The Nagano Prefectural Government and representatives of its labor union agreed Saturday to cut employees' pay by up to 10 percent.
The planned 5 percent to 10 percent wage reduction is the largest of its kind for local civil servants in Japan. The prefectural government trimmed the scale of the reduction to 5 percent from an initially proposed 6 percent for younger rank-and-file workers.
Pay cuts for department head-level officials will be 10 percent, for division chief-level officials 8 percent and for other officials 5 percent to 6 percent.
The deal was struck Saturday morning after eleventh-hour negotiations that began Friday evening, in which Gov. Yasuo Tanaka took part.
The prefectural government is expected to propose an amendment to an ordinance on salaries in a prefectural assembly session to be convened Feb. 20, local government officials said.
The wage cut will slash prefectural government expenditures by about 12.7 billion yen, they said.
Tanaka earlier proposed that the 6 percent to 10 percent pay cuts for prefectural employees cover the three-year period from April. The cuts were proposed to reduce the budget deficit triggered by huge investment in the 1998 Nagano Winter Olympics.
Nagano is beleaguered with a 1.6 trillion yen debt, the second-highest of Japan's 47 prefectures in terms of bond-issuance authority.
The central Japan prefecture has already reduced employees' salaries by 2 percent since January on the recommendation of the prefectural personnel commission.
Fighting Gov. Tanaka's initial pay-cut proposal, the union cited the possible negative impacts on employees' morale and the local economy. The governor emphasized the serious financial difficulties of the prefectural government and the growing support for the pay cuts among local residents.
In the end, the union was forced to accept the severest pay cuts ever for a Japanese prefectural government. Observers say it is a political triumph for Gov. Tanaka, who has won public support for spending cuts.