Summer bonuses at Japan firms expected to fall by 6.4% due to coronavirus

Bonuses at Japanese companies are expected to fall this summer by an average of 6.4 percent from a year earlier, the largest decline in 11 years, reflecting a sharp drop in earnings in the wake of the new coronavirus pandemic, a think tank said Friday.

The Japan Research Institute estimated the average bonus at companies with five or more employees at 357,000 yen ($3,300).

It would be the third consecutive year of decline in summer bonuses, following falls of 0.1 percent and 0.4 percent in the two previous years, and the sharpest drop since the summer of 2009, when the average payment decreased 9.8 percent following the 2008 financial crisis.

“Winter bonuses could drop substantially as well, depending on when the coronavirus pandemic winds down,” said Naoko Ogata, the institute’s senior economist.

The manufacturing sector had already started to slump in the second half of fiscal 2019, even before the virus outbreak, amid slowing capital spending worldwide and U.S.-China trade tensions.

The spread of the coronavirus, first reported in China late last year, disrupted supply chains and production, hitting global trade, while stay-at-home requests quickly cut domestic consumption.

Any rise in bonus payments was expected to be limited after major manufacturers including Toyota Motor Corp. and Nippon Steel Corp. rejected base pay increases during annual wage talks this year. Bonus payments are decided based on basic pay.


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