After posting its largest profit since 2008, Toyota Motor Corp. will be handing out its biggest salary bonus in five years. Toyota approved a union proposal for a 2013 average bonus of around JPY2.05 million ($21,375), which is much higher than the salary bonus of JPY1.77 million in 2012. According to the Japan Automobile Workers' Union, Toyota released JPY2.51 million in salary bonuses in 2008.
Toyota’s bonus hike follows similar increases in fellow Japanese companies Honda Motor Co. and Nissan Motor Co. – a telltale sign that Japan’s carmakers have recovered after natural disasters in Japan and Thailand disrupted their production and inventory in 2011 and 2012.
The Japanese yen also weakened 17-percent since Oct. 31, 2013, helping carmakers boost the value of their exports. Japanese Prime Minister Shinzo Abe has pledged for "unlimited" stimulus and has called on companies whose businesses have improved to increase wages to help the government achieve a 2-percent inflation target.
Traditionally, Japanese companies hand out bonuses twice a year as a multiple of their monthly salary. Payments to employees are considered as guaranteed pay and not as incentive compensation. The amounts of the bonuses are adjusted annually, typically in talks with labor unions.
With its strong performance in 2012, Toyota saw its stock price surge 18 percent in 2013. Toyota regained its crown as the best-selling carmaker in world in 2012, outselling nearest rivals General Motors Co. and Volkswagen AG. In February 2013, Toyota updated its full-year 2013 net income forecast to reflect a 10-percent increase to JPY860 billion, which is more than three times larger than its profit in 2012.