The lower house of Japan’s parliament on Thursday approved legislation that effectively raises the country’s mandatory retirement age to 65 from 60 as the government and employers try to deal with swelling pension costs due to an aging society.
Revising the retirement age and accompanying pension law has been the topic of debate among the government, unions and business lobbies as Japan’s aging population has put an ever-larger squeeze on the country’s finances.
As of October 1, 2011, a record 23.3 percent of the population was 65 years of age and older, according to the cabinet office. The figure is expected to climb to 38.8 percent in 2050.
The bill passed the lower house with the agreement of the three major political parties – the ruling Democratic Party of Japan and the opposition Liberal Democratic and New Komeito parties. Its passage through the upper house is considered likely given the cross-party support.
Under current law, employers can decide whether to keep employees after they retire at 60, often on reduced terms. The proposed legislation would give employees the right to decide whether to stay on until 65.
Keidanren, Japan’s leading business lobby, has said it supports measures to allow all employees who wish to continue working until 65 to have that right. The lobby group wants to raise the percentage of those remaining in the workforce between 60 and 64 to 63 percent by 2020.
Keidanren declined to comment specifically about the bill as it hasn’t passed both houses of parliament.
While raising the retirement age is considered a key step in lowering Japan’s rising pension costs, the legislation doesn’t directly affect workers’ rights under the national pension plan.
The bill was amended to include a clause that gives companies the right to force employees to retire at 60 if “mental or physical defects” hinder them from performing their duties.
Unions are suspicious of the clause, saying that the bill is a step in the right direction, but isn’t enough to protect workers.
Motoaki Nakaoka, a spokesman for Zenrokyo, a council of trade unions, said that the clause’s “ambiguous wording” would make it easy for companies to lay off senior workers who want to remain in their jobs.
“The companies overwhelmingly have power,” he said.
Hisashi Inoue, a spokesman for Zenroren, another trade-union confederation, said that not only was the bill “insufficient,” but that he was concerned about the debate getting short shrift in a crowded parliamentary schedule.
“The sales tax also is being debated, so this bill has to be voted on within an impossibly short amount of time, and that is a big problem,” he said, adding that parliament should hear worker testimonies on how the bill will affect Japan’s workforce.
If passed, the bill would take effect April 1, 2013. -By Eleanor Warnock