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For Sony, being in business is more important than keeping employment. Matter of course as international company

1, 02. 2009

   The president of Sony Corp. has revealed in an interview with a newspaper that he would give the priority to keeping his company in business rather than keeping employment. It was his judgment taking into consideration the interest of the shareholders. As the company has taken a decision even to dismiss some of its regular staff members, a voice is heard to praise the president's action with a comment: "The action does not give any strange feeling as that of an international company."

"Have to meet the expectation of shareholders as a business manager."

Asahi’s article on interview with Pres. Chubachi of Sony
Asahi’s article on interview with Pres. Chubachi of Sony
"I don't have any strange feeling about (Sony's latest) personnel cut."

   This comment came from a certain economic journalist about Sony's dismissal of about 16,000 employees over the world. In the wake of the current economic depression triggered by the financial crisis, firing of temporary workers sent by staffing agencies and other part-time workers is reported daily in Japan. In case of Sony, however, it indicated that one half of employees to be dismissed would be permanent workers. This appears to be taken by the journalist as an employment adjustment made as a matter of course by an international company like Sony.

   "An American company would cut surplus personnel even under good business condition. As an international company, it must have had the sense (of conducting the personnel cut as a matter-of-course action). I think Sony is a company one step ahead of others in Japan," the journalist said.

   Apparently reflecting the sense as described by the journalist, Ryoji Chubachi, president of Sony, revealed at the interview held later with the newspaper that he gave the priority to protecting the company rather than keeping the employment by saying:

"I am not expected of making the company incur a loss by giving the priority to employment."

   According to the Dec. 17, 2008 edition of the Asahi Shimbun newspaper, Chubachi made the comment during the interview conducted by the newspaper. He further said during the interview, "The management is accountable for meeting the expectation of the shareholders. What the people in the management are held responsible is whether they have done their best or not."

   This was rather an unusual remark leaning in favor of the stockholders' position made by a business executive in Japan, where the life-time employment practice has been kept. About this, the journalist said such remark was made because "Sony is ahead of other companies in internationalization. I think there will be other Japanese companies that will follow suit in the future. Like in America, it may happen that stockholders are given more favor as pays for executives are raised. This is why the stockholders are becoming more demanding."

"Policy tends to shift to giving priority to quick profit earning"

   In Japan, it takes too much time to adjust the employment of regular employees and this creates a bottleneck. This is because the life-time employment system can not be changed.

   Journalist Seiichi Takarabe criticized the labor law that bans the unilateral dismissal of permanent employees in his column carried by the Nikkei BP Net on Dec. 12, 2008. He said it is unreasonable that regular workers can be fired only on a voluntary basis by paying them extra severance pays even when the employers are faced by the danger of bankruptcy. He called for a revision of the law together with the construction of a safety net. "Employment adjustment at the time of a sharp demand decrease is a common sense in the world," he said and pointed out, "Japanese business firms exposed to severe international competition would leave Japan sooner or later" unless something is done.

   The employment adjustment placing emphasis on the interest of stockholders, however, is not free from some drawbacks. The economic journalist said, "It might create the tendency of shifting toward the pursuit of short-term, maximum profit. There would be the obstacle of weakening the motivation of the employees and the discontinuation of the transmission of technology because of personnel re-structuring. There are merits in protecting the regular employees, and the matter must be judged case by case."

   Chubachi indicated during the interview with Asahi that he is not confining his efforts to pushing the restructuring, but he said he is ready to make investments positively in such fields as the television and game machine business that are currently in the red but seen to grow in the future. But the economic journalist severely criticized by saying, "There was no plan indicated as to what sort of merchandises would be sold in the future. The sale of slim television sets is becoming sluggish, but there is no indication about the technology or new designing to show if such products can be pushed against the sever competition. Unless a long-term strategy is presented, the motivation of the regular workers will be weakened and the investors will refrain from making favorable assessment. It does not work only by squeezing out money through cost cuts."

   A wide range of discussion is called for in the future on the protection of the employment under what condition.

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