Toyota to Base Worker Pay More on Merit, Less on Seniority

Toyota Motor Corp. wants to change the way it pays workers in Japan to put more emphasis on performance and less on seniority, The Nikkei reports. The company aims to launch the new system next January for about 60% of its 68,000 domestic hourly employees.

Toyota also will adjust allowances for dependents to provide more support for workers with young children, the newspaper says. The adjustments are intended to help attract young factory workers in a country whose average age is quickly increasing.

The average factory worker at Toyota today is about 40. But Japan's shrinking youth population will hike the percentage of Toyota workers who are 50 or older to 30% by 2035 from 20% currently, according to The Nikkei.

Toyota current policy sets 60 as the normal retirement age and permits older workers to continue only at half their previous pay and workload. The company is considering a program to rehire especially talented retirees at their previous pay and work levels to help transfer their skills to younger workers, the newspaper says.