Toshiba mulls cutting employees' wages amid nuclear-linked losses
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Toshiba Corp. plans to cut the salaries of its employees to maintain its ties with creditor banks at a time when it expects a huge write-down on its nuclear business, sources close to the matter said Monday.
The struggling Japanese industrial conglomerate is asking the banks to keep lending to it and the envisioned pay cut would be a way to show its seriousness about restructuring, according to the sources, who were briefed on the plan by Toshiba executives.
The plan comes after Toshiba announced last month it would review its nuclear operations and spin off its profitable chip business to raise funds by selling a stake in the new chip company and cover the expected write-down in the nuclear business, which could reach 700 billion yen ($6.22 billion).
But the wage cut is likely to be opposed by its workers given that the huge expected losses in the nuclear business are largely blamed on management and its decisions. Toshiba has a total of some 190,000 workers on a group basis.
Toshiba and its labor union agreed last year to cut employees' bonuses by up to 50 percent from the previous year. The management appears inclined to reduce payroll costs further, by appealing to the union about the need to improve its finances.
The Tokyo-based company is facing the risk of falling into negative net worth -- a situation where its liabilities exceed assets -- in the year ending March 31.
Toshiba has said it will finalize the amount of the expected write-down and unveil countermeasures on Feb. 14, when it reports its earnings for the April-December period.