This past week Toyota has struggled with pay issues around the world. Although Toyota has had a relatively profitable past year, its success is localized. In some markets like North America, business is good. In others not as good. Upcoming large tax increase coming soon for Japanese workers played a part in a decision by Toyota to increase wages.
In India, Toyota has locked out its workers in one plant in a dispute over pay. The lockout of workers in a plant outside Bangalore affects 6400 workers. The plant produces about 700 cars per workday. Media reports imply that the workers were threatening the safety of supervisors. In its reporting on the situation, the BBC said that Toyota released a statement saying that Toyota had "no other option but to declare a lockout of the premises to ensure the safety of its workers and management personnel.”
The raise that Japanese workers is getting comes after 5 years straight with no raise. That may seem outrageous until one considers that Japan is struggling with deflation. With goods costing less over time it is hard for Toyota, a maker of goods with diminishing value, to pay more for labor to make those goods. However, the government led by Prime Minister Abe (Ahh-bay) has decided to increase taxes. Toyota, along with other large and prestigious Japanese companies, agree to give workers raises now ahead of the coming tax increases to help workers to keep the same relative rate of pay.
To read just the Reuters report on the Indian plant shutdown one would not know this was the case. Reuters finishes its story with the statement “The lockout comes just a week after Toyota Motor gave Japanese workers their biggest pay increase in 21 years.” The story then does not give the back-story, telling the reader that for half a decade there were no raises in Japan and that the amount of the raises is expected to be about the same as the tax increases already passed. To its credit the BBS story did.
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