Legislation that has been approved by the Lower House will oblige employers to “make efforts” to secure job opportunities for their employees until they turn 70 if they wish to keep working. A key part of the social security reform pursued by Prime Minister Shinzo Abe, the measure aims to make up for the growing labor shortage in an aging and shrinking population by prodding the elderly to work longer — and to help support the social security system under demographic pressure.
However, doubts linger as to whether the proposed policy is enough to keep elderly people motivated to continue working into more advanced age in good health and under safe conditions. The policy needs to be constantly examined to see if it’s serving the intended purpose.
In Japan, the primary working-age population (from 15 to 64) had declined to 75.45 million as of 2018 — from a peak of 87.26 million in 1995 — accounting for a record low 59.7 percent of the total population, a steep fall from 69.8 percent in 1992. The figure is forecast to decline further to 68.75 million in 2030 and 48 million in 2060.
Meanwhile, the number of people 65 and older with jobs has increased by more than 3 million over the past decade to some 8.92 million — or about 1 out of 4 of the elderly population. Those 65 or older, who occupy a record 28.4 percent of the population, account for 13 percent of the labor force, helping sustain the workforce along with women’s growing participation in the labor market. But many of those elderly workers face unstable, irregular employment conditions and low wages.
While most Japanese companies set the mandatory retirement age of their employees at 60, people basically become eligible to receive public pension benefits when they turn 65. The current law for stabilizing elderly workers’ employment requires the employers to enable their employees to keep working until the age of 65 — either by abolishing or extending the retirement age or by rehiring the employees on post-retirement contracts.
The proposed legislation calls on employers to try to secure job opportunities for their employees until they turn 70 through these measures and additional options such as commissioning jobs to retirees who start their own business or giving them freelance work, as well as getting them to engage in social activities in which the companies will be involved. These options, as well as the lack of penalties against employers that fail to make such efforts, are said to be designed to ease opposition on the part of companies that reject uniform rules that add to manpower expenses. This raises questions as to how effective the legislation will be in enabling more people to stay in the labor market longer.
According to government surveys, 99.8 percent of the companies polled have introduced a system to keep their employees hired through the age of 65, but only about 30 percent of the firms secure job opportunities for those older than that. Most of the workers above the age of 60 are re-hired under post-retirement contracts with significantly reduced wages. A series of lawsuits have been filed by re-hired workers who complain that it’s irrational for the employers to cut their pay even when they are engaged in essentially the same tasks as before.
That problem may come into focus as big corporations become obliged beginning this April to follow the “same work, same pay” principle, under which the employers will be obliged to explain the disparity in wages and other conditions for workers engaged in the same tasks with equal skill levels, irrespective of their contract status. In developing programs for people to keep working until 70, the issue of fair evaluation of and reward for the elderly people for their work — a must to keep them motivated — cannot be averted.
As the rapid aging of the Japanese population puts a strain on the nation’s various systems, and on social security programs in particular, there are moves to redefine “elderly.” In 2017, the Japan Geriatrics Society and others proposed that the elderly, now defined as people age 65 or older, should be redefined as those age 75 and over — noting that today’s Japanese are five to 10 years younger in terms of their physical and intellectual fitness than past generations due to improvements in medical services and living environment. Indeed, Japan’s healthy life expectancy — the probable period of life in which people are expected to live on their own without nursing care or becoming so sick as to hamper their daily activities — is steadily rising. It seems to make sense to get more elderly people to work longer.
On the other hand, there are individual gaps in the health and fitness of elderly people. Roughly a quarter of the people who received compensation for work-related deaths and injuries under the government scheme were aged 60 or older. The options of getting the elderly to work as freelancers or as owners of independent business would remove them from the protection of labor-related rules such as minimum wages, work-hour regulations and accident compensation schemes. A system to secure safe working conditions for elderly workers and to ensure their good health must be established.
Surveys show that a majority of elderly wish to keep working beyond the age of 65. Retaining elderly people in the workforce may contribute to keeping them healthy and fit into more advanced age. But 3 out of 4 people age 65 or older on payrolls are reportedly hired in low-paying irregular jobs. Many of them are believed to have to keep working because their pensions or savings are not enough to sustain their livelihoods.
If the aging and shrinking population requires the elderly to stay longer in the labor force, a system needs to be put in place to ensure the existence of working conditions that keep them motivated.
The Japan Times Editorial Board