August 5, 10:30 JST, 2016

Bumper summer bonus for Japanese salarymen

The total wage rose by 1.3% year on year in June, one of the highest growth rate so far in the year. The regular (basic and overtime) part of wages was flat, only up by 0.1%, but the bumper summer bonuses, up by 3.3%, pushed up the overall paycheck in June. It is going to be a good summer for all those army of loyal company men (and women) in Japan.

The talk of good summer bonuses must be painful for irregular workers in Japan though. Over 1/3 of employment in Japan nowadays are irregular workers and most of them are not eligible for bonuses. In June, wages of part time workers were only up by 0.4% year on year, compared with 1.5% year on year rise for full time workers. And there is also a dark cloud on the horizon for regular workers. Corporate profits have fallen in the last two quarters, and the trend is likely to continue. Bonuses in Japan tend to lag behind corporate profits by 6 months to 12 months, and it is quite probable that the 2017 bonus will be down from this year.

While we are happy to hear that majority of workers in Japan enjoyed a rise in their summer bonus and we wish them a good summer, as dismal scientists, we would also like to warn them that a lean year tend to follow a bumper year. All said, have a good summer!