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OLD HANDS, NOT IDLE HANDS:
Post-retirement job training is becoming more common. (Photo: Jiji Gaho Sha, Inc.)
Other countries may seek to lower the retirement age, but Japan is now in the throes of discussing whether to move it back, from 60 to 65. This is what is proposed in the Ministry of Labor's recently released fiscal 1997 white paper, and in the recommendations of a Ministry panel of experts. In 2015, more than one quarter of all Japanese are expected to be 65 or over. This rate of graying is putting great pressure on pension finances. So the age of eligibility for national pension payments is being raised to 65 in 2013. This raises many questions, such as how corporate wage structures and benefits will be affected. But the issue is complex and must be addressed. There is a need to seek national consensus as soon as possible.
Pace of Graying Picks Up
Another concern is unemployment. It is estimated that the population aged 60-64 will rise by about 1 million to 8.6 million in 2004, as those born in the first baby boom immediately after World War II reach old age. If the retirement age continues to be 60, the generation coming up to that age between 2005 and 2010 could face the prospect of mass unemployment while still needing to work. These are the dilemmas that prompted the labor white paper and the ministry panel to effectively make calls for changes in the way Japanese society operates.
But there is another question: Will the younger generation be able to meet the swelling costs of future pension provision singlehandedly? The Ministry of Health and Welfare calculates that with the increase in the number of aged, pension contributions will amount to 27% of monthly wage packets by 2015, compared with the current 17.35% (in both sums, the employer pays half the costs). If those drawing the pensions worked on to 65, footing the bill themselves, it would be a major prop for the creaking pension-finance system.
In particular, more companies are taking aim at the costliest end of their payrolls by introducing early-retirement incentives. According to a Labor Ministry survey of around 12,000 employers, 33.5% of retirees aged 50 or over had left before retirement age in 1996, and 9.3% had taken advantage of early-retirement packages, twice as many as in the previous year. The proportion of people working up to retirement age is declining, not rising. Given these realities, companies in competitive global markets cannot but take a dim view of keeping people on until 65. As long as the majority stick with the seniority-based pay system, managers will be unenthusiastic and it will be difficult to move back the retirement age.
Old Dogs, Old Tricks
In its white paper, the Labor Ministry points out that it would be a waste not to use the expertise, skills and experience that older people have built up over the years, especially when they are themselves keen to work. It is said that it doesn't much matter how old you are when doing white-collar work. Senior citizens can be high value-added human resources if they bring specialized knowledge.
But they also bring with them health problems. Not all of them want to work on, and many are too frail to work comfortably under pre-retirement conditions. For this reason, it is also becoming necessary to create working environments which take account of advanced employee age, with flexible regimes allowing, for example, shorter working hours, or work-place attendance every other day. And corporate employers could make things easier by changing traditional wage, retirement-allowance, and other structures.
Japan faces a period of acute labor shortage. Mobilization of senior citizens is an issue that is going to affect all of society. The key to coping with extreme demographic imbalance is likely to be the creation of an environment in which the experience and expertise of the aged can be fruitfully brought to bear.
Edited by Japan Echo Inc. based on domestic Japanese news sources. Articles presented here are offered for reference purposes and do not necessarily represent the policy or views of the Japanese Government.