Higher summer bonuses expected

For 2010 the projection is that major Japanese companies will pay about 662,832 yen as summer bonus, which is an increase of 2.4 percent or then 15,522 yen compared to last year (according to Mainichi Japan newspaper on May 7, 2010). From a foreign perspective being able to predict an average summer bonus might be startling, but this data became available after negotiations between labor and management. The average bonus payment is based on information from 142 Japanese firms listed on the first section of the Tokyo Stock Exchange. While this 2.4 percent increase might sound like happy news, one needs to consider that due to the global recession last year’s bonus dropped a record 14.4 percent.
Let’s go one step back. What is actually a summer bonus? In Japan it is common to pay a semi-annual bonus in June and December, which is usually a fixed amount of about 1 – 3, some cases even up to 5 times the monthly basic salary. Performance based bonus systems do exist and slowly become more accepted, but mainly at foreign companies. More surprising, during the first annual salary discussions new Japanese employees may ask to receive their bonus as fixed amount, because having an unknown amount as bonus can be perceived as too risky. In many cases the bi-yearly bonus is very much needed and pre-planned for the loan payment of the owned home. Therefore for Japanese companies having the annual salary divided by 14 or 16 is quite common. Within the annual salary then 2 – 4 months’ salary are set aside for semi-annual bonuses.

Brought to you by Sibylle Ito (シビル伊藤).

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