LONDON - The British arm of Toyota Motor Corp is to cut UK staff pay and working hours by 10 percent to save money in the face of a sharp downturn in global demand, the Japanese auto maker said on Wednesday.

Toyota Manufacturing UK and trade unions had agreed that the work share arrangement at the firm's two British plants, near Derby in central England and at Deeside in north Wales, would begin on April 1 and last for a year, it said in a statement.

During this time we will continue to monitor the market and company situation closely, Toyota said. We believe the measures we have announced give us a greater opportunity to maintain employment through this difficult period.

The news came as a report said Toyota Manufacturing UK's parent, Toyota Motor Corp, was likely to agree to pay staff in Japan an average 1.78 million yen ($18,100) in annual bonuses per worker, equal to five months of wages, in 2009.

The company was also set to pay an average basic monthly wage increase of 7,100 yen following talks with unions, Japan's Kyodo news agency cited sources close to the talks as saying.

A spokesman for Toyota Manufacturing UK said the British plants would move to a four-and-a-half day week, with staff not being paid for the time off.

A spokesman for trade union Unite said it was recommending the cuts to its members.

Any decision to cut wages and working time is never taken lightly, but the agreement we have reached with Toyota will ensure none of our members' benefits are eroded and that these skilled workers will remain in place and at work ready for when the upturn comes, he said.

Toyota officials were among representatives from the UK motor industry attending a meeting with business minister Ian Pearson on Wednesday to discuss the details of a 2.3 billion pounds ($3.18 billion) aid package for the ailing sector [ID:nLB938133].

The government said the European Commission had approved the aid and ministers were now inviting funding bids from manufacturers and suppliers.

Last month, Toyota said it would freeze pay and management bonuses and introduce a voluntary severance programme at its two British factories.

Toyota, which makes its Avensis and Auris models at Burnaston near Derby and produces engines at Deeside, saw its production volumes fall by 20 percent in 2008 due to lower demand.

The company, which employs 3,800 people at Burnaston and 570 at Deeside, previously announced plans to halt UK production for four weeks this year in response to the downturn. ($1=.7236 pounds) ($1=98.34 Yen) (Editing by Greg Mahlich and Mike Nesbit)

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