LONDON Ė Japan's troubled Sharp Corp. has asked its labor union to agree a 7 percent cut in wages for the general work force and the company is imposing a 10 percent cut in managers' salaries.
The cuts are due to come into force Oct. 1 and last for one year. Across all its operations Sharp has about 57,000 employees although in August the company announced a plan to cut 5,000 jobs by the end of the financial year on March 31, 2013.
The latest tariff of wage cuts are increased from a previously agreed 2 percent drop for workers and 5 percent cut for management, according to a statement issued by Sharp on Tuesday (Sept. 11). The increased level of wage cuts is expecting to save 14 billion yen (about $180 million) in personnel costs in Sharp's 2012 fiscal year, the statement said.
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In addition Sharp (Osaka, Japan) announced the cutting back of premium overtime payments to the legal minimum and the termination of welfare programs. Any bonus payments will be cut to 50 percent of previous rates, Sharp said.
Sharp has been hit hard by a slump in the sale of liquid crystal displays generally and LCD televisions in particular and is now expected to forecast a loss of about 300 billion yen (about $3.8 billion) for the year to March 31, 2013. The company made a net loss of 138.4 billion yen (about $1.8 billion) in the first fiscal quarter to June 30, 2012.
The company had been trying since March to forge a partnership with Hon Hai Precision Industry Co. Ltd. (also known as Foxconn), the world's largest contract manufacturer and a supplier of manufacturing services to consumer electronics giant Apple. However, a bail-out plan that included investment from Hon Hai in return for a transfer of LCD technology has become drawn out as Sharp's share price has collapsed. With the deal in limbo Sharp was reported earlier this month to have mortgaged nearly all of its domestic factories and offices, including one making liquid crystal displays for Apple products, to secure loans.