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Retirement age in spotlight in bid to attract, retain older workers

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Japanese employers embrace ageing workforce

Japanese employers are taking steps to encourage older workers to remain in the workforce by enhancing their benefits and raising the retirement age. One such example is Sumitomo Chemical, which plans to gradually increase the retirement age from 60 to 65, with the annual pay remaining the same as before turning 60. Previously, the company allowed employees aged 60 and above to reapply for their jobs but at significantly reduced pay levels of 40% to 50% of their previous earnings. Recognizing the importance of utilizing senior talent, a human resources manager at Sumitomo Chemical emphasized the need for their active participation.

According to the Recruit Works Institute, Japan is expected to face a labor shortage of 11 million workers by 2040, underscoring the significance of retaining older employees in the workforce. In response to this trend, the employment rate for individuals aged 65 to 69 has risen approximately 14 points over a decade to reach 50.8%, making up 21.6% of the employed population, as reported by the Ministry of Internal Affairs and Communications.

Murata Manufacturing, a supplier for Apple, is also following suit by increasing its retirement age from 60 to 64 and reforming its pay structure for employees aged 60 and above. Traditionally, mandatory retirement has been employed to create opportunities for younger workers to progress in their careers. However, experts like Hisashi Yamada, an economist and professor at Tokyo’s Hosei University, are emphasizing the need to promote active participation among seniors while simultaneously reforming seniority-based personnel systems to ensure younger workers have ample opportunities to participate actively in the workforce.

Other companies are also taking measures to retain and incentivize older employees. Toridoll Holdings, the operator of Marugame Seimen udon chain, has raised the age limit for on-site supervisors from 65 to 70. Similarly, Royal Holdings, another restaurant operator, is offering higher pay for retired employees who choose to return to work after the age of 60, providing them with 85% of regular employees’ pay, an increase from the previous 78%.

In contrast to Japan’s approach, the United States prohibits age discrimination in employment and lacks a mandatory retirement age, except in specific occupations. Workers in the U.S. are increasingly expecting to retire at the age of 66, according to a 2022 Gallup poll, which reflects an upward trend compared to two decades ago.

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