Toyota Motor Corp., Japan’s largest automaker, has decided to introduce a system that allows employees to work until the age of 70 by rehiring the retirement age of 65. This means that considering Japan’s legal retirement age (60 years old), they will be allowed to work for 10 more years after retirement.
Japan, which has experienced a low birth rate and aging population for a long time, considers solving the shortage of workers as a national task. To this end, the retirement age has been gradually raised and measures to promote the employment of the elderly have been encouraged over several decades since the 1980s. In particular, it is catching both of the ‘two rabbits’ of corporate growth and job expansion for the elderly by increasing re-employment.
According to the Asahi Shimbun on Sunday, Toyota will revise its personnel management system to increase the age of re-employment from 65 to 70 from August this year. All occupations are eligible. Working conditions, including salaries, will be individually determined in accordance with the current re-employment system.
The government has also decided to improve the treatment of employees aged 60 to 65. In the past, employees who wish to hire employees at the retirement age of 60 are rehired, but their wages have been reduced to less than half unless they take on a managerial or higher position. By changing the plan, the government plans not to cut wages too much in consideration of the company’s contribution.
Even under the current system, 80 percent of employees at the retirement age of 60 sign contracts for reconsideration at the risk of a wage cut. Conversely, however, about 20 percent leave the company. As people are suffering from a shortage of workers, they believe it is important to keep them and have started to improve the terms of the contract for reconsideration.
Toyota is the world’s largest automaker that sold 11.23 million units worldwide last year. It is implementing a “multi-passway” strategy in which it makes all-round investments in internal combustion engines, hybrid vehicles, electric vehicles and hydrogen vehicles. As a result, labor shortages in development and production sites are burdensome. In addition, the importance of securing talented people with technological prowess has increased as the quality issues and certification of subsidiaries such as Daihatsu have been denied.
In addition, the company became the first Japanese company to achieve annual operating profit of 5 trillion yen, recording an operating profit of 5.35 trillion yen last year. This means that the company has enough room to re-hire the elderly. Toyota President Koji Sato (佐藤恒治) stressed at a press conference announcing the company’s financial results that he would invest 380 billion yen in human capital.
Japan’s working-age population (15-64 years old) accounted for 68.2 percent in 2000. However, the figure has declined sharply every year to 59.5 percent last year. Instead, the share of the aged 65 or older is expected to rise from 17.4 percent in 2000 to 37.7 percent in 2050.
In order to cope with changes in the demographic structure, society as a whole is active in hiring the elderly. The retirement age from 58 was increased to 60 in 1998, and in 2006, a system requiring employment of 65 years of age or older was introduced. Firms must choose to extend, abolish, or rehire their retirement age. In addition, in 2021, companies were obligated to try to hire up to the age of 70.
As a result, many other companies besides Toyota are pushing to extend and abolish the retirement age, and improve the treatment of senior employees. YKK, famous for zipper manufacturing, abolished the retirement age system in 2021, and another automaker Mazda raised the retirement age from 60 to 65. According to a survey conducted by the Nihon Keizai Shimbun last year, 66% of adults over the age of 18 said they would work after the age of 65.
In an aging society, more people can work for a long time. But that much younger people may lose their opportunities to work. In addition, they may not be able to overcome their age and have problems in social life. We need to make efforts to show better energy by harmonizing with the younger and older people.
SOPHIA KIN
US ASIA JOURNAL
