Utilizing seniors as part of the workforce is increasingly being seen as vital amid projections that the labor force could drop by more than 10 million in the next 2 1/2 decades.

With the falling birthrate and aging society, Japan saw its first recorded decline in population last year, when the number of deaths exceeded births in the 12 months to the end of November.

The current labor force is estimated at 66 million, which includes people age 15 and over but excludes those attending school, doing housework, or are sick or elderly and unable to work. The number is projected to decrease by more than 10 million by 2030.

A legal revision on stabilizing elderly employment took effect in April, making it obligatory for firms to keep workers on the payroll in stages until age 65.

According to the Health, Labor and Welfare Ministry, about 96 percent of firms with more than 300 employees have already introduced measures to extend employment. But the bulk of them rehired employees aged 60 with pay cuts of 50 percent or more.

Less than 7 percent of businesses have gone so far as to either raise the mandatory retirement age from 60 to 65 or abolish it, the ministry said.

Osaka-based Mystar 60 Corp. is one company that has taken a new step in utilizing old people: It only hires people 60 or older.

The company has 600 engineers as regular employees with a starting annual salary of 2 million yen. They are dispatched to other companies based on their experience.

Shigeo Hirano, president of Mystar 60, said: “People show their appreciation of a retired person only for a short period after he retires. Even his wife begins to feel annoyed seeing him all the time, a month after his retirement. He realizes that work was his reason for living.”

Kenzo Miki, 60, who joined the company in January, was recently recruited by a client firm in Chiba that evaluates real estate.

The revised law seeks to have corporations extend the retirement age limit or abolish the retirement system, but it does not set any punitive measure for companies failing to comply.

A stumbling block to the hiring of older people is labor costs. Wages at many corporations are kept low for young people but are higher for middle-aged employees with child-rearing and education costs to meet.

Salaries begin to drop gradually as the employees approach retirement age.

If such a system remains intact and the retirement age limit is extended, firms will be saddled with having elderly people with high income.

To fend off such cost problems, McDonald’s Holdings Japan Ltd. abolished the retirement system this spring and applies the same yardstick to new and veteran employees alike by evaluating performance regardless of age or experience.

Askul Corp., an Internet retailer of office supplies, has raised the retirement age to 65 and plans to abolish it within five years. Its yearly salary system is based on six-month achievement evaluations. According to preliminary reports on the 2005 census, working people aged 65 or older numbered 5.7 million, up about 800,000 from 2002.

The figure indicates about 20 percent of people over 65 were working.

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