Companies in Japan allow employees to postpone retirement

About 25.6% of companies are heeding a government directive to allow employees to voluntarily work until they are 70 years old.
By: | July 25, 2022

The directive was part of the government’s efforts to alleviate a manpower crunch and ease pressure on the social security system.

The Law on Stabilisation of Employment of Elderly Persons, which requires companies to allow their employees to work until age 65, was amended in April 2021 to encourage businesses to secure opportunities for their employees to work until they reach 70.

The amended law states that this can be accomplished by abolishing or raising the retirement age, re-employing those past the mandatory retirement age or commissioning such individuals to perform particular tasks. 

The labour ministry said on June 24 that it surveyed around 230,000 companies across Japan to ascertain if they had heeded the government’s recommendation. 

It found that among companies that said they had complied with the revised law, 19.7% had introduced an “employment continuation system” that allows for the re-employment of post-retirement employees until the age of 70. 

About 4.0% of the companies had abolished the retirement age and 1.9% had raised the retirement age. 

The survey showed that smaller companies seem more willing to allow their employees to work until they are 70. It found that 28.9% of the companies with 21 to 30 employees had followed the amended law’s recommendation. 

The figure was 25.2% for the companies with 31 to 300 employees. Among larger companies with 301 or more employees, the rate fell to 17.8%. 

READ: Employees of SMEs in Japan to be paid more

“It would seem that larger companies, which have many older employees on their books, are more cautious about heeding the law’s recommendation,” a ministry official said, according to The Asahi Shimbun.