Japanese multinational automobile manufacturer, Nissan, has decided to promote all contract employees in its plants and R&D centres in Japan, to full-time roles w.e.f April 1. Interestingly, Japanese law makes it more difficult to terminate full-time workers, as compared to contract workers who can be dismissed on completion of their contract period.
The Company believes this move will motivate the employees, help them improve their skills and also make them more efficient, thereby enhancing overall business operations.
By adopting this approach, the Company will also manage to reduce fixed costs sparing finances to invest in skilling and retaining quality talent. Henceforth, the Company will not hire any workers on contract. By doing so, it aims to cut 300 billion yen in annual fixed costs, which is equal to about $2.8 billion. Even the contract staff at its head office will now be made permanent, full-time employees.
Last year, Nissan had already begun to put in place measures to decrease its annual fixed costs by shutting down production lines and reducing capacity by 20 per cent. These measures were resorted to when the Company incurred a net loss of about 671 billion yen last March. In the July-September quarter, it suffered an operating loss of about 4.8 billion yen. Even for the present fiscal, ending March, the Company is expecting a net loss of about 615 billion yen, which makes it all the more important to try everything possible to get back on track.