Japan's Businesses Embrace Older Workforce Amid Aging Population

Japan's workforce is aging, presenting a challenge for businesses of all sizes. Companies are grappling with how to retain employees as the population ages. A recent survey indicates a significant shift in strategy, with a strong emphasis on retaining middle-aged and older workers.

A survey by Tokyo Shoko Research Ltd., encompassing approximately 5,000 companies, reveals that a majority are relying on their older employees. Sixty-four percent of the surveyed companies reported that employees aged 45 and older constitute over half of their workforce. Furthermore, 22 percent of the participating companies stated that this demographic accounts for at least 80 percent of their employees.

Despite this demographic trend, nearly all responding companies have not implemented or are considering voluntary or early retirement programs. This suggests a strategic shift towards utilizing and retaining older workers, particularly in light of ongoing labor shortages across various industries. The survey included responses from both large and small to mid-sized companies, with similar trends observed across both groups.

The transportation industry shows the highest concentration of companies with an older workforce, followed by finance and insurance, real estate, and construction. Industries like agriculture, forestry, fishing, and mining also reported a significant proportion of older employees.

When asked about voluntary or early retirement programs, only a small percentage of companies had implemented them in the past three years, and even fewer were considering them. While some large companies have announced restructuring plans, the survey results suggest that widespread job cuts are not a prevailing trend.

The survey also examined mandatory retirement for managerial positions. A significant percentage of large corporations already have such systems in place, while a smaller proportion of small and midsize companies do. The survey also revealed that some companies have abolished these systems, while others are considering introducing them, indicating indecision among companies on the best approach.

The "bubble-era hiring generation" is now reaching their late 50s and early 60s, coinciding with the growing importance of retaining older employees. The revised Stabilization of Employment of Elderly Persons Law encourages companies to ensure employment until age 70. This is leading to revisions in human resources and compensation systems to facilitate long-term employment for older workers, reflecting a growing demand for experienced professionals in the job market.