The mass retirement of a large section of Japan’s workforce has begun and business is striving to capture the combined knowledge and skills of this ageing group. Carole Goldsmith visited one of Japan’s leading companies, Toyota, to find out what it is doing to manage the change.
THE mass retirement of around 6.8 million Japanese workers born from 1947 to 1949 started in 2007, when more than 3 million of them reached retirement age.
The huge cost of providing retirement benefits, and transferring the older worker’s job skills to the younger generation, is a major challenge for Japanese Government and business.
As early as 1991, Toyota Motor Corporation (TMC) was already planning for its retirees by starting its first re-employment system for mature employees – the Skilled Partner Program (SPP).
Still operating today, the program involves post-60-year-old employees from ‘assistant manager’ positions to lower levels, many of whom are production workers. According to the company, TMC is one of Japan’s leaders in providing re-employment programs for mature aged employees, enabling them to pass on their lifelong job skills to younger workers.
TMC’s assistant manager corporate communications, Paul Nolasco told Manufacturers’ Monthly when it visited Toyota in Japan earlier this year, that the company has another re-employment scheme known as Professional Partners program (PPP) which is geared towards managers.
The Japanese Ministry of Health, Labor and Welfare responded to the generational challenge by revising the law in 2006.
According to the Foreign Press Centre of Japan, the amended law requires companies to implement one of three initiatives. They include raising the employment age to 65 years, abolishing mandatory retirement, or introducing a continued employment system.
The old-age basic pension in Japan is available to people from 65 years of age, if covered under the National Pension and Employees’ Insurance systems for 25 years or more – in recent years, this has progressively increased from 60 years of age to 65 years of age, according to the Japanese Social Insurance Agency.
Across Japan, TMC employs around 68,000 people. In 2007, 910 of the 1,590 eligible employees who reached the age of 60 entered either the SPP or the PPP re-employment programs.
According to Nolasco, “these are volunteer programs and people are not forced to work past 60 years of age. For employees who want to keep working after 60, they need to apply for available re-employment positions. If successful, they go on twelve-month contracts that can be extended.” He stressed that both of the programs are very competitive.
Nolasco added that the main objective of the programs is to enable the talented older employees, who in some cases have been working at Toyota for decades, to teach skills and provide guidance to the younger workers.
At TMC, opportunities are provided for eligible employees in the re- employment programs to work at least up until the age of 63 and for some people until 65 years. This will help bridge the gap for employees until they are eligible to receive the old-age pension at 65 years of age.
Nolasco said, “Participants in the SPP and the PPP do the same type of work, in principle as they were doing before they reached retirement age. This covers almost any task in production or non-production fields.”
“In both re-employment programs, the rehired workers are not necessarily paired with a younger worker for the duration of the one-year contract. Those with experience are trusted to lead by example.”
“Toyota still has an optional employment program for retiring workers (age 60) who wish to apply their skills outside of Toyota Motor Corporation,” advised Nolasco.
A report, by the Social Development Research Group, shows that not only are the new laws in Japan expanding opportunities for older workers but there is also growing social awareness of issues such as work-life balance.
The report’s author, Masaharu Aoyama writes, “the amended law concerning stabilization of employment of older persons…is steadily expanding employment opportunities for older workers.”
As of June 2007, 81,762 companies have implemented some measures required by the law. Of these, 1,714 companies abolished retirement, 9,922 companies raised the retirement age, and 70,126 companies introduced continued employment.
In the breakdown by industry conducted by the MHLW, “Employment Conditions of Older Persons (2006 and 2007)”, the implementation rate of the law in 2007 was highest in mining (96.9 per cent), finance and insurance (96.5 percent), electric, gas, heat and water (94.4percent) and manufacturing (93.8 per cent).
“Sectors that struggle with new hiring tend to have higher rates due to their greater reliance on experienced and skilled workers,” Aoyama said in the report.
Further reading:
The Foreign Press Centre, Facts and Figures of Japan 2007, http://fpcj.jp/old/e/mres/publication/ff/pdf_07/00_2007.pdf
Social Development Research Group, “Trends in Employment Stabilization of Older Persons”, http://www.nli-research.co.jp/english/socioeconomics/2008/li080304.pdf
