Toyota Motor and its labour union have agreed to switch from age-linked wages for mechanics and other skilled workers to a system of performance-based pay, Dow Jones reported, citing Kyodo News.
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The report said Toyota and the union will discuss further details of the agreement and launch the new system in April, and added that age-linked wages increase automatically as an employee gets older, thus serving as the backbone of the seniority-based promotion system.
Once the new system is in place, Toyota will have eliminated all its age-based wage practices, the report said, noting that the company has already ended age-based wages for other workers, including executives and clerical employees.
In October, the company will also introduce a new retirement pay scheme emphasising an employee’s qualifications and performance, the report said.
According to Dow Jones, Toyota has been one of the major symbols of Japan’s seniority-based system and its change is expected to spur the move toward switching to the merit system.
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