, aren’t doing as well in the recovery, and while average bonuses have gone up, the actual number of bonuses given out has gone down, from 38.6 million in 2013 to a projected 37.4 million this year.

Economist Hiroko Ogiwara pointed out to the magazine that while automobile makers did really well, their suppliers barely kept up and so didn’t give out much in the way of bonuses. NTT didn’t do as well as last year because it has no export-related business. And domestic companies that rely on imports, like processed food manufacturers, have suffered due to higher costs for ingredients. Moreover, the labor shortage in the retail and service industries pushed up personnel costs. Sukiya, the largest gyudon (beef bowl) chain in Japan, could only afford an average ¥350,000 to its regular employees (meaning not to restaurant staff). Power companies also were cheap with bonuses because of their continuing reliance on imported fuel. Kyushu Power’s average was only ¥300,000.

CONTINUE READING about summer bonuses →

The bonus is in the bank

Wednesday, July 14th, 2010

Japan Post wants your bonus, too

Japan Post wants your bonus, too

The life insurance company Sonpo Japan DIY just released its annual survey, in which it asks about 500 carefully selected housewives whose husbands are salaried employees between the ages of 20 and 50 what they plan to do with this summer’s bonus. The bonus is one of the cleverest ideas ever developed by the Japanese business world. Ostensibly, bonuses are tied to a company’s good fortune or an employee’s performance, but Japanese workers have always deemed them to be part of their salaries, and tend to plan their finances accordingly. Employees and employers look at bonuses differently: The former see them as an entitlement, while the latter use them as a safety valve.

Consequently, for the past several years, many companies have reduced bonuses and some have even eliminated them as profits have tanked. The Sonpo survey, though it’s rather small, is significant since it gives some idea of how the economy affects the average household.

The good news is that the average bonus this summer was ¥670,000 after taxes, which is about ¥115,000 more than it was last year. This is the first time in three years that the trend has reversed. About 41 percent of the respondents said that their bonuses increased from last year, while a little more than 28 percent said it went down. What’s still a bit scary is that, of the respondents who said their bonuses were less than last year’s, the average decrease was ¥159,000.

Perhaps of more concern to the government is what these people are doing with their bonuses. According to a survey by a research panel in the Bank of Japan, 74.2 percent said they planned to put all or part of it in their savings. Last year, the percentage who saved was a little more than 50; 39.6 percent said they would spend theirs on “everyday life,” and 37.6 percent said it would go toward repaying a mortgage or other loans. Not much economic stimulation going on there, which could mean that those companies will continue to be stingy with their bonuses in the future.

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