Japanese companies running out of excuses - myassignmenthelp.com

Question: Discuss about the Japanese companies running out of excuses. Answer: After the heady days of the US and global financial meltdown of 2007/2008; the UAW allowed some manufacturers to introduce two-tier wages with the aim of lowering production costs and to spur growth in the depressed automotive sector . Apart from helping save the auto makers, the system has helped spur a growth in jobs in the industry, with hitherto closed factories being opened and creating job opportunities for the unemployed, even if the entry wages are nearly half that of tier 2 employees (Lee, 2011). The two-tier systems has helped create jobs and spur the growth of jobs in the US Auto industry Inevitably, the two-tier wage system raises concerns due to the wide wage disparity between new and established workers; this is more of a social issue than an economic one. Viewed through the prism of economics, the two-tier wage system is sustainable, especially in the short to medium term; this is because it makes sense to have more people productively employed, gaining crucial skills while helping automotive workers balance their books and regain profitability that can guarantee even the entry level workers earning less a job and stable income in the future. In the short and medium term, the system has been very successful (Wernle, 2014). In the longer term, however, it will not be sustainable, especially from a social angel because as the FIAT CEO has argued, it is likely to create resentment and two classes of workers within the same factory. Talking of its sustainability, the answer is yes and no; yes because from a purely economic angle, it will be acceptable for unemployed p eople to accept jobs at a lower wage rate than remain unemployed. Some of the drawbacks to two tier wage systems is obvious resentment from those paid less and problems with unions of equal pay for equal work. It will also help the auto makers lower costs and gain profitability, and this will lead to expansion and opening of new plants that will increase employment. Meanwhile, the entry level employees will eventually move to the established employees rank and earn more wages. Elsewhere, it has been successful, tied to the seniority system that has long been a tradition in Japanese companies (White, 2018). The concerns of the FIAT CEO are justified by social factors, where eventually, there will be resentment and class issues based on wages that can adversely impact productivity and cooperation among staff: this is why Marchionne thinks it will create two classes of workers. Some drawbacks of the system is that it will be complicated in the long term when auto makers become profitable and have to negotiate wages with the UAW. These are legitimate concerns; experienced workers in the lower wage bracket are likely to seek greener pastures, disrupting their current employers, so in the long t erm, the system as presently implemented is NOT sustainable: what is required is its evolution to something better Using non GM workers may be economically sound but social unsustainable; based on the Hierarchy of needs and sociological functioning, employees seek loyalty from employers and vice versa. While it may work in the short term, it is unsustainable in the medium to long term: this would be Marchionnes thoughts about the approach, it still will create resentment as well. The two-tier system will go away in the near future, with the most likely scenario is for it to evolve, say to be used for interns rather than full time employees. Union pressure, and worker demands for equal pay for equal work will eventually see its disbandment, or at the very least, its evolution (Chen, 2011) References Chen, L. (2011).Two-Tier Wages Are Likely to Evolve - NYTimes.com. [online] Nytimes.com. Available at: https://www.nytimes.com/roomfordebate/2011/09/18/can-detroit-sustain-its-two-tier-pay/two-tier-wages-are-likely-to-evolve [Accessed 23 Feb. 2018]. Lee, D. (2011).Two-tier pay system brings reopening of GM plant, reviving hope. [online] LA Times. Available at: https://articles.latimes.com/2011/dec/18/business/la-fi-economy-wages-20111218 [Accessed 23 Feb. 2018]. Wernle, B. (2014). Why mess with 2-tier wage success?. [online] Automotive News. Available at: https://www.autonews.com/article/20140526/OEM02/305269987/why-mess-with-2-tier-wage-success%3F [Accessed 23 Feb. 2018]. White, S. (2018).Japanese companies running out of excuses not to raise wages. [online] Japan Today. Available at: https://japantoday.com/category/business/Japanese-companies-running-out-of-excuses-not-to-raise-wages [Accessed 23 Feb. 2018].