Nissho Iwai Corp. has proposed to its union that it pay no bonuses to nonmanagement staff in the business year starting April 1, a move that would effectively cut their annual salaries by about 20 percent, company officials said Monday.
The proposal, made by the struggling trading house Thursday, is aimed at accelerating restructuring ahead of its April business integration with Nichimen Corp., another troubled trader, the officials said.
Nissho Iwai is also considering slashing the salaries of its management staff by about 20 percent, they said. Unlike other workers, management staff are paid on a merit-based system.
It wants to shed itself of 300 employees aged 30 or older for the next business year through a voluntary early retirement program. The proposed job cuts include managerial posts.
It was the first time the firm lowered the age of staff targeted for voluntary retirement programs to people in their 30s.
The company plans to decide officially on the proposal before the two firms set up a holding company, Nissho Iwai-Nichimen Holdings Corp., on April 1 for the business integration.
Nichimen meanwhile will consider slashing annual salaries for employees excluding management by about 20 percent, company sources said.
The two firms’ moves are apparently in response to calls by U.S. investment bank Lehman Brothers and other financial institutions to take additional restructuring measures in exchange for financial support.
According to the officials, Nissho Iwai’s proposal was sent to all employees via e-mail and signed by President Hidetoshi Nishimura.
The proposal says the firm will not pay its staff bonuses they had in the business year through March 31.
Nissho Iwai also plans to abolish a regularly scheduled annual pay hike based on the current pay scale for the year, the officials said.
The proposal came after Nissho Iwai and Nichimen said Jan. 29 they had signed a formal agreement to create a holding firm April 1 under which they will cut their workforce by a combined 4,600 people over the next three years.
By accelerating restructuring efforts, Nissho Iwai-Nichimen Holdings is aiming for a group pretax profit of 101 billion yen by the end of March 2006, which would rival that of Mitsui & Co., the second-largest trader in Japan.
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