business

Struggling Sony to cut pay despite Abe's calls for higher wages

43 Comments
By Ritsuko Ando

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Blame it on North Korea and their recent hack attack!

And to Abe, proof that your "requests" or "urging" are falling on deaf ears, time to fall on your sword.

6 ( +13 / -8 )

Lets face it the old job for life has been history now for almost 2 decades, Japans bloated companies having to pay people that aren't carrying their weight is weighing HEAVY & as a result those that deserve raises aren't getting them & those just getting older are weakening companies, companies cut or don't hire young people...........

Its a perpetuating cycle.

And the companies making big bucks are small in number & are usually increasing bonuses but not bass pay.

And those primarily in the domestic SHRINKING market get a double whammy from less customers along with higher prices especially now that the yen is so weak & even though oil prices are dropping is costing Japan a lotta ca$h to buy the stuff.

Japan needs to re-invent itself bigtime or NOTHING with change enough to make things better, otherwise we only have more decline to look forward too!

14 ( +16 / -2 )

“First and foremost, we’re hoping employees can be paid and graded according to the roles they play. Cost effectiveness should improve as a result,” she said.

Well I'm not sure what she means by "according to the roles they play". It would be unfair if the highest paid managers escape the pay cuts simply because of their status, but I suspect the lowest paid workers will suffer the consequences.

4 ( +4 / -0 )

Pay cuts are unusual in Japan, especially at big companies with their tradition of jobs-for-life and seniority-based compensation. Employers typically adjust to hard times by trimming bonus and overtime pay and hiring fewer new graduates.

As GW says, this kind of thinking should have died two decades ago. Jobs-for-life, which rewarded loyalty, made all the sense in the world prior to the bubble bursting. But now Japan needs a fluid job market in order to be able to more quickly adapt to change.

0 ( +4 / -4 )

Lets face it the old job for life has been history now for almost 2 decades, Japans bloated companies having to pay people that aren't carrying their weight is weighing HEAVY & as a result those that deserve raises aren't getting them & those just getting older are weakening companies, companies cut or don't hire young people...........

There is always some overpaid worker, even at my workplace. But as someone who was promised lifetime employment last April, I can say firsthand that i feel so much more at peace. And I feel like I've worked harder since then. I feel a lot of gratitude.

-1 ( +3 / -4 )

You can't make money from nothing... More so this increase of cost for companies on both sides is going to kill small business. When you raise taxes across the board you can't just expect a company to take a double hit in revenue like that.

1 ( +1 / -0 )

See, there is NO trickle down - other than pay checks going down

8 ( +9 / -2 )

so sad the decline of Japan. When the Japanese automakers gone the way of Japanese electronic consumer companies, it will complete the disaster of the once mighty Japan Inc. Sayonara...

4 ( +7 / -3 )

Nothing new has come out of Sony in 20 years

0 ( +4 / -4 )

“Personal spending, which accounts for around 60% of GDP, needs to grow,” Nonaka told Reuters. “We want to share that understanding with companies as we negotiate.”

No, no and no. Personal spending as a means to good living is so '80's... How come Japan can't see beyond themselves and realize this?

Sony seems to be in a sad state. And and average pay of almost ¥9 million per year? No wonder they're in trouble. It always amazes me how much of the Japanese society can be so far ahead technologically, yet be so enormously behind socially. That Sony just now considers pay based on performance is incredible. What takes you so long?

6 ( +8 / -2 )

"Pay cuts are unusual in Japan, especially at big companies with their tradition of jobs-for-life and seniority-based compensation."

Wrong, perhaps for the office drones, but for the production floor pay cuts have been SOP. Production workers have been paid bare minimum wage plus a gross piece bonus for each piece above the minimum. As companies lost edge cutting pay has been SOP.

“First and foremost, we’re hoping employees can be paid and graded according to the roles they play. Cost effectiveness should improve as a result,” she said.

Translation: Office drones and executives will get raises - everyone else gets pay cuts or the axe.

1 ( +1 / -0 )

This just proves how far off the mark Abe's economic policies are. His recovery plan is based on corporate giants increasing salaries who are struggling in international markets that no longer exist for Japanese companies. The electronics and car industries are no longer monopolised by Japan. Every car and electronics company in Japan has been cutting back staff and production for over a decade. Yeah, he gave corporations tax cuts, which only helped to supplement their losses. This is why they have not passed the tax cuts onto workers as salary increases. If Japan's economy is ever gonna recover it needs innovative and radical economic strategies and not recycling the patterns of old from when Japan had the monopolies. And, after the December 16 election there will be even more narrow minded crony based strategies employed pushing Japan's economy even further down the toilet. Japan's greatest resource is its workforce. They need to support small business and rebuild the economy from the ground up.

4 ( +7 / -3 )

@gogogo Nothing new has come out of Sony in 20 years

I have to unfortunately agree, but with the qualifier of "nothing groundbreaking and disruptive".

20 years ago Sony professional electronics were the absolute best in the industry. Now there are far cheaper and just as good alternatives.

Their consumer electronics have been overpriced in the last 20 years as well.

In my opinion, buying a movie studio and library was stupid and being sucked into the Hollywood corruption pit was a big mistake as well, but more from a moral influence that affected their corporate culture even if it is making money (although not paying shareholder dividends).

The bottom line is that overall, why would I buy the Sony brand when I can buy something as good or better for cheaper? What super-cool-must-have-thing do they have that no one else does?

The best analysis I've seen was written several years ago and states that Sony has become "silo'd" (as in grain silo). This means that each division no longer works with the other division and there is very little transfer of research and data due to division rivalry yet much fighting over resources and priorities.

Kyk88, there is nothing to worry about when it comes to Japanese car companies. Toyota has only recently become the number one car maker in the world and should be able to easily hold that spot for several decades. I, for one, will not buy anything else BUT a Japanese car (I currently own a Mazda). The price to performance to reliability is still unbeatable.

3 ( +4 / -1 )

Roll back the consumption tax to 5%, never mind the postponed 2%.

And give tax incentives only to companies that increase wages by x% wherein the lower 50% of the payroll gets a higher cut ( y > 50%) of the wage raises that contribute to the average and overall percentage.

I wish at least one of these would happen....

5 ( +5 / -0 )

In September, the company widened its annual net loss forecast to 230 billion yen from 50 billion yen

I wonder if the Yen vs U$D played some factor?

1 ( +1 / -0 )

Human greed, that's the bottom people. The company demand are certain return on their shares. Abe's delusional economic fantasy is not even a real consideration. Jobs and pay will be cut as things become worse over the next few years. "Abenomics" will go down as the single greatest economic failure of the industrial / post-industrial age, sad to say. Too bad the Japanese sheeples can't see it.

1 ( +4 / -3 )

For a second year, Abe is pressuring major companies to raise base pay in the fiscal year from April, and boost investment, to kick-start a positive cycle of higher wages, profits and prices to end 15 years of deflation.

Increasing costs on businesses, then demanding they give wage hikes at the same time, shows just how out of touch PM Abe is with the economy. As if private companies should base their business decisions around the whims of a single politician.

PM Abe needs to stop pressuring companies and consumers to open their wallets, and get his hands out of theirs. If business taxes were cut, then there would be a way for businesses to give wages a bump. Tax cuts across the board would give more incentive, and confidence to business and consumers alike.

Right now, all Abe offers are higher deficits, higher taxes, and continued government intervention. That's not the kind of environment that makes business comfortable spending more money.

2 ( +3 / -1 )

Increasing costs on businesses, then demanding they give wage hikes at the same time, shows just how out of touch PM Abe is with the economy. As if private companies should base their business decisions around the whims of a single politician.

They did in last year's Shunto. Looks like the "Japan’s main union of electronics workers is likely to demand a hike of over 2 percent in base pay, and companies are widely expected to comply". Expect the same demand from auto workers as well and with many manufacturers complying.

-3 ( +3 / -6 )

Yubaru, this has nothing to do with corporations ignoring Abe. This is Sony being a heavily troubled company. The problems are deep and have been around for a long time. Please educate yourself before you make claims that have no basis in reality

1 ( +4 / -3 )

While Japan’s economy is fitfully recovering under Abenomics, with profits at record highs, Sony remains in a defensive mindset.

“Personal spending, which accounts for around 60% of GDP, needs to grow,”

It's quite a leap to say "While Japan’s economy is fitfully recovering under Abenomics", isn't it? If consumer spending has dipped, and most experts point to the increase in the consumption tax though they forget to mention the average consumer is holding on to what little savings they have out of concern that they may, lose their employment, no signs a recovery at their level and doomsday predictions on Japan's national pension system and social support programs that get hacked at by this administration every-time an opportunity arises. Trickle-down economics just doesn't work anymore as corporations no-longer have any loyalty to their employers who they now view as A LIABILITY instead of an asset!

It's ludicrousy to think that giving tax cuts to companies is going to translate into a change in the corporate mindset towards salary increases and if anything does trickle down, it's so miniscule that it won't translate into any tangible increase in consumer confidence, thus spending. What increases that are occurring is only for show and a nod of appreciation to Abe-san for his corporate hand-outs. Small and medium-sized companies can't afford to raise salaries because Abenomics has translated into an increase in sales as evident in the dismal consumer spending figures.

If CONSUMERS have money to spend, companies can sell products. If consumers aren't spending then tax breaks do nothing more than give a company a bigger cushion to land on while at the same time cutting salaries and eventually the size of the workforce, thus the title of the story, Struggling Sony to cut pay despite Abe's calls for higher wages and should continue, and despite Abe's economic policies. Wonder what Sony would like to see, a larger corporate tax cut or a lesser tax burden on consumers? Maybe some trickle-up economics needs a chance because Abenomics may be helping a few but it's doing more damage to the rest.

3 ( +4 / -1 )

Japan’s main union of electronics workers is likely to demand a hike of over 2 percent in base pay, and companies are widely expected to comply.

I wonder where these unions learned math. A 3% rise in the consumption tax, along with another 2% rise expected, plus rising import costs, and increased costs across the board, and they think that 2% rise in base pay is enough?

Plus I always love how the unions here get their points across when they strike...a one day walk-out, orchestrated with management as to limit the "damage" to the company.

Unions here are a joke.

1 ( +3 / -2 )

While Japan’s economy is fitfully recovering under Abenomics, with profits at record highs

arches back, places arms on waist, takes a deep, deep breath of hair, opens mouth, pauses....then.

WHHHHHAAAAAAAAAAAAAAAAATTTTT!?!?!?! BWWWAAAAHHAHAHAHAHAHAHAHAHAHAHA!!!!!!!!!!

3 ( +6 / -3 )

While Japan’s economy is fitfully recovering under Abenomics,

A very optimistic wording of what is demonstrably not happening. I wonder if JT writers are given a briefing on house style direct from the Ministry of Truth?

Abenomics is clearly not leading to any glimmer of recovery. Why does an allegedly free press have to pretend it is?

http://www.bbc.com/news/business-30373560

2 ( +6 / -4 )

Come on TR pull the other one, it chimes a seasonally festive range of jingles and ditties. Sony fell on stoney ground because of a series of gross corporate failures at its highest echelons. Where do we start, Betamax?, the memory stick ignoring the fact that the 'micro card industry standard is SD format? Or Sony's Walkman music player the very definition of miniaturised portability that had the market cornered, Apple was no more than a geek's wet dream, a prototype digital music player sat languishing on the drawing board whilst internal belly button gazing over content owning parts of the business who's near rabid level concern about the piracy that it might unleash compounded the gravest of errors. Apple had no such concern with the iconic ipod.

Abe may have lost one of his crucial arrows, promised structural reform of contractual employment market. And I will be the first to have a tantrum over his arrogant uncle routine in calling this Election. But Abe should not be associated with failure at Sony. The responsibly for many of the gravest of failures lies at the feet of Sony's Board. Takahiro Nonaka, General secretary of the electronic union must also take a share of the responsibly, in his failure to effectively challenge the lope sided contractual employment system.

2 ( +2 / -0 )

I, like all others on here, have heard these "demands" for wage increases for years. I haven't had a pay rise in over three years. In fact, my pay has gone down. How can we be expected to spend more with LESS?

4 ( +4 / -0 )

Wow. Remember the good ole' days when a Japanese CEO would rather cut his pay than the pay of his workers?

2 ( +2 / -0 )

Yep, this is what comes of your ill-advised consumption tax hike, Abe. You should've actually put measures in place to force companies to raise wages before your equally ill-advised implementation day of April 1st. Even better, not raised the tax at all

-1 ( +2 / -3 )

How can we be expected to spend more with LESS?

Long story short, be like the Japanese government and go into debt! Hell Abe is doing it and he wants to be the shining example for the country. I guess he figures everyone else will follow along!

2 ( +3 / -1 )

Structural reform could be implemented in bite sized pieces, doesn't need an employment legislative 'bazooka'. Not suggesting wholesale wealth redistribution, just a redefined social contract that allows the best to succeed, no matter their social background, or their gender. Its the wage disparity and the feckless use of the 'temporary' contract corporate culture that is locking in uncertainty and caution in consumer spending. Sony failure is evidence of dead mans shoes promotion policy, instead of merit. Having said that I do admire the working as a team culture in some industries.

-1 ( +0 / -1 )

How about a goal of zero inflation and zero deflation?

3 ( +3 / -0 )

wonder where these unions learned math. A 3% rise in the consumption tax, along with another 2% rise expected, plus rising import costs, and increased costs across the board, and they think that 2% rise in base pay is enough?

inflation in Japan is only about 1% right now. And that figure includes rising import costs and the recent tax increase.

Just saying.

-1 ( +2 / -3 )

lifetime pay smacks of communism. human beings are meant to do more than just toil at a cubicle

3 ( +3 / -0 )

Mark my words, when Abe starts going after labor market reforms next year, everyone on this website will go crazy about him going after the middle class and ending employment security.

That man can do no right in the eyes of the readership here.

-1 ( +3 / -4 )

"and the company’s average pay of 8.85 million yen is among the industry’s highest."

Gosh, maybe Sony workers could take a 10% pay cut and still make ends meet, I sure could.

0 ( +0 / -0 )

If consumer spending has dipped, and

It hasn't.

Where do people come up with this?

-4 ( +2 / -6 )

Another example showing just how outta touch the PM is~

1 ( +2 / -1 )

If Abe hadn't been so obsessed with devaluing his currency and stoking inflation, and had instead encouraged falling prices (which, any store owner knows, is the one thing that brings customers in droves), we might have been able to weather a tax hike that helped turn the government deficits around.

Instead he's done just the opposite, with inflation-sparked price increases making the tax increase that much worse. People would have been willing, grudgingly, to pay 8% tax on a 97-yen item (105 yen, 'tax in') that was once a 100-yen item (105 yen 'tax in'). But as everyone knows, the petty monarch Abe has gone so far as to send out surveyors to make sure that businesses aren't lowering their prices to make up for the higher taxes.

(I bought a beer yesterday at the 7-11 for 201 yen. What rational business sets a price that ends in "-01" and not a round number or something like "-99"? A business obeying Abe's price diktats, that's what.)

Who knows how little the yen will be worth, and how worse off everyone under 50 in Japan will be, when this monster is finished wrecking things? How many brilliant minds will have left the country? How many smart young people will be making plans to have a future somewhere else? All so Abe's generation can enjoy their golden years. We won't even have to ask anyone to turn out the lights when they're gone -- by then we won't be able to afford to keep them on.

3 ( +4 / -1 )

My pay's already been cut. Japan is a pretty expensive place to live, and with taxes going up...

1 ( +2 / -1 )

It's a Sony is now made in China so to devalue the yen means JS!

0 ( +0 / -0 )

If consumer spending has dipped, and

It hasn't.

Where do people come up with this?

nigelboy -- maybe from places like Reuters. Where do you get your "facts" from, other than thin air?

(Reuters) - Japan's factory output, consumer spending and real wages all fell in August, offering fresh signs of an economy reeling under the hammer-blow of a sales tax hike and keeping pressure on policymakers to deliver more stimulus to revive growth.

3 ( +3 / -0 )

This has nothing to do with so-called Cyber attack against SONY Pictures Entertainment, headquartered in Culver City CA in USA. Very very profitable. entertainment business by Sony.

0 ( +0 / -0 )

They did in last year's Shunto.

True, but, caving to government pressure isn't necessarily sound business practice. Japan's large, established firms should be using their clout, cash, and influence, and pressure the government for more business friendly policies, and reforms.

I've got nothing against wage increases, but, those can only come if employers have higher profits and/or more confidence in the economic future. Abenomics doesn't help achieve any of those things.

-1 ( +0 / -1 )

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