Toyota asks Japan workers to lower pay amid slump

Toyota Motor Corp. said Thursday it is negotiating with its workers in Japan to slash salaries as it stops production to adjust to slumping global demand.

Toyota spokeswoman Ririko Takeuchi said the size of the cut is still undecided. She said talks are under way after the company decided this week to idle production at all 12 of its Japan plants for 11 days over February and March - a stoppage of unprecedented scale for Toyota, Japan's top automaker.

Under Japanese law, companies must pay at least 60 percent of the average regular wages during such stoppages, she said.

In a stunning reversal of its previously booming fortunes, Toyota projects that it will sink into its first yearly operating loss in 70 years for the fiscal year ending March 31. And fears are growing about the ripple-effects of the U.S. financial crisis to this nation's export-reliant auto industry, including parts-makers.

Toyota is shedding 3,000 temporary workers in Japan - about half its domestic temporary work force - by the end of March.

The job cuts have not affected the nearly 70,000 full-time Japanese staff, who like workers at major corporations here are generally protected with lifetime employment. Toyota employs 316,000 people globally.

Toyota officials have said they are trying to ease the transition for its laid-off workers, allowing them to stay in the company dormitory for a month, instead of just a week, as in previous cases.

"Protecting employment is of utmost importance for us," Toyota President Katsuaki Watanabe told reporters last month. "But tough market conditions are likely to continue, and they could get worse."

Japanese automakers may be faring better than their U.S. counterparts General Motors Corp. and Chrysler LLC, which have been on the brink of collapse until securing a multibillion dollar government bailout.

But the plunge in global demand and the surging yen have hammered their earnings.

Toyota, the maker of the Corolla subcompact and Prius hybrid, saw its U.S. sales in December tumble 37 percent on year. It expects 50 billion yen ($555 million) in net profit for the fiscal year ending March 31, down from 1.7 trillion yen the previous year.