Keeping retirees employed

The Lower House on Aug. 2 passed a bill to make it obligatory in principle for enterprises to keep employing through the age of 65 all workers who want to continue to work after reaching the mandatory retirement age of 60. The bill is aimed at securing employment for such workers until they start receiving pensions. In fiscal 2013, the age at which people will be entitled to receive pension will begin rising in phases from 60 to 65.

The bill is to revise the 2006 law for stabilizing employment for elderly workers. That law has a provision allowing enterprises to decide which employees to keep on if labor and management reach an agreement on the point. The new bill will abolish this provision, but it is not without problems. It will put off the complete abolition of the provision through 2025. This runs counter to the central aim of the bill.

Under the bill, enterprises will be allowed to transfer workers who have turned 60 to affiliated enterprises. The downside to this is that there is a possibility that affiliated enterprises could be located in distant regions, offer completely different jobs or poorer labor conditions. Such conditions may cause such workers to quit.

Enterprises have expressed concern that the obligation to retain those older employees who want to keep working will force them to keep workers whose attitude toward their jobs is extremely bad or those who suffer from poor health.

In response, the Democratic Party of Japan, the Liberal Democratic Party and Komeito added a clause to the bill giving a legal basis for the guideline on which workers may be excluded from being retained. The labor ministry will write the guideline after listening to opinions from labor and management. The possibility that such a guideline will be abused is strong.

In view of the fact that people aged 60 or older number about 41 million, or about one-third of Japan’s population, the bill is very important. But it appears that enterprises are not ready to accept its aims. According to a Kyodo News survey last spring that covered 103 major companies, only 13 of them (12 percent) supported the idea of retaining older workers, while 37 (35 percent) opposed it.

Reasons for opposing it include that the retaining workers over the age of 60 will lead to cost increases for companies or make it difficult for them to employ young workers. Labor and management need to work out wage and other work-related systems that will help increase hiring of both the young and the elderly. The government, for its part, needs to help enterprises increase employment as well as stabilize the pension system.