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Baby Boomers Poised to Turn Pensioners en Masse

By Taiga Uranaka, The Japan Times

Japan

June 21, 2005


A mass exodus looms in 2007 when baby boomers begin reaching retirement age, and the implications -- both positive and negative -- will be far-reaching. 

While concerns mount over the loss of skilled and experienced labor, many view the situation as a business opportunity because it signifies an emerging consumer group with a lot of free time and retirement bonuses to burn. 

First and foremost, the mass retirement will impact the labor market. 

"All conditions being equal, the country's worker population will decrease by 1.32 million in 2010, compared with 2004," said Ryutaro Kono, chief economist at BNP Paribas Securities (Japan) Ltd. "The labor supply will get tight." 

Not all inexperienced young people will be able to take over the jobs of skilled veterans, but he said the mass baby boomer retirement will create more opportunities, although there will inevitably be some "mismatches" between the sort of workers employers want and the skills job seekers can perform. 

"For the past decade, companies have been curbing recruitment of full-time workers to keep veteran workers employed," he said. "With the mass retirement, the hiring glut will ease to a certain degree." 

In addition, Kono predicted the tight labor supply will help improve the status of female workers, because businesses will be more hard-pressed to retain talented employees regardless of gender. 

But the household savings rate will decline as baby boomers retire and start living off their savings. 

Some economists worry this will adversely affect capital investment, since the pool of savings at banks has been the main source of cheap funding for businesses. 

Kono, however, said he is not concerned, noting that in the age of globalization, companies can procure capital from overseas. He said he does not see the mass retirement as detrimental to the economy. 

In Japan, baby boomers are defined as those born between 1947 and 1949. According to 2004 government statistics, their population is estimated at 6.8 million, roughly 30 percent to 50 percent more than their counterparts in the neighboring three-year brackets. 

The boomer generation had had a significant impact on society and the economy at virtually every stage of their lives. 

Born when the country was still recovering from the ravages of war, they reached school age only to witness a serious classroom shortage. Later, fierce competition to enter high schools and universities became a social problem. 

As grownups, they formed what was touted as the "new family" and helped launch a housing boom, urbanization and a mass consumer culture. 

"They represent (the history of) the country's postwar economy," observed Yoshio Higuchi, a professor at Keio University in Tokyo who studies baby boomer issues. 

The generation joined the workforce around the time the country's breakneck economic growth suffered a setback from the oil crises of the early 1970s. 

Still, Japan enjoyed relatively moderate growth, and the baby boomers played important roles in the workplace, helping the country become an economic superpower. 

"The generation was large in number, but it also had leadership qualities," Higuchi said, adding the baby boomers were the last generation to truly start and complete their careers amid the traditional "guarantee and obligation" relationship with companies: lifetime employment in exchange for loyalty. 

One concern stemming from their aging, he said, is that large cities will start seeing their populations gray -- a phenomenon up to now largely rural in nature. 

"Many baby boomers were born in the countryside and migrated to large cities to work," he said. 

At the same time, there are baby boomers who express dismay over some of the popular myths about them. 

One is that the activists of the radical student movements of the late 1960s to early 1970s turned into loyal corporate soldiers upon graduation. 

The generation was embroiled in fierce nationwide student movements, where helmet-wearing, club-wielding youths clashed with riot police. 

"A vast majority participated just once or twice, and it was those people who went to blue-chip companies," said Hiroshi Onishi, who now runs the marketing consultancy Core Concept Inc. in Osaka and Tokyo. 

As a student at prestigious Kyoto University, Onishi was a feisty activist during his freshman and sophomore years. Upon graduation, he joined an ad agency, an uncommon move back then. 

"Those who were actively involved in the movements, including myself, could not get a decent job," the 57-year-old said. "We were blacklisted by authorities." 

He also took issue with the generation's image of being serious workaholics. 

"We are easy-going and even frivolous," he said. "The older generation sees us as childish -- a bunch of comic-reading, TV game-playing grownups." 

He added that he believes his generation is much more Americanized and liberal than those born after them, largely due to its exposure to the U.S dramas that dominated TV and an "undiluted postwar democratic education." 

"We grew up watching American TV programs such as 'Route 66,' " he said.

"And we are the ones who sing American songs by Nat King Cole and Elvis Presley at karaoke bars, while youngsters sing Japanese pop." 


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