For Japanese Workers, Good Times Seem Over

http://www.forbes.com/2009/03/19/japan-labor-sony-markets-equity-wages.html

Chana R. Schoenberger, 03.19.09, 02:54 AM EDT
Downturn is degrading pay, perks of seniority.


BATS Real-Time Market Data by XigniteTOKYO -- The Japanese worker was once king. In his name, companies kept open unprofitable divisions, fought takeovers and paid out generous pensions. But the economic downturn sweeping the world may spell the end of the good times for salaried and hourly employees here.

Sony (nyse: SNE - news - people ) announced Thursday that it won't be giving its workers raises this year as it struggles to return to profitability after a projected $2.9 billion loss for the fiscal year that ends March 31. The consumer-electronics giant will give bonuses of four months' wages instead of the traditional six months. And those employees are the lucky ones: In December, Sony unveiled plans to shutter factories and cut 16,000 jobs worldwide. (See "Stringer Tries To Turn Sony's Distress To Advantage")


Yahoo! BuzzJapan is being hit by waves of layoffs, and unemployment is on the upswing as demand falls worldwide for its cars and electronics. (See "Labor Casualties Dim Land Of Rising Sun") A strong yen, which was trading below 96 to the dollar Thursday, hasn't helped matters, making Japanese goods more expensive overseas. Japanese manufacturers are the least optimistic they've ever been about the country's economy, according to a Reuters survey of industrial sentiment for March. And the trade deficit is widening. (See "For Japan, Once Unthinkable Becomes Routine")


This week, floundering tech behemoths Toshiba (other-otc: TOSBF.PK - news - people ), NEC (nasdaq: NIPNY - news - people ) and Hitachi (nyse: HIT - news - people ) (See "Hitachi Injects Old Blood") said they might have to take more drastic measures with their own workforces.

For the first time in four years, Japan's major automakers and electronics companies offered no base wage increases to their labor unions during their annual spring negotiations. Toyota (nyse: TM - news - people ), Honda (nyse: HMC - news - people ) and Nissan (nasdaq: NSANY - news - people ) said Wednesday they would continue to make automatic pay hikes based on seniority, one of the standard features of Japanese corporate life that has helped to keep workers loyal and tied to their employer for life. However, a number of major electronics makers, including Toshiba, Sharp and NEC, are reportedly planning to break with the practice and freeze automatic seniority raises.

Work-sharing programs and reduced pay could be in the offing to prevent layoffs, according to press reports on emergency measures under negotiation between the government and industry that were broadly confirmed Thursday afternoon by Labor Minister Yoichi Masuzoe. Masuzoe said the government is planning 1.5 trillion yen ($15.6 billion) in spending to help the unemployed and preserve jobs.

Mitsubishi Motors (other-otc: MMTOF.PK - news - people ) illustrates the gloomy employment trends as the auto market worldwide shrinks. The company cut some 250 workers in its Illinois plant last year and declined to renew the contracts of 1,100 Thai workers in January. By the end of the fiscal year, which finishes in March, the company will have also let go nearly all the 3,300 contract workers in its Japanese factories by failing to re-sign them. "We have to adjust our production volume with the demand, and we have to decrease the number of inventories," a company spokesman said.