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Friday, Aug. 31, 2012

Willing elderly workers helping to defuse pension time bomb

Seniors staying employed now global trend that Japan is leading


By KANOKO MATSUYAMA
Bloomberg

The thought of retiring after more than four decades made Hirofumi Mishima anxious. Instead of looking forward to ending his three-hour daily commute, Mishima wanted to work, even if it meant another hour on the train.

News photo
Workforce warriors: Hirofumi Mishima is one of the nation's 5.7 million people older than 65 still working — for money, health or to seek friends. BLOOMBERG PHOTOS

"Keeping a regular job is the most stimulating thing for me," said Mishima, 69, who spent six months trawling the vacancy boards at a Tokyo employment center after retiring from his job as an industrial-gas analyst in 2009.

"If I was at home all day, I'd get out of shape and my wife would fret about all the extra chores she'd have to do."

Mishima is one of 5.7 million Japanese older than 65 still in the workforce for money, health or to socialize — the highest proportion of employed seniors in the developed world. While European governments struggle to convince their voters to sign up for longer work lives, Japan faces the opposite issue: how to meet the wishes of an army of willing elderly workers.

The Diet has passed legislation that will give private-sector employees the right to keep working for another five years, up to age 65.

"If I was at home all day, I'd get out of shape and my wife would fret about all the extra chores she'd have to do."

Mishima is one of 5.7 million Japanese older than 65 still in the workforce for money, health or to socialize — the highest proportion of employed seniors in the developed world. While European governments struggle to convince their voters to sign up for longer work lives, Japan faces the opposite issue: how to meet the wishes of an army of willing elderly workers.

The Diet has passed legislation that will give private-sector employees the right to keep working for another five years, up to age 65.

With one of the world's longest life expectancies, the largest public debt and below-replacement birthrate, curbing spiraling welfare costs by keeping people in jobs longer could help defuse the pension time bomb that threatens to overturn or bankrupt developed-world governments.

"The raising of the retirement age, it's a good thing, and more importantly, we have no alternatives," said Michael Hodin, a researcher at the Council on Foreign Relations in New York specializing in health policies and aging populations.

"Life is boring without work. My wife says the same."

Japan, where babies born today can expect to live to 83, has the highest proportion of working seniors in the developed world: 20 percent of people over 65, compared with 14.5 percent in the U.S., 6.3 percent in the U.K., 3.4 percent in Germany, 3.1 percent in Italy and 1.3 percent in France, according to the Statistics Bureau.

Longer working lives do have a downside, including a reduction in per capita productivity, said Peter Tasker, a founding partner of hedge fund Arcus Investment Ltd.

"You are trying to increase the supply of workers even though demand isn't increasing," he said. "That probably means the wages go down for everybody." Still, keeping senior workers can save on health costs. Nagano has the highest proportion of working seniors of any prefecture and its elderly spend the least on health care, according to a 2007 white paper by the health ministry. In contrast, Fukuoka has one of the lowest ratios of working seniors in the country and the highest health costs.

The University of Tokyo's Institute of Gerontology is running projects to assess whether jobs at farms, nursing homes, restaurants and kindergartens enable seniors to enjoy a more active, healthier lifestyle, said Hiroko Akiyama, a professor at the institute. The researchers want to create a model that can be adopted across urban Japan, where aging will accelerate as baby boomers retire, she said.

Worldwide, the proportion of people older than 60 in the population is increasing at more than three times the total growth rate. Within five years, people 65 years and older will outnumber those younger than 5 for the first time. By 2050, there will be 2 billion people 60 years or older, from 605 million in 2000, the World Health Organization said. Aging is occurring fastest in low- and middle-income countries, says the WHO, which dedicated this year's World Health Day to aging and health.

"A transition toward an older society that took more than a century in Europe is now taking place in less than 25 years in countries like Brazil and China," WHO Director General Margaret Chan told a meeting on gerontology in Havana in March.

"The window for preparatory action has become much smaller."

It may be easier for Japan to accommodate older workers than elsewhere. Its unemployment rate is 4.3 percent, compared with 8.3 percent in the U.S. and 11 percent in the eurozone, according to data compiled by Bloomberg.

Still, companies would prefer not to be required by law to retain older workers, said Yasuchika Hasegawa, head of the Japan Association of Corporate Executives (Keizai Doyukai), the nation's second-biggest business lobby.

"It's difficult for businesses to keep everyone," said Hasegawa, 66, who is also chief executive officer of Takeda Pharmaceutical Co., Asia's largest drugmaker. Employers should instead create an environment that enables the elderly to work until they are about 70, he said.

Komatsu Ltd., the world's second-biggest maker of construction equipment, rehires 90 percent of its retirees with a 40 percent cut in salaries.

"I'm happy to keep workers on after 65, but I don't think many are physically capable," Chief Executive Officer Kunio Noji, 65, said in an interview. "Also, it may take away job opportunities for younger people."

Mitsubishi Estate Co., Japan's largest developer, says 11 percent of its workers are over 60 years old and 80 percent of those workers stay for another five years.

"When the working population is falling, the elderly become a precious part of the workforce, and it's meaningful to hire people with motivation," the Tokyo-based company said in an email.

That's not something industrial-gas analyst Mishima lacks. Fifteen days a month, he rises at 4 a.m. and commutes two hours each way to work an 8½-hour shift overseeing the supply of hydrogen gas to buses.

"Before my retirement, I worked for the company and got satisfaction from contributing to its profit and growth," he said. "Now, I work for my health. I'm very happy my job gives me mobility and helps me stay active."



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