Summer bonuses to increase year-on-year for the second straight year
Below is a rundown of various surveys on the recent employment and business situation in Japan.
1. Labor Force Survey (flash report) (Ministry of Public Management, Home Affairs, Posts and Telecommunications) = The total unemployment rate for April (seasonally-adjusted value) remained largely unchanged from the previous month, at 4.7%. There were 3.35 million totally unemployed persons in April, or 500,000 fewer than in the same month last year, constituting a drop for eleven consecutive months. The number of people who left their jobs because of "employer-related reasons" and "personal reasons" both decreased.
2. Situation pertaining to job placements (Ministry of Health, Labour and Welfare) = The effective job-to-applicant ratio for April (seasonally-adjusted value) remained largely unchanged from the previous month, at 0.77. Effective job offers and effective job seekers both dropped by 0.8% and 1.8%, respectively. New job offers in April increased 5.2% from the same month last year. Particularly large increases were seen in information and telecommunications sectors (up 36.5%) and the service industry (up 25.3%).
3. Report on Receipts and Disbursements of workers' households (Ministry of Public Management, Home Affairs, Posts and Telecommunications) = Consumption spending per household totaled 366,027 yen in April, registering a 7.2% increase from the same month of the previous year. Real income and disposable income also rose 3.5% over the same period.
4. Consumer Sentiment Index Survey for April (Nippon Research Institute) = The Business Forecast Index was 85, up some 21 points over the previous survey conducted in February. This was the first time in three and a half years (since October 2000) that the Index soared to above 80 points. However, over 70% of respondents harbored a fear of losing their jobs
5. Monthly economic report for May submitted by the Minister of State for Financial Services, Economic and Fiscal Policy Heizo Takenaka to a meeting of relevant Cabinet ministers = The report reiterated last month's assessment that the positive economic climate has spread to improved performance in corporate departments, and that business is undergoing a steady recovery. The report revised its assessment of the employment situation from that of the previous month, from "although the situation is still tough, employment is beginning to pick up" to "although tough conditions still remain, employment is improving."
A synthesis of the above surveys suggests improvements in employment centered on large-scale corporations, which is bringing about a positive change in consumer sentiment. This change is contributing to an increase in consumption, prompting a steady business recovery."
Meanwhile, the summer bonus season is fast approaching.
Our earlier issues have covered spring joint labor negotiations and the decision of many corporations to shift to a system of bonuses linked to corporate performance without raising base pay. In this respect, much attention is focused on future changes in the amount of bonuses handed out.
According to Nihon Keizai Shimbun's survey on wage trends (number of responding corporations: 247 manufacturers and 48 non-manufacturers, as of May 7, 2004), a sum of 775,045 yen (including tax) was paid out per employee, up 2.35% over the previous year. This was the second consecutive year in which summer bonus payments increased.
Summer bonus payments exceed last year's levels for the second consecutive year in the manufacturing sector, for which business is recovering particularly in steel and other areas. Likewise, the non-manufacturing sector saw the amount of summer bonus increase for the first time in three years, although the rate of increase was modest. This may have been substantially affected by a decline in summer bonuses for two years in a row in the construction sector (for which domestic demand is shrinking) and the electric power sector (where cutbacks in personnel expenses continue to counter the stiff competition induced by the liberalization of electricity sales), especially due to the large number of employees working in these two sectors.
The results of the 2003 Comprehensive Survey on Living Condition of the People on Health and Welfare released by the Ministry of Health, Labour and Welfare at the end of May showed that households earned an average of 5,893,000 yen in 2002. This was a decline for the sixth straight year, notably falling below the 6 million yen level. The average annual income of elderly households was 3,046,000 yen, and that of households with elementary school-age children was 7,027,000 yen.
It is still uncertain if this second consecutive year of increased bonus payments will help to expand domestic demand and invigorate the future economy. In any event, this is a welcome development.
US$=\110 (June 15, 2004)
