Elderly workers in Japan: The need for a new deal

Abstract

IntroductionEvidence suggests that Japan has been successful in social and economic terms in the management of older workers (Sueki, 2013). This national tendency has been translated systematically into the national system for human resource management (HRM) in Japan. Historically, policy-makers in Japan tend to encourage the unemployed or inactive back into jobs or urge those in employment to delay retiring in order to avoid a long disconnection from the labour market. As a result older employees tend to stay in the labour market in larger numbers and for longer time than in most European countries, including Germany (ILO, 2013).Correspondingly, policy at the national level has given the opportunity to large companies to utilize dedicated human resources at reasonable cost and to the public authorities the possibility to slow down the rising deficit of the social security system. However, there was always little attempt to optimize the talent of elderly people after mandatory retirement in teaching them new skills and to allow them to shift gradually to complete retirement in good conditions. Little public money has been devoted to training institutions for all types of workers, including the older workers until the last decade (Johns & Urasawa, 2011). Many of them occupy under-qualified jobs. They are also not given the opportunity to acquire new skills and they are not paid fairly. Other older workers perform qualified jobs and were reasonably rewarded so far because financial incentives complementing public pension could be added to their wage.However, these traditional practices appear increasingly unsustainable under the impact of demographics, the socio-cultural context, the regulatory environment and the subsequent need for changes in the social security system. Japan cannot afford not to continue to train older workers in order that they have marketable skills, even age sixty and above. The raising of the age of eligibility for receiving public pension means that the income of older workers would decline significantly without other kinds of public support, something that is very difficult in view of the public deficit, or companies' acceptance to pay higher wage, something that the large majority of companies declare to be beyond their means and economically unrealistic. Thus, it may be time to examine how the traditional practices of managing elderly employment can evolve, what kinds of new HRM approaches can be tried, what form of new deals might be offered to employees, and how these might be implemented.ContextLow fertility rates and rising life expectancy are causing the ratio of Japanese workers to retirees to shrink. Between 2010 and 2040, the share of Japan' working-age population will fall by more than 10 per cent (World Bank Group, 2015). Japan went from having one of the lowest dependency ratios in 1960 to one of the highest in the world nowadays. It is bound to escalate further and projected to more than double in the following twenty years (ILO, 2013).In Japan as in many countries ageing is still often correlated with less dynamism and entrepreneurial spirit, and lower productivity. However, efforts to prolong or sustain working life are increasingly understood in a broader and deeper perspective. It is increasingly thought that no upper limit should be decided in setting the threshold be- tween working age and retirement age. Many people are not only able to work longer, but prefer and choose to do so. Surveys suggest that Japanese people recognize the need to work longer and the desirability in terms of economic benefits and strengthened social engagement (World Bank Group, 2015). Research also suggests that the productivity of elderly workers may be maintained for some types of tasks: for example, through innovative technologies in shop floors and in offices. Because healthy life expectancy is increasing, cognitive decline is found to start later in life (Skirbekk, 2013). …