The revised law on securing employment for elderly people will take effect in April, marking a first step in efforts to establish a society in which anyone can continue to work as long as he or she is competent and willing to do so.

The amended law concerning stabilization of employment of elderly persons will eventually require corporations to keep employees on the payroll until they reach the age of 65. In the initial stage of the law's enforcement, companies will be required to keep employees on their payroll until they are 62. In fiscal 2013, the law will raise this age to 65.

Corporate workers usually retire when they turn 60--the mandatory retirement age set by many companies.

Although the revised law incorporates no penalty to be imposed on corporations that fail to live up to their new requirement, we hope the spirit of the revised law will be accepted by the corporate sector. This will be essential to make it the norm for corporate employees to work until the age of 65.

The average life expectancy of Japanese has steadily increased. Undoubtedly, many people can play an active role in society even after they reach 60. Revision of the law represents an effort to complement earlier changes in legislation for the corporate employee pension plan. The starting age for payment to male recipients under the basic pension scheme, which constitutes part of the three-tier employee pension system, will be moved back to 65 years of age, beginning in fiscal 2013.

Society needs older workers

The continued birthrate decline and aging population has been accompanied by a drop in the working population. Baby boomers--those born between 1947 and 1949--will reach 60, starting next year. The presence of many elderly workers is important to make this country an even more vibrant society. Their contribution in this respect also will serve to increase the number of people who can shoulder the financial burden to keep the social security system intact.

To keep employees on the payroll until the age of 65, the revised law requires corporations to raise their mandatory retirement age while also introducing a system in which corporate workers would be able to work under new contracts after quitting their jobs because of the age limit.

The law incorporates a general rule requiring companies to reemploy retirees who wish to continue working under this extended employment system. But they will be able to reduce the list of rehired workers if they reach a labor-management agreement concerning the selection of such retirees.

According to a survey conducted by the Health, Labor and Welfare Ministry in January, most corporations said they would adopt the extended employment system, presumably because the system does not require changes in their wage structure and personnel system.

Conditions must be discussed

There are marked differences among corporations concerning how they value the expertise acquired by elderly employees over the years. Some companies take full advantage of the skills and experience gained by aged workers. Meanwhile, progress in efforts by some corporations to automate their operations has narrowed the scope of work available to elderly workers. The difference in this respect also varies according to the category and size of the business.

The Japan Business Federation (Nippon Keidanren) has said each company needs to adopt an extended employment system best suited for its business. Admittedly, each corporation needs to think hard about what kind of system it should introduce. However, it would be against the spirit of the revised law to drastically whittle down the list of rehired retirees.

It is also essential to ensure the clarity and fairness in assessing the on-the-job performance, skills and health of retired workers, when it comes to laying down the standards for selecting retirees to be reemployed.

We also hope labor and management will fully discuss what kind of wage system, job content and working patterns should be adopted in putting elderly workers on the payroll for a second time. The morale of current employees will certainly pick up if they find their company's reemployment system rewarding their work and contributing to the firm's business performance.

The system adopted by each company will not necessarily serve its purpose from the very beginning. There will be changes in the employment situation and the awareness of employees about their working conditions. Given this, it is important to constantly reexamine the system so it can meet the changes of the times.

Needless to say, life-time service in the same company is not the only option for retirees. Different people have different ways of working after reaching the mandatory retirement age. The enforcement of the revised law will provide an opportunity to think about how to live the rest of one's life after turning 60.