NAGOYA -- Toyota will revamp how it compensates factory workers to put greater emphasis on performance and less importance on seniority in order to draw more young talent.
The new arrangement will apply to about 40,000 employees aged 18 to 65, or about 60% of the company's 68,000 workers.
The automaker has unveiled the proposal to its labor union and is hopeful of rolling it out next January.
Toyota will revisit its existing seniority-based system and also reshuffle allowances for dependents to provide greater benefits to workers who are raising children.
Employees will be evaluated twice a year on criteria such as performances on the factory floor and on teamwork. Wages will be adjusted accordingly every six months for those around age 30 and older.
By focusing more on merit, Toyota wants to improve workplace morale and attract new, younger hires.
The average age of factory workers at Toyota is around 40. But because of the decrease in the younger population, the percentage of employees 50 and older is expected to increase from some 20% currently to more than 30% by 2035.
To promote the transfer of skills to younger workers, Toyota might rehire workers who have reached the retirement age of 60 but are considered exceptionally valuable. The company would rehire those workers at pay and workloads similar to their pre-retirement terms, rather than according to the current system, where both workloads and wages are halved.
Wages for Japanese factory workers that work in teams are predominantly based on seniority, according to Kiichi Toko, chief researcher at Japan Productivity Center. Toyota's efforts may prompt other major Japanese manufacturers to take a second look at their own wage systems.