The big freeze

So far, firms such as Hitachi, Sanyo, Panasonic and Miitsubishi have been cited, with Toshiba being the first to apply freezes from April 1st. Apparently, Sharp also intends to postpone any wage rises, with annual bonuses greatly reduced. While pay cuts and freezes are not uncommon in the current climate, what's interesting is the way Japanese firms set pay scales and the potential ramifications these measures may have. Traditionally, Japanese workers' basic wages automatically increase every year by a fixed amount. The rises are based on factors such as seniority and length of service and an employee can usually expect to see an increase at the start of every business year. However, if plans to freeze this regular increase go ahead, Japanese unions are unlikely to take the measures lightly. The Japanese Electrical Electronic & Information Union is already up in arms and maintains that management teams should agree at least on automatic wage hikes if they wish to avoid walkouts by workers. While other measures may be implemented - Hitachi, for example, are already seeking alternatives to wage freezes by increasing the number of unpaid holidays - it's unlikely to impress the unions. It's hard to see how exactly unions and management will settle on a compromise, but I suspect it won't be pretty.