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Toyota warns employees of industry shift with summer bonus cut

Managers to take 5% hit, while union members will see reductions of 10%

An assembly line technician works at a Toyota plant in Toyoda, Japan. The automaker says it wants to instill a sense of urgency among its unionized workers and middle managers.  (Photo by Koji Uema)

TOKYO -- Toyota Motor will cut summer bonuses for its managers this year by 4% to 5% versus 2018, Nikkei learned Thursday.

Although the carmaker's earnings are steady at the moment, the company aims to instill a sense of urgency among middle managers, amid intensifying competition in areas such as autonomous driving and electric cars.

The cuts will apply to about 7,500 management-level positions and to around 2,300 executives, such as managers and deputy managers.

The reduction in bonuses for union members below managerial rank will be even steeper, about 10% on average.

Although the thinner pay packets will hurt, the belt-tightening is less severe than in some years. Toyota cut managers' bonuses by 12% to 19% in 2016.

Toyota's sales for the fiscal year ended March came to 30.2 trillion yen ($278 billion), the first time a Japanese company's revenue has topped the 30 trillion yen mark. It forecasts an operating profit of 2.55 trillion yen this year, up 3% on the year.

But with automaking facing tectonic shifts, Toyota's management is playing hardball in talks with workers. The company appears to have cut the summer bonus to keep union members and middle managers from becoming complacent.

The average summer bonus for union members this year was set at 1.2 million yen, equal to 3.24 months salary, a 9.77% decline from the previous year. The payment will still be higher than the 1.1 million yen bonus the average unionized worker received last winter.

In the past, summer bonuses were set through talks between labor and management in the spring, while winter bonuses have been fixed at three months' salary. This year the winter bonus will be negotiated separately in the autumn.

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