Some Japan Firms Reallocating Bonus Funds to Regular Pay

Tokyo, Dec. 10 (Jiji Press)--An increasing number of Japanese companies are reducing performance-linked bonuses and reallocating those funds to regular salaries, aiming to attract talented workers with more stable higher monthly pay.

But it is unclear whether the trend will spread further, as it is difficult for companies to cut salaries even if business performance deteriorates once they adopt such a pay system that limits their ability to adjust compensation to fluctuations in earnings.

Gaming giant Sega Corp. plans to hike employees' regular wages by an average of around 10 pct next April. While 4 percentage points of this represent a pay scale increase, the remaining 6 points come from the portion reallocated from part of the funds that would otherwise have been paid as bonuses.

The move raises the starting monthly salary for university graduates from 300,000 yen to 330,000 yen, among the highest in the industry, according to the company.

Sega's 2023 wage revision enabled funds for retirement allowances to be used to increase monthly pay. Receiving retirement allowance funds early is beneficial for employees who plan to change jobs during their careers.

[Copyright The Jiji Press, Ltd.]