Canon Inc. will scrap its seniority-based wage structure April 1 and introduce a system under which pay is determined by achievement and performance, company officials said Thursday.
The company will also abolish a range of employee fringe benefits such as rent subsidies and benefits for employees with spouses or other dependents, the officials said.
The company believes the new system will motivate employees to work harder, the officials said, adding that the money the firm will save via the change will be used to pay bonuses.
"This change does not signify a restructuring program, because it will increase our overall personnel expenses," remarked one Canon official.
The new regime will affect about 36,000 employees at Canon and its subsidiaries, the officials said.
The firm will transfer the money saved via the abolition of its fringe benefits to employees' basic wages to ensure no employees suffer wage cuts for the time being, they said.
Under the new system, the annual income of a high-performing employee with a spouse and two children will be up to 1.8 times that of a low-performing employee with a spouse and two children, they said.