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Hiroyuki Fukuhara (Osaka City University) November 4-6, 2014／Seoul

Global Human Resources Forum 2014 in Korea Session TC-2: Retirement Extension & Jobs for Middle-to-Old Ages

The Extension of the Retirement Age and the Current Employment Condition of Middle-Old Aged Persons in Japan:

As a Reference Case

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Introduction 【Similarity 】

Japan and Korea are rapidly aging today, the issue of middle-old aged persons is becoming increasingly important

【Intention】

As a reference case for considering the extension of the retirement age and the middle-old aged persons in Korea, I want to present the case of Japan, that is, how Japan has been dealing with this issue.

【Content】

1. Process of The Extension of the Retirement Age “Measures to Secure Employment for the Aged” 2. Finding regular employment “Promotion of the Employment of Middle-Old Aged Persons” 3. The issue of middle-old aged workers is related to the employment system in Japan

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1. The Development of 2 Policies for Middle-Old Aged Persons (From the 1960s to the 1990s)

1) promote the employment of those older than 45

・target : unemployed middle-old aged persons

・dropped into an external labor market of unstable employment

・In 1966 : the national government and local governing bodies introduced

the system on the employment rate for the middle-old aged.

・In 1971 : introduce the employment rate of unemployed middle-old aged

persons in particular job fields to support the job search of unemployed

middle-old aged persons.

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2) extension of the retirement age from 55 to 60

・Back ground：

・In 1973：start of the retirement age of 60 with retirement extension grants

・In 1976：The companies were requested to increase the number of middle-old

aged workers over the age of 55 to more than 6% of the total staff.

⇒ the system on the employment rate for the middle-old aged has become

a part of the extension of the retirement age.

⇒ to tackle aged-based discrimination, the companies that did not reached

the 6% threshold were no longer eligible to post their job advertisement

in public job centers.

・ Around the end of the 1970s :the government’s employment promotion plan to

support aged workers has switched from proving support directly to the aged to

providing support to the companies.

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※the employment rate for the middle-old aged, tackling aged-based discrimination

Measure to support directly the unemployed middle-old aged persons

⇒switched to providing support to the companies.

change： One of the retirement age extension measures

【Cause】

Japan with its “membership-based employment system” had reached the upper hand

over the West, which led to the optimistic view that Japan could secure employment

for its middle-old aged workforce under its particular economic growth employment

system.

・ by 1985：more than 50% of the companies had set their retirement standard on 60.

・ in 1986: the government has required the age of 60 retirement system to companies.

・ in1994： the government established the age of 60 retirement system

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2. The Implementation of “Measures to Secure Employment for the Aged” (2000s)

1) Back Ground

・ prolongation of living expectancy

・ the aging of the baby-boom generation (first generation being born between 1947

and 1949) posed new challenges to Japan’s public pension funds from 2007 onwards.

2) in 2000 : the Amendment of the Law for the Stabilization of Employment of the Aged

require the following measures as a requirement to secure employment the middle-

old aged

① continuous employment to age of 65 ② retirement from the age of 65

③ the abolishment of the retirement system

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・In the amendment of 2004, these measures became obligatory, were implemented in April 2006 ※during this stage, stipulations of the select by the labor-management agreement were included ・the amendment of 2012 ： These stipulations were abolished ・in April 2013：brought into force ・Now companies are obliged to secure employment of all applicants under the age of 65. ・Here after： It is most likely that during the process of raising the pension age to 65 by 2025, renewed efforts will be paid to increase the extension of the retirement age over 65 or to abolish the retirement system.

※) after the middle of 1990s: policy agenda of the Government don’t include the promotion of the employment of the unemployed middle-old aged persons.

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3. The Implementation Condition of Employment Securement for Middle-Old Aged Persons Measures

1) 3 options in “the measures of securement of employment for middle-old aged persons”

which option is favored by the companies?

① Abolishment of set retirement

② Raising retirement to the age of 65

③ Retirement between the age of 60 and 64, and continuous employment after

retirement

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2）As result ・Before2013 and After 2013 Direction of choice don’t change ・there are not that many companies that have increased the retirement age to 65. ・They mostly opt for continuous employment. 3）Cause ・During the period between 2012 and 2013, the background of the implementation of the “employment securement for all applicants under 65” could be related with the fact that companies been able to suppress the wages by including baby-boom generation workers who are older than 60. ・ when they would have to secure employment for all applicants it would pose extra wage risks and amidst the difficulty of securing employment

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4)the content of the option for continuous employment? （the 2014 JILPT survey） ・The employment status of continuous employment “Permanent Employee in One’s Own Company” (35.2%) “Other Type of Employee in One’s Own Company (Non-regular, Contract, Part-time etc.) (54.7%) ・The duration of the employment contract “Yearly Basis” (79.5%), “Half Year to One Year Basis” (6.9%) “Bulk Contract to the Age of 65” (5.2%) ・The content of work “Same Work as Before Retirement” (83.8%) “Different Work as Before Retirement but Same as Other Employees Before Retirement” (9.9%) ・93.7% is employed in the department “Same as before Retirement” ・95.5% works in the “Same Working Place at Time of Retirement” ・the amount of working days/hours work “Full-time (Same Amount of Days/Hours as Before Retirement)” (86.4%)

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5）related to the wage cost and the employment system ・The responses on measures taken by the companies “Revision of Wage System” (11.3%) “Revision of Recruitment Plan of New Graduates” (9.3%) 6) These results show ・related to the wage cost. ・notice a tendency to revise of the original seniority-wage system and the effects to the employment of young people. ・Figure 3 and 4 ：when looking at graduated males who are characteristic of the “membership-based employment system”, we can see the peak wage amount shifting from the age of 55-59 to that of 50-54. ・From this we can say that the original seniority-based wage system is starting to be revised in response to aged employment

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1) Now that many Western countries are abolishing their retirement systems, one can say that it will be difficult to uphold retirement extension over the age of 65 in Japan.

2) The Condition for the extension of the retirement age to 65 ・Response to the wage costs ・this will ultimately change in the near future. ・This could also connects to a revision of the “membership-based employment system” into “job-based employment system” based of occupational qualifications. 3) in the 1960s there was a strong intention to this in the promotion of employment to the middle- old aged

Conclusion

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4) now, another problem of non-permanent employment, not just of young persons but also persons in their 40s that are facing long-term unstable employment ・the government has recently started to look into the situation of the external labor market. Because the discussion is not merely on the labor conditions such as minimum wage but also on occupational qualifications and publicly funded training programs, the concept of “job-based employment system” might take further root. Conclusion To realize the retirement extension and the employment stability of middle-old aged workers, we have to find the way to combine successfully two system, that is, the “job-based employment system” and the “membership-based employment system”.