Japanese firms cut summer bonuses by most

Japanese firms slashed this year’s summer bonuses by the most since the 2009 global financial crisis, a survey showed on Thursday, underscoring the damage brought by the coronavirus pandemic and clouding the outlook for already weak consumption.

The survey adds more gloom to the world’s third-largest economy, which is set to take a hit from expanded state of emergency curbs to deal with a spike in Delta variant cases.

Average summer bonuses paid by big companies this year fell 8.27 per cent from the previous year, marking the third straight year of declines, the survey by business lobby Keidanren showed.

Non-manufacturers’ bonus payments slumped 17 per cent, much bigger than a 5.94 per cent cut among manufacturers, highlighting the heavy toll the pandemic took on service-sector firms reliant on domestic demand.

A separate survey by the Development Bank of Japan, however, showed companies plan to increase capital expenditure by 12.6 per cent this fiscal year after delaying investment in 2020 to cope with the pandemic’s immediate impact.

“We’re seeing a K-shaped recovery” between manufacturers benefiting from robust exports and retailers suffering from weak domestic spending, the bank said in a report on the survey.