Toyota has frozen pay increases and ruled out management bonuses at its UK operations this year and is discussing further action to reduce labour costs to cope with the downturn in demand.
The Japanese car-maker's 4,500 UK employees were informed of the moves this week as the firm reacts to a 20% fall in production volumes in 2008 to 213,000 cars.
Further cost-cutting moves are also in the pipeline, with a shorter working week for reduced pay, or the temporary suspension of employees being discussed as options.
Discussions are set to be finalised at a scheduled meeting in March.
Meanwhile, following a request from employee representatives in January, the firm has agreed to introduce a voluntary redundancy programme for employees at its two plants Deeside, North Wales and Burnaston near Derby.
A spokesman from Toyota said: "Our strategy is to make every possible effort to protect jobs. We want to retain our employees and have to be ready to come back stronger, fitter and leaner [when demand increases]."
The news comes as figures from the Engineering Employers Federation (EEF) released today (19 February), reveal the number of companies freezing pay has doubled to over 40% in the three months to the end of January.
The average level of annual pay increases in the sector has fallen at an unprecedented rate to 1.8%.