The Cabinet on Tuesday approved bills to urge businesses to let employees work until age 70, as the country seeks to expand the working population to cover rising social security costs amid the rapid graying of society.
While their provisions are not mandatory, the bills call on companies to choose one of five options, including raising the retirement age, scrapping it or allowing employees to work beyond the age limit.
The two other options are for companies to outsource some operations to retirees who start their own business or become freelance, or to assign them to philanthropic projects run by the firms.
The government plans to submit the bills — covering six laws — to the ongoing Diet session and hopes to put them into effect from April 2021. In the future, the government plans to make it obligatory for firms to let employees work until 70, officials said.
As they are more likely to experience work-related injuries, there are some challenges involved in the continued employment of elderly workers. While the government is set to eventually make retirement at 70 mandatory in the future, it needs to conduct sufficient deliberations.
Also among the envisioned changes is the introduction of a system for combining the working hours of all jobs held by one person when certifying overtime-related illnesses or injuries, as the government pushes for company employees to hold second jobs. The practice has long been banned in Japan.
The government also plans to reduce benefits provided to workers age 60 to 64 that are intended to make up for salaries that drastically drop when they turn 60.
Graying Japan needs more workers to sustain its soaring social security costs. According to government data, 1 in 3 people in Japan is expected to be 65 or older in 2025.
The move is seen as one remedy for the serious labor crunch, regarding which the government has also introduced a series of steps to make up for the labor shortfall, such as bringing in more foreign workers and promoting women’s participation in the labor market.
Still, Japan is expected to face a shortage of 6.44 million workers in 2030, according to an estimate by Chuo University and Persol Research and Consulting.
Among the 66.64 million workers age 15 or older last year, 8.62 million, or 13 percent, were 65 or older, the government said.
While increasing employment opportunities for elderly people, the government is not considering raising the starting age for receiving a pension, the sources said.