The government’s updated outline for its policy on the elderly — with its proposal to raise the optional age for receiving public pensions to 71 or older — seeks to change the uniform definition of people 65 or older as senior citizens and instead enable those willing and fit enough to keep working irrespective of their age. Noting that today’s older adults are much healthier than previous generations, the new policy aims to encourage the healthy elderly to stay in the labor force longer and support society. Behind it is a growing need to make up for the declining ranks of the productive-age population and sustain the social security system in our rapidly graying society.
The new policy appears to make sense, given the improved health and changing lifestyles of elderly people as well as the nation’s demographic realities. What’s crucial to making it work will be greater efforts to secure job opportunities for those elderly people who can and are willing to remain in the workforce.
Last year, a group of academic societies, including the Japan Gerontological Society and the Japan Geriatrics Society, proposed redefining “elderly” as age 75 or older — instead of 65 or older as has been commonly referenced for decades — and people from 65 to 74 as “semi-elderly” who can actively engage in social activities. Scholars stated that advances in medical technology and living conditions make people five to 10 years younger in terms of their physical and intellectual abilities compared with a decade ago.
Meanwhile, the nation’s demographic picture casts doubt on the sustainability of the social security system. While people are living longer, declining births and the graying population threaten the pension, medical and nursing care programs that were built on the premise of working generations supporting the elderly. While it’s estimated that roughly one in every three people will be 65 or older in 2025, the 15-64 population is forecast to fall from 87 million in 1995 to 70.8 million in 2025.
Currently people begin receiving pensions at age 65, but they can choose to receive their benefits at any time between the ages of 60 and 70. The later the starting date, the greater the monthly amount. However, few people delay receiving their pension beyond the age of 65. Under the new policy, the Health, Labor and Welfare Ministry plans to extend the optional age beyond 70, with the monthly benefits raised further. It would be rational to extend this option if more people are remaining in the workforce so that they can continue to earn a living as long as they are able to and can count on increased pension benefits when they retire.
The key to making this policy work is to secure decent employment opportunities for the elderly who can and are willing to keep working. In fact, the ranks of people 65 or older who remain in the workforce are growing. The number of such people has increased for 13 years in a row to account for 11.9 percent of the labor force. But among the people 65 or older who are employed, 75 percent hold low-paying irregular jobs such as part-time positions — the number of such people has increased by 2.5 times over the past decade.
The updated policy on the elderly says the government will provide support to private sector companies that extend the mandatory retirement age of employees or extend the period for rehiring employees who have passed retirement age. The government is also weighing gradually raising the retirement age for public workers from 60 to 65.
Some companies are already moving to extend the retirement age of their workers to 65 in the face of the tightening manpower shortage. However, these firms remain a minority as many businesses hesitate out of fear of increased personnel expenses. In a labor ministry survey last year of 156,000 companies that have more than 30 employees, 2.6 percent have abolished the mandatory retirement system and 17 percent have extended the retirement age to 65. Yet nearly 80 percent of the firms have kept their mandatory retirement age at 60. About 75 of the companies enable their employees to work at least until age 65 if they so wish, either by abolishing or extending the retirement age or rehiring them after retirement — often at greatly reduced wages. But only 22 percent of the firms allow employees to remain until at least age 70.
To encourage elderly people to stay in the labor force longer, their working conditions need to be improved. If the traditional uniform definition of the elderly is no longer valid, the relevance of the system that set the uniform retirement age must be questioned. The new policy should be accompanied by further efforts to identify and eliminate obstacles that stand in the way of healthy and willing elderly remaining productive members of the labor force.