- The Washington Times - Tuesday, January 7, 2003

TOKYO, Jan. 7 (UPI) — Japan's continued economic doldrums is taking a toll even on labor unions, as Japanese car manufacturer Toyota Motor Co.'s laborers announced Tuesday that they will not demand a pay increase in the next fiscal year.

As workers prepare to enter negotiations with their employers for the next fiscal year starting April 1, Toyota's labor union headed by Hajime Tosho, said that its members will expect paychecks to remain unchanged from the previous year.

In announcing its decision, the union, which has about 58,000 members, pointed out the need for Toyota to maintain its competitive edge in an increasingly competitive global market, and it also noted that the company was unlikely to yield to calls for pay increases, in any case. Such a stance by Toyota's union came as a surprise, however, given that the company has continued to enjoy strong revenue in spite of the economic slump both within and outside Japan. In fact, the company is expected to post a net profit of $125 billion for the current fiscal year ending March 31.

But one of the biggest factors for Japanese exporters, including car manufacturers, doing well over the past few years has been the steady devaluation of the Japanese yen against major currencies. A weak yen makes Japanese exports cheaper, and thus more competitive, in overseas markets. However, the yen has been strengthening steadily over the past few weeks, partly due to rising geopolitical risks worldwide and a resulting sell-off of the U.S. dollar.

Should the yen continue to gain against the greenback as well as the euro, it will make it more difficult for manufacturers such as Toyota to keep their finances in shape. Meanwhile, the company will likely struggle to make headway in the domestic market, which will be entering its 13th year of little or no growth.

As a result, instead of demanding a broad increase in workers' pay, Toyota's union called for a lump payout of $500 per worker next year as a gesture acknowledging the company's solid performance over the past 12 months.

The union will be presenting its official proposal to Toyota's executives mid-February, after holding a number of town hall meetings with members.

The decision by Toyota's union members not to call for a broader pay raise is likely to be followed by unions of other Japanese manufacturers, particularly those which are highly exposed to overseas sales such as electronics manufacturers Sony Corp. as well as other carmakers.

In trading on the first section of the Tokyo Stock Exchange Tuesday, Toyota's shares ended down 8 cents at $26.96.

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