Summer bonuses for workers may fall at the fastest pace in seven years, according to Mizuho Securities Co.
The payments, typically made in July, will drop 6.5 percent from a year earlier to ¥379,000, Mizuho said in a report published Thursday. That would be the lowest since 1990, according to data published by the labor ministry, which tracks wage figures.
The Bank of Japan's quarterly "tankan" survey showed Wednesday that manufacturers' confidence dropped to a record low, indicating companies may cut jobs and wages as sales plunge.
Falling summer bonuses cloud the outlook for consumer spending, the strongest part of an economy headed for its deepest postwar recession, as they typically account for about 10 percent of a worker's annual income.
"The downward pressure on consumer spending is likely to intensify with the drop in bonuses," said Yasukazu Shimizu, a senior market economist at Mizuho in Tokyo. "It's inevitable that companies cut costs through job reductions and wages because of the sharp deterioration in profits."
The Japan Business Federation (Nippon Keidanren), the nation's biggest business lobby, said wage increases among large companies will slow to 1.77 percent in 2009 from 1.91 percent last year.
The number of people receiving a bonus from the private sector will decline 0.4 percent to 37 million, the first drop in five years, Mizuho said. The jobless rate rose to a three year high of 4.4 percent in February.