Currently, Japan has the highest old-age dependency ratio of all OECD countries, with a ratio in 2017 of over 50 persons aged 65 and above for every 100 persons aged 20 to 64. This ratio is projected to rise to 79 per hundred in 2050. The rapid population ageing in Japan is a major challenge for achieving further increases in living standards and ensuring the financial sustainability of public social expenditure. However, with the right policies in place, there is an opportunity to cope with this challenge by extending working lives and making better use of older workers' knowledge and skills. This report investigates policy issues and discusses actions to retain and incentivise the elderly to work more by further reforming retirement policies and seniority-wages, investing in skills to improve productivity and keeping up with labour market changes through training policy, and ensuring good working conditions for better health with tackling long-hours working culture.
Working Better with Age: Japan
Abstract
Executive Summary
Population ageing has occurred much more rapidly than in most other OECD countries. It is therefore encouraging that employment opportunities for older people have risen in Japan, thanks to improving macroeconomic conditions and combined Government and society‑wide efforts taken over the past few years. Further increases in employment of older people would help to limit the steep fall in the total labour force that Japanese is projected to face over the next 20-30 years. However, achieving this will not be easy as Japan already has rates of labour force participation for older people that are among the highest of OECD countries, especially for older men.
A number of structural issues continue to undermine efforts to extend working lives in productive and high‑quality jobs. These include: the persistent use of traditional human management and wage policies that result in many firms setting a low mandatory retirement age of 60; a dual labour market creating inequalities between groups; and relatively poor quality jobs at both younger and older ages. In particular, further policy responses must address the needs and specific situation of older people namely i) those workers who have benefited from Japan’s system of lifetime employment but who face an uncertain transition into retirement after the age of 60; ii) the rising share of non-regular workers outside of the lifetime system; and iii) the situation of many older women who have been involved in non‑regular work at younger ages or left the workforce completely.
To promote better and longer working lives, the OECD recommends that Japan should seek to:
Undertake further reform of the setting of the mandatory retirement age and seniority wages to encourage employers to hire and retain older workers.
Tackle labour market dualism by reducing the incentives for employers to hire workers using more precarious forms of employment.
Invest in lifelong learning to support the good foundation skills among older and younger Japanese adults and reduce inequalities in training participation by age, skill and type of employment contract.
Improve job quality to increase opportunities for workers to continue working at an older age by: tackling excessive hours of work; adequately implementing the Work Style reforms; and adopting more systematic and obligatory psychosocial risk assessment of working practices.
Boost opportunities to combine work and care for children and elderly parents in order to help women to (re-)enter and stay longer in the workforce.
