Top auto, electronics producers nix raises

by Hiroko Nakata

Major electronics companies and carmakers said Wednesday they will not increase monthly base pay in light of the worst economic slump in a decade, shrugging off their unions’ demand in the “shunto” spring wage talks for a raise.

Many companies also decided to reduce annual bonuses amid the bleak outlook.

“We entered the talks with the priority on how to ensure the company’s survival and how to secure employment,” Nissan Motor Co. Senior Vice President Hitoshi Kawaguchi told a news conference in Tokyo.

The automaker unions wanted a ¥4,000 monthly increase, while workers at the electronics companies were seeking ¥4,500.

The industrywide wage talks are held every spring and have been a fixture of the labor-management scene for more than half a century.

Unions in each industry usually submit demands in mid-February and management answers after a month of negotiations. This year’s response is in stark contrast with the past three years, when base pay and bonuses were raised on the back of brisk economic growth.

The talks were held this spring in a climate of doom and gloom. The electronics and automobile sectors, which lead Japanese industries, have given the ax to thousands of temporary workers at domestic plants and some full-time workers mainly abroad to reduce labor costs.

The wage stance taken by electronics companies and carmakers usually influences how other industries act.

Economists criticized the unions’ tack this year for placing too much weight on higher pay.

“Unions stuck too much to the wage hikes they initially demanded and did not succeed in securing jobs,” said Hisashi Yamada, an economist at Japan Research Institute. “As a result, the management side had its way, while the unions gained little.”

Amid the global downturn and growing fears over unemployment, unions should have demanded improvements in working conditions in return for a pay cut, Yamada said. Such improvements include those aimed at narrowing the gap between part-timers and full-timers, support for job hunting when employees are thrown out of work and the adoption of work-share programs, Yamada said.

The economy is likely to sink further in the next year and the job environment will get worse, adding, “How to stabilize employment beyond the frameworks of part-timers and full-timers will be the focus next year.”

This year, the aggressive demand by the unions was based on the uptrend in prices of goods that started early last year. Unions also said higher salaries would shore up personal spending and therefore the overall economy.

Management responded with its stony rejection because many firms expect huge operating losses for the business year ending March 31.

Last month, unions at nine out of the 10 car and truck makers in the shunto process demanded a ¥4,000 pay increase, while the remaining union, at Mitsubishi Motors Corp., did not demand any hike.

Major automakers, including Toyota Motor Corp., Honda Motor Co. and Nissan, said Wednesday there will be no increase in the base wage, but they will maintain wage increases based on the seniority system.

Toyota said the bonus for this year will be ¥1.86 million, lower than the ¥1.98 million demanded and the ¥2.53 million that was paid last year.

Honda’s annual bonus will be equivalent to five months of salary, against a demand for 5.5 months and the 6.6 months paid last year, it said.

Nissan’s bonus will be lowered to 4.2 months of salary, against a demand for 5.2 months and the 6.1 months paid in 2008. “We made utmost efforts to maintain the motivation of workers,” Nissan’s Kawaguchi said.

Amid weak earnings forecasts, many major electronics makers, including Toshiba Corp., Sharp Corp. and NEC Corp., are even planning temporary freezes on the regular salary increase based on seniority, which is unique to Japanese corporate culture. Such companies either reduced bonuses or let the bonuses reflect their earnings results.

Other electronics giants, including Panasonic Corp., said they will maintain the seniority-based wage hike but not raise the base wage.