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Mandatory retirement takes a leap forward

by Mark Schreiber

The angels that guard you / When you drive / Usually retire / At sixty-five

That ditty, for Burma-Shave brushless shaving cream, appeared in signs along U.S. highways in the early 1960s. The number 65 suggested drivers who exceeded that figure in miles per hour (equivalent to 104.6 km/hr), raised the risk of a fatal accident. It also acknowledges that even half a century ago, Americans saw nothing odd about staying on the job until reaching age 65.

Now finally, Japan is catching up. From next month, when the 2013 fiscal year begins, the revised Law Concerning Stabilization of Employment of Older Persons takes effect, and the mandatory retirement age, defined as the minimum age for payout of social security pensions — last raised from 55 to 60 years in 1998 — will go up to 61, and then increase incrementally at the rate of one year of age every three years, until 2025, when the mandatory retirement age reaches 65.

Over the long term, the new statute is expected to have profound effects on hiring, the wage structure and many other aspects affecting the nation’s corporate culture.

Yet Japan, with its declining birthrate and aging population, clearly had to do something to maintain the size of its labor force (which was 62.98 million as of 2010). Mass immigration, one of its few other options, has been proposed numerous times over the years, but for reasons too numerous to raise here keeps getting put on the back burner.

But when you think about it, what’s wrong with people working into their 60s? Nikkei Business (March 4) suggests that the human brain has no “mandatory retirement age.” “Of all the organs in the human body, the brain lives the longest,” asserts neuroscientist Toshinori Kato. “While it’s true that some individuals do start becoming seriously forgetful due to deterioration of their hippocampus, that doesn’t mean their entire brain stops functioning at the same age. In particular, those who have sharpened their ‘brain address’ through long years of work show little deterioration around age 60, and if they stick with their area of specialization they can perform more than adequately.”

To put senior employees to work at menial tasks, from the neuroscientific standpoint, is “the epitome of foolhardiness.” The best thing, Kato advises, is to team them up with younger individuals. “When you have different generations working together they support each other and it’s natural to achieve favorable results,” he asserts.

Nikkan Gendai (March 15) raises the specter of toshiue-buka (subordinates who are older than their bosses), which presents a variety of problems in the workplace, especially since many Japanese are used to showing deference to their elders.

In a survey of 100 engineers conducted by Tech Soken, an affiliate of Recruit, Inc., only 33 percent of respondents said they felt that age discrepancies between coworkers would not be a concern.

“The thing most likely to cause difficulties at a workplace where a veteran staff member has been assigned is confusion over who’s in charge,” says Norifumi Mizogami, a journalist who specializes in covering human resources management. “A supervisor has to keep up the veteran’s enthusiasm so that he is not made to feel he’s a burden. We can make exceptions for things like man-to-man situations, where they are passing along their experience in a skill or technique, but otherwise for the first three months at a new post it’s probably better to just let them observe.”

Basic matters such as verbal communications also pose challenges. Should a young boss address his (or her) older subordinate using casual Japanese, or is keigo (polite language) more appropriate?

Staff must also deal with matters of protocol, like who is seated first during formal affairs. Or when heading for a nightcap after a banquet or other event — would an invitation for a drink issued by a younger superior lead to misunderstanding by an older subordinate that their relationship is one between equals?

“In situations such as coworkers going to informal places like akachochin (traditional bars) where they would be seated at a counter, it’s probably a good idea to let the superior assign the seats for the others,” advises business trainer Haruko Furuya.

The practical concern by corporations, of course, is not hierarchical worker relationships, but the fiscal bottom line. Writing in Shukan Toyo Keizai (Jan. 26), Nao Horie notes that keeping older staff on the job longer will inevitably saddle businesses with heavier costs. According to one nationwide simulation, should three-quarters of eligible workers stay on the job until reaching 65, the added costs in terms of wages, contributions to social pensions and so on would rise from ¥0.4 trillion in fiscal 2013 to a projected ¥1.9 trillion per year by 2025. This, warns Horie, will affect the wages across the board and discourage new hiring.

So what’s the solution? Retrain them, says Horie, or try to come up with some other revolutionary ways to boost senior workers’ productivity. Should that fail, the alternative would be to keep them on the job while reducing wages commensurate with any declines in productivity.