National / Media | MEDIA MIX

Japan's pensioners are literally getting older

by Philip Brasor

Special To The Japan Times

Because of the election announced by Prime Minister Shinzo Abe on Monday, the new Cabinet he formed last summer to boost his falling support rate will do no work, since it was launched during the summer vacation and Abe dissolved the Diet as soon as it opened on Thursday.

What this means is that Toshimitsu Motegi, the economic revitalization minister who was also appointed to the newest Cabinet portfolio, minister for human resources development, may never carry out any tasks in that latter role, which will disappoint a lot of journalists who are still scratching their heads trying to figure out exactly what the ministry does. The English name is more straightforward sounding than the Japanese one, which is hitozukuri kakumei tantō daijin, directly translated as Minister in Charge of the Revolution for Creating People, a phrase that sounds part Bolshevik, part sci-fi.

As a number of media have pointed out, Abe’s second administration, despite its fondness for glib slogans such as “Make women shine” and “100 million working actively together,” has shown little interest in boosting social welfare programs. But this new ministry, as well as Abe’s campaign pledge to use revenues from the consumption tax for education and better day care, would seem to be reversing this policy.

Or maybe it means something else. On Sept. 1, Japan’s financial newspaper, Nihon Keizai Shimbun (Nikkei), explained the government’s aim to extend the retirement age for civil servants to 65, starting in fiscal 2019. This summer, the Cabinet formed a study group of heads of government personnel departments to come up with a plan for revising the National Public Service Law by March, with the idea of passing the revision sometime in fiscal 2018.

With the exception of some top bureaucrats, the current law stipulates that the retirement age for civil servants, whether national or regional, is 60. However, the government pension system changed in 2013, gradually pushing back the starting age for receiving pensions to 65 by 2025. That means retirees may not start receiving payments when they leave their jobs, so the government feels it should adjust the retirement age so that it matches the age when the retiree starts receiving their pension.

The main problem is cost. If the retirement age is pushed back for civil servants, national and local governments will have to pay them for the extra years they put in, and civil servants get paid well — especially well at the end of their careers. The new law, therefore, would probably include some sort of provision to limit pay increases during these extra years. One way to do this would be to take away certain high-level workers’ titles that allowed them to receive automatic pay raises every few years. However, even if the worker’s salary remained the same for the rest of their time on the job, it would still cost the public more than if the person were replaced by a younger colleague, whose pay would be lower.

But according to the article, the government is hoping for another change as a result of the civil servant pension revision. It wants the private sector to follow this lead and extend retirement ages as well. The Diet already put this idea in motion with the 2013 senior workers stability law, which says companies must retain employees until the age of 65 if those employees wish to keep working. Companies have three options in this regard: abolish their set retirement age, extend their set retirement age to 65 or re-employ workers after they retire.

Presently, 16 percent of private employers have set their retirement age at 65, according to the labor ministry, and only 2.7 percent have abolished mandatory retirement ages. The government wants to increase these numbers and the revision to the National Public Service Law is a means of showing the private sector the way.

There is a corollary to this plan, however, that Nikkei doesn’t mention, at least not in detail, and which seems to be the domain of the Ministry of Human Resources Development. As economist Takuro Morinaga explained on the Sept. 11 installment of Bunka Hoso’ “Golden Radio” talk show, no major media other than Nikkei covered the new government plan. Morinaga thinks it was more of a PR article than a piece of journalism: The government presented Nikkei with a bill of goods, which the paper was then supposed to sell to the business community that comprises its readership. The real objective is to promote the idea of extended employment as a means of alleviating the labor shortage.

“I’m 60 years old,” said Morinaga, “and all my friends are reaching retirement age.” They all plan to keep working, he added, and most are in the private sector. The difference between company employees and the civil servants as described in the Nikkei article is that Morinaga’s friends are not going to make nearly as much money. He estimates they will get from one-third to one-half what they received before they reached retirement age. Private companies typically transfer or assign retired workers to lower paying positions. This is very different from the situation for civil servants, who may not enjoy any more pay raises, but at least won’t suffer pay cuts.

“I’m not disparaging civil servants,” said Morinaga, “but they are protected by law, and it should be the same for private sector employees.”

The real goal of the government plan, according to a Sept. 14 article in the online version of tabloid Nikkan Gendai, is to extend the retirement age — as well as the age for receiving pensions — to 75 for everyone. Doing so would not only ease the labor crunch, but also help the government save billions in social security. In 2014, the labor ministry admitted as much. This strategy, says Gendai, would also force older people to spend whatever savings they have, boosting consumption tax revenues that will help pay the salaries of all those civil servants who continue to work.

The 100 million will definitely work together. Right up until they die.