JILPT Research Report No.211
Outlook and Challenges for an Era of Working Until Age 70:
Empirical Analysis of Enterprises’ Continuous Employment Systems and Individual Careers

June 18, 2021

Summary

Research Objective

This report discusses and clarifies enterprises’ personnel management policies through quantitative analysis with a focus on how they affect individuals’ ways of working in the context of employment and labor periods increasingly extended up to the age of 65 and a growing need to offer employment opportunities up to the age of 70. The report as a whole has the following two characteristics:

  1. Systematic clarification of the current situation and issues surrounding employment and work from age 65 onward, based on previous surveys and research on continuous employment among those aged 60–64.
  2. Approaches to the above issues from both enterprises’ perspectives (Chapters 2–5) and employees’ perspectives (Chapters 6–7).

Research Method

Secondary analysis utilizing data from the following sources.

  • Chapter 2: Ministry of Health, Labour and Welfare, “Employment Status of Elderly Persons”
  • Chapters 3–5: “Survey on Elderly Employment” (Enterprise Survey)
  • Chapters 6–7: “Survey on Employment and Lifestyles of Persons Aged 60–69” (Employees Survey)

Key Findings

  1. The impact of 2013 enforcement of revised Act on Stabilization of Employment of Elderly Persons (analysis of enterprise survey)

    2. In terms of industry classification, the 2013 amendment, which covers all applicants for the system of continuous employment up to the age of 65, tends to have a significant impact on “Information and communications,” “Finance and insurance,” “Scientific research, professional and technical services,” and “Wholesale and retail trade.” As for enterprise characteristics, influence on enterprises with a large number of regular employees and enterprises with trade unions has been noted. Among the group of enterprises affected by the 2013 amendment, the number and percentage of regular employees aged 60 to 64 increased over the seven years starting in 2012 (Figure 1). A rigorous analysis shows that the number of regular employees aged 60-64 years increased by approximately 2.7 employees on average per enterprise over the seven years, and the percentage of all regular employees up to age 64 increased by approximately 0.8%, compared to a hypothetical scenario where there was no amendment.

    Figure 1. Change in number and percentage of regular employees aged 60-64 by influenced/not influenced by the 2013 amendment of the Act on Stabilization of Employment of Elderly Persons
    Figure 1

    Source: Tabulated on the basis of “Employment Status of Elderly Persons.”

  2. Increase in percentage of regular employees aged 65 or above in the 2010s (analysis of enterprise survey)

    3. In the 2010s, the number of employees aged 65 and above rose significantly in comparison with the number of employees aged 60-64. In particular, person-to-person service industries such as “Transport and postal activities” and “Eating and drinking services,” enterprises without trade unions, and small and mid-sized enterprises had a high rate of increase in the percentage of regular employees aged 65 and above.

  3. Relationship of wages for employees aged 60-64 with employment stabilization measures, attitudes toward wage allocation, and continuous employment systems (analysis of enterprise survey)

    4. The average wages of employees aged 60-64 were 12.8% higher at enterprises with mandatory retirement extension systems than at those with continuous employment systems. Also, enterprises that extend the mandatory retirement age were more critical of reduced wages for elderly persons than at those with continuous employment systems, and tended to prefer determining wages based on an overall wage and evaluation system. Meanwhile, the average wages of employees aged 60-64 are relatively high at enterprises that emphasize past wages, current duties, and human capital, and relatively low at those that emphasize the status of employees’ receipt of old-age pensions for active employees and Continuous Employment Benefits for the Elderly.

  4. Employment issues for employees aged 60–64 by types of continuous employment systems at enterprises (analysis of enterprise survey)

    5. Continuous employment systems for employees aged 60-64 are categorized under the following three types.

    (1) “Mandatory retirement at age 60 + change in work duties” type: Responsibilities and content of work change after 60-year-old mandatory retirement

    (2) “Mandatory retirement at age 60 + no change in work duties” type: Responsibilities and content of work do not change after 60-year-old mandatory retirement

    (3) “Mandatory retirement at age 65” type

    With regard to employment management for employees aged 60-64, at the enterprises in types (2) and (3) it was more difficult to identify the issue of falling motivation among employees aged 60 and above compared to type (1), and at type (3) enterprises it was more difficult to identify the issue of declining morale among young and middle-aged employees compared to type (1) (Table 1). In addition, while many in type (1) placed importance on “handing down techniques and expertise to younger generations,” while many in types (2) and (3) did not particularly emphasize it. In terms of relationship to wages, the average wages of employees aged 60-64 were lower, by 4.2% when work responsibilities were lightened, and by 6.6% when engaged in different jobs.

    Table 1. Issues surrounding continuous employment systems up to age 65 and employment management for employees aged 60–64 (binomial logistic analysis)
    Table 1
    Click to expand

    Source: Tabulated on the basis of “Survey on Elderly Employment (analysis of enterprise survey)”

    Notes: 1. *** p < .001； ** p < .01； * p < .05.

    2.Control variables: Number of employees, industry.

  5. Enterprises’ frameworks for acceptance of employees aged 65 and above by types of continuous employment systems and personnel management policies (analysis of enterprise survey)

    6. Comparing the above three types in terms of whether they have systems allowing employees to remain on the job after the age of 65, it was evidently difficult to institute such systems at type (1) enterprises. By contrast, at type (3) enterprises, it was easy to institute them. All those wishing to continue work were able to, and the actual probability of employment was high at many of type (3). Furthermore, the data suggested that personal management policies such as individual interviews and evaluations lead to selection of employees when hiring after the age of 65, and that the higher the degree of adjustment of wages for employees receiving Continuous Employment Benefits for the Elderly, the higher the probability that they would be able to work from age 65 onward.

  6. Changes in work content and responsibilities and the effect on employees’ work satisfaction, and intention to continue working before and after mandatory retirement age or age 60 (analysis of employees survey)

    7. Job satisfaction was higher among people whose work content changed around the age of 60 than among those whose work content did not change (Table 2). On the other hand, there was no significant correlation between the presence or absence of change in responsibilities and job satisfaction, or between changes in work content and responsibilities and clear intention to continue to work.

    Table 2. Relationship between continuation of or changes in work and job satisfaction after reaching mandatory retirement age or age 60 (OLS)
    Table 2

    Source: Tabulated on the basis of “Survey on Employment and Lifestyles of Persons Aged 60-69”

    Notes: 1. * p < .05.

    2. Control variables: Gender, age, reason for working, job content, employment format, monthly income, whether or not company takes employees’ physical strength, etc. into account, number of employees, industry.

  7. Diversity of reasons for working, and careers among employees aged 60-64 (Individual Analysis)

    8. Reasons for working among males aged 60 to 64 were divided into four types: (i) only “to make a living,” (ii) a composite of “to make a living” and “to lead a fulfilling life,” (iii) “was asked to continue working,” and (iv) a composite of “for health reasons,” “have spare time”, and “to lead a fulfilling life.” The smaller the enterprise employees aged 55 worked for, the more likely they were to select reason (i). Male employees who were regular employees of large enterprises or government offices at the age of 55 and male employees with sufficient savings tended to select (ii). On the other hand, little correlation was observed between these reason and differences in careers after age 55.

Policy Implications

  1. Enterprises’ response to promotion of requirement to provide employment opportunities until the age of 70

    2. If employment opportunities until the age of 70 are promoted, it is expected that enterprises will treat employees in the same way as when employment until the age of 65 was mandated. The latter has already spread to some extent, especially to meet demand in industries in short labor supply. If providing employment is obligatory, the finance industry, mid-sized and large enterprises, and enterprises with trade unions in particular will no doubt be able to establish some kind of system for continuous employment after the age of 65. However, when assessing impact on the market as a whole, it is necessary to keep in mind the generational effect and the number of enterprises affected.

  2. Human resource management aimed at expanding employment and job opportunities from the age of 65 onward

    3. If continuous employment is promoted, individual enterprises will be required to take measures, such as adjusting the wages and work contents of elderly employees, in light of the burden of personnel costs. If the goal is to further expand employment opportunities from the age of 65 onward, it is important to shift from a system in which work content and responsibilities change around the age of 60 to continuing employment practices that do not involve such changes. To achieve this, it appears effective not to overemphasize to elderly employees about their role in “handing down techniques and expertise to younger generations,” and to introduce systems where wages are determined according to performance evaluations, etc. regardless of age.

  3. Public benefits

    4. Enterprises that emphasize public benefits in determining wage levels for elderly persons tend to have lower average wages than other enterprises, but also to have higher employment rates for elderly persons and to offer systems enabling employees to continue from the age of 65 onward. Thus, from the perspective of expanding employment and opportunities for those aged 65 and above, Continuous Employment Benefits for the Elderly will remain necessary to enhance public income security for elderly employees of enterprises with low capacity to shoulder personnel costs.

  4. Desirability of changing work duties around the mandatory retirement age or age 60 (from the perspectives of both enterprises and individuals)

    5. Whether it is right or wrong for employees to transition to different job duties around the mandatory retirement age or age 60 depends on the goal. From the standpoint of emphasizing solutions to the social challenge of expanding employment opportunities for those aged 65 and up, continuous employment without changing their work contents around the age of 60 is desirable. On the other hand, when focusing individual worker’s job satisfaction, there is a negative correlation between having no change in work content around the age of 60 and job satisfaction. It is not always desirable from the employee’s point of view.

  5. Disparities among the elderly

    6. Some studies show employment and career disparities among the elderly are strongly determined by their pre-retirement-age careers. The results of this report’s analysis also show that active-working-age careers affect reasons for working in old age as well as elderly careers in general, including changes in job duties before and after mandatory retirement. On the other hand, as no correlation between reasons for working in old age and careers from the age of 60 onward was observed, it can be said that changes and transitions in elderly careers do not have a significant effect on career disparities among the elderly.

Policy Contribution

This survey can serve as a basic reference for planning and implementing policies related to stabilizing elderly employment and providing employment opportunities for the elderly.

Main Text (available only in Japanese)

Research Categories

Project research: Research on labor and employment policies in response to changes in population and employment structures

Sub-themes: Research on realization of a lifelong active society

Research Period

April 2020 - March 2021

Authors

KUBO Masahiro
Research Director, The Japan Institute for Labour Policy and Training
MORIYAMA Tomohiko
Researcher, The Japan Institute for Labour Policy and Training
FUJIMOTO Makoto
Senior Researcher, The Japan Institute for Labour Policy and Training
FUKUI Yasutaka
Associate Professor, Nagoya University Graduate School of Environmental Studies Department of Social and Human Environment Sociology
YOSHIOKA Yosuke
Associate Professor, Chiba University Graduate School of Humanities

Category

Employment / Unemployment

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