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Bus company proposes drastic wage cuts to survive

Date Posted: 2004-02-26

The president of the Ryukyu Bus Co., one of the three Okinawan bus companies currently operating under bankruptcy, has presented a plan to the company’s labor union aimed at saving the keeping the company operational.

Company president Hiromasa Nagahama proposes that the company’s 683 workers be fired at the end of March, and then those willing to continue employment would be hired back on Apr. 1 at 50 percent of their previous pay.

Nagahama says there is no other alternative to saving the company. “If we continue business as usual would mean the final demise of the company’s bus service with all negative effects that it would bring to the public. I hope our union will realize that,” he said.

Ryukyu Bus has been operating under bankruptcy since 1994. According to its court-approved rehabilitation plan, it should return to profitability by 2008. It has received operating funds from the prefecture and local municipalities in order to stay afloat. The company has also cut routes and other expenses, but the management says that resulting savings are not enough.

According to the company’s original plan, it should have posted an operating profit of Y130 million in 2003, but instead was Y70 million in the red.

The company management has proposed pay cuts in the past, but the union has always turned them down. This time, the president says there is no other way.

The company lawyer says the company also plans to petition the court to extend its rehabilitation period another five years to 2013. “We thing we need that much more time to return to profitability,” the lawyer states. The Prefecture Labor Office says that there are no legal problems with the proposal. A one-time firing of 683 people would be the biggest in the prefecture’s history.

If the workers approve the plan, the lowest salary in the company would be Y115,000 per month. The company directors’ pay would be cut to Y230,000 per month.

Aside from the future wages, the 50 percent cut would also apply to unpaid salaries and retirement payments, according to Nagahama. “We need to take drastic steps and revise our rehabilitation plan as our sales show a constant downward trend. Our projected loss this year is Y200 million and there is no signs of things improving,” Nagahama says.

Most of the company’s workers seem to take the pay cut as inevitable. Only 104 have said that they will quit, while 576 say that they will continue working. Some, though, say that they would not let the company get away that easy. “I can’t accept what they are proposing. I’m going to take them to court,” one bus driver fumed.

An earlier plan sought to merge all four of Okinawa’s ailing bus companies into one, but the plan fell through because of differences in the financing plans.

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