The bonus payment season is approaching. Have you ever wondered how the bonuses that most company employees receive came to exist in the first place? Today, I’ve put together an overview of Japan’s unique bonus culture—from the Edo period to the present day, and even a look into an AI-based future prediction.
Note: The illustrations are purely conceptual and may differ from actual historical forms.
Edo Period (1603–1868): No Bonus System Yet
Samurai received annual stipends, while merchants and townspeople shared profits, but there were no monthly salaries or bonus systems. Compensation was mainly given in rice or goods. Occasional allowances or New Year gifts served as early prototypes of what bonuses would later become.
Meiji Period (1868–1912): The Start of the Modern Salary System
As Japan entered the Meiji era, government-run companies and banks began adopting a monthly salary system. Bonuses were not yet common, and payments were usually made in cash by hand. Western-style salary systems strongly influenced the foundations of the modern monthly wage.
Pre-war to Post-war Era (1920s–1940s): The Age of Temporary Allowances
In the years before and immediately after WWII, companies sometimes paid temporary allowances based on performance or management decisions. Due to war and shortages, wages were unstable, but some companies introduced systems resembling modern bonuses. Payments were mainly made in cash or food, handed out directly.
High Economic Growth Period (1950s–1970s): The Establishment of Bonus Culture
During Japan’s rapid economic growth, companies institutionalized “summer and winter bonuses” to share profits with employees. The system fit well with seniority-based pay and lifetime employment, becoming an essential part of household budgeting and consumer behavior. Cash payments by hand were common, though some bank transfers began to appear.
Bubble Era (1980s–early 1990s): The Peak of Bonuses
In the bubble economy, bonuses could reach several months’ worth of salary and were often used for consumption and investment. Bank transfers became mainstream, though some companies still paid in cash.
Post-Bubble (1990s–2000s): Diversification and Reduction
Economic stagnation led to shrinking bonuses, along with the spread of performance-based pay and annual salary systems. Payments increasingly varied according to individual evaluations or company performance, and bank transfers became the standard method.
Modern Day (2010s–Present): Increasing Diversity
Today, various pay structures coexist—monthly salary plus biannual bonuses, annual salary contracts, and systems where bonuses are included in monthly pay. Nearly all payments are made by bank transfer, and bonuses continue to play an important role in personal financial planning.
Future Predictions for Bonus Systems
- Full digitalization and cashless payments
- Performance-linked and flexible distribution options (customized to individual preference)
- Integration with stock compensation or benefits packages
- Summer and winter bonuses may remain as cultural traditions, though their form will evolve
In the future, both the content and structure of bonuses are expected to become more flexible and diverse.
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