Japan's Sumitomo Extends Retirement Age to 60+, Doubles Salaries to Secure Seniors Amid Labor Shortage

Retirement Age Raised Significantly from 60 to 65 in April Next Year
Salary Increased to Active Level... Doubled from Previous Amount

In Japan, which is experiencing a severe labor shortage, there is a growing movement to secure senior workers by extending retirement age and raising wages. Due to the long-term low birthrate and aging population, it is not easy to find young workers, so efforts are being made to create a work environment that is favorable for senior workers in the "100-year life era."

According to the Nihon Keizai Shimbun on the 17th, Sumitomo Chemical in Japan has decided to gradually raise the retirement age from 60 to 65 starting April next year. Until now, after the age of 60, reemployment was offered to those who wished, but the salary level was reduced to 40-50%. Going forward, the annual income of employees aged 60 and over will be maintained at the same level as at the end of age 59, which is the active worker level. Nihon Keizai explained that this means the salary level after 60 will double compared to before.

[Image source=AP Yonhap News]

Sumitomo Chemical expects that with this measure, the proportion of employees aged 60 and over will sharply increase from the current 3% to 17% within 10 years. A company official stated that the labor-management agreement was reached with the mindset that "securing manpower is not easy, and it is urgent to fully utilize senior workers."

Sumitomo Chemical is not the only Japanese company focusing on securing senior workers. Murata Manufacturing is also reviewing the wage system for employees aged 60 and over. From April next year, they plan to introduce a system that maintains the wage structure before age 59 for employees aged 60 and above. Additionally, the retirement age will be raised to 65, but a selective retirement system will be adopted, allowing employees to freely set their retirement age up to 64.

Toridoll Holdings, the parent company of the Japanese udon chain Marugame Seimen, also raised the age limit for on-site managers from 65 to 70 in April. Furthermore, the age limit for hiring part-time workers with experience at three subsidiaries including Marugame Seimen was abolished.

Global sports brand ASICS has operated a system where employees aged 59 and over are not assigned separate positions, but it is reported that they are considering abolishing this system.

Japanese companies are taking measures such as extending retirement age and raising wages due to labor shortages. Nihon Keizai reported, "While hiring for people in their 40s and 50s has sharply decreased since the bubble burst, the generation that was hired en masse during the economic boom around the 1990s is soon reaching the retirement age of 60, raising concerns about labor shortages." According to the Japanese think tank Recruit Works Institute, due to the decline in the population under 50, the labor force is expected to be short by 11 million people by 2040.

The number of people aged 60 and over working in Japan is increasing. According to the Ministry of Internal Affairs and Communications' labor force survey, the labor population aged 60 and over was 14.54 million last year, accounting for 21.6% of all employed persons. The employment rate for those aged 65-69 also rose by 14 percentage points over 10 years to 50.8%, meaning one in two people in this age group is working. Accordingly, the Elderly Employment Stabilization Act was revised in 2021, making it mandatory for companies to provide employment opportunities up to age 70.

However, since the wage levels were low and positions limited, it was difficult to motivate senior workers to want to work, so companies are focusing on improving these conditions to secure manpower.

This content was produced with the assistance of AI translation services.