Newspaper article The Daily Yomiuri (Toyko, Japan)

New Model Needed to Keep Elderly Working

Newspaper article The Daily Yomiuri (Toyko, Japan)

New Model Needed to Keep Elderly Working

Article excerpt

Facing an age in which lifespans will regularly exceed 100 years, the government has begun studying how to create an environment where individuals will be able to work until age 70. How can we build a society in which elderly people with the will to work can play an active part? The Yomiuri Shimbun asked Hisashi Yamada, chief senior economist of The Japan Research Institute, about this. The following are excerpts from the interview.

Current situation like welfare

The Yomiuri Shimbun: What is the importance of making it easier for elderly people of post-retirement age to work when most companies set their retirement age at 60?

Hisashi Yamada: It will certainly help elderly people find meaning in their life, but it will also serve as a countermeasure to the serious labor shortage the country is facing. Additionally, the tax and social security premiums paid by such people will help finance social security programs that cover medical treatment and nursing care and treatment, and will also help mitigate the issuance of deficit-covering bonds to a certain extent.

Q: How would you assess the current state of elderly employment?

A: From a quantitative perspective, employment is gradually increasing due to an increase in healthy, active people with longer healthy life expectancies. The revised Stabilization of Employment of Elderly Persons Law (see below) has also been a factor as it mandates that businesses accommodate individuals who wish to work until they are 65.

From a qualitative perspective, however, it is very problematic. Regarding the employment of those in their early 60s, about 80 percent of companies have such workers retire and then rehire them as non-regular workers, such as in part-time roles, instead of revising up the retirement age. As a result, such people face significantly lower wages and are forced to take on auxiliary roles in many cases.

Under such circumstances, such employees can lose the motivation to work. But companies continue to employ them out of obligation and from a welfare point of view, even if such workers are not able to perform as the companies need.

That being said, raising the retirement age to 65 will create different issues. Young employees will have fewer opportunities to take on tasks with responsibility, and companies' organizational aspects will become inflexible and less dynamic. The majority of companies also lack the financial resources to pay higher wages for employees under a seniority wage scheme.

Q: What about those 65 and older whom companies are not obligated to employ?

A: Wages are becoming polarized, with workers with specific skills and owners of corporations earning high salaries while unskilled workers earn low wages. With few opportunities in between those two extremes, many individuals who still wish to work end up giving up looking for employment.

Foster specialists

Q: The Future Investment Council, chaired by Prime Minister Shinzo Abe, is working out a policy that would allow people to work until 70.

A: It comes down to how it will be implemented. If it is simply that the age until which companies are required to provide employment is raised, that will only add five years to the current welfare-style employment.

Q: In that case, what should be done?

A: The traditional model of Japanese employment needs to be changed. The system of increasing wages on a seniority basis as workers approach their 50s should be revised, and financial sources for paying employees in their 60s must be secured.

Employment of middle-aged and older workers needs to be more flexible as well. …

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