Japan grapples with ageing challenges

With fewer children being born and Japanese people living longer than ever before, thanks largely to medical advances, Japan’s population is expected to shrink by 10 million by 2030, leaving it with a shortfall of workers.

Aware of the looming threat to its industry and way of life, Tokyo has waged campaigns to encourage people to have more children, while there are also proposals under consideration to allow more foreigners into Japan to work.

Worried that even those measures will leave the country short of manpower, an advisory panel to the government has suggested the civilian equivalent of Dad’s Army as Plan C.

Quotas backed

“We strongly support this proposal as many older people have many skills and knowledge that they can still share in the workplace,” Fumiko Inoue, a spokeswoman for the Japan Organisation for Employment of the Elderly and People with Disabilities, said.

“If they are in good health and want to work, it would be wise to make use of their skills.”

People aged 65 or older account for nearly 20% of the population

Inoue added: “But at the moment it is difficult for people once they reach the retirement age of 60 to find employment.

“We believe it would be better to have rules that oblige companies to have a percentage of elderly people as employees.”

The advisory panel, a committee of the Council on Economic and Fiscal Policy, is to submit its Visions for a 21st Century Japan to Prime Minister Junichiro Koizumi in the spring of 2005.

The population problem is arguably more pressing than economic stagnation or nuclear-tipped North Korean missiles.

In the year up to 31 March 2004, a mere 1,129,239 babies were born, the lowest figure since statistics were first compiled in 1968 by the Ministry of Home Affairs.

Major problem

In the same period, those aged 65 or older accounted for a record high 19.24% of Japan’s 126,824,166 people. And while the Japanese used to be proud of their longevity, the government knows it has a major problem on its hands.

In 2003, the Ministry of Health, Labour and Welfare announced that it planned to sink more than Y1 trillion into efforts to arrest the alarming slide in the birth rate and reverse what has become the worst ageing population problem in the world.

“It’s true that lots of Japanese people are still quite lively in their 70s, but it’s beyond my imagination to still be employing them to 75″ Junichi Yasutaka, Director, Human Resources, DaimlerChrysler Japan

The worrying statistic that one in five Japanese will be aged 75 or over by 2030 has given extra urgency to the study, although the companies that will be affected are less than enthusiastic at the prospect of a greying workforce.

“The implications for employers are huge and I can’t imagine what companies will have to say about it should the proposal be adopted,” Junichi Yasutaka, director of human resources at the Japanese unit of DaimlerChrysler, said.

“It’s true that lots of Japanese people are still quite lively in their 70s, but it’s beyond my imagination to still be employing them to 75.”

Rigid system

From a purely financial point of view, Japan’s rigid seniority system will require that older workers take home a disproportionately higher wage, while younger members of the company may find their new ideas and approaches turned down in favour of methods that were tried and trusted in decades gone by.

Companies’ insurance bills would rise, along with their contributions to health-care plans, while older staff are likely to require more time off through illness.

A shrinking population is going to leave Japan short of manpower

“In general, a blanket increase in the retirement age is not considered a favourable proposition as it could negatively affect a company’s comeptitiveness,” Tatsuya Iida, a spokesman for Honda, said.

“Furthermore, as the funds available for salaries is a certain percantage of a company’s income, the postponement of the retirement age would make it more difficult to hire young associates,” he added.

In April 2003, Honda introduced a programme whereby staff would be allowed to work a further 12 months beyond the mandatory retirement age of 60, but whether they were actually rehired depended on the “balance” the company believed it needed in that year, Iida said.

Elderly wisdom

Mitsubishi Electric currently allows its staff to work until the age of 60 and is considering extending that to 65, but has no plans to extend that to 75 in the future, according to Travis Woodward, a spokesman for the company.

“The elderly can bring wisdom and experience to a workplace,” he said. “They can also bestow this experience on younger workers.”

“We strongly support this proposal as many older people have many skills and knowledge that they can still share in the workplace” Fumiko Inoue, spokeswoman for the Japan Organisation for Employment of the Elderly and People with Disabilities

A spokesman for TetraPak Japan expressed similar opinions, but dismissed the suggestion that the majority of people aged 75 would be of benefit to a company with a terse, “No, they would be too old.”

And while employers agree that valuable skills and knowledge would be passed on to a new generation of employees, the financial burden – and concerns over the health of older staff – would outweigh the benefits.

“It is clear that a good number of older workers have a strong desire to work past the retirement age because they would prefer to work than just stay at home,” Yasutaka, DaimlerChrysler’s HRD director, said.

“But the response I think the government will get from companies is laughs at the proposal.”