Japan is dealing with a problem that’s just starting to sweep the world—an aging population combined with a shrinking work force. 41 By so doing, it is hoped that Japan’s government will save its increasingly burdened pension (i.e., payment received after retirement) system from going bankrupt. In 2000, the Japanese could get a full pension from the government at 60. 42 What’s more, premiums paid by workers every month are set to rise while payouts they get after retirement fall.
To help workers to cope with this, Japan passed a law last year that requires companies by 2013 to raise their retirement age from 60 to 65 or rehire their retired workers. 43 In a country where forced layoffs are a last resort, large companies traditionally have relied on retirement to reduce payrolls. They were just about to enjoy a big cut in personnel costs because of the mass retirement of Japan’s baby boomers. 44 Consequently, there was much opposition from corporations to the new retirement law. Early signs suggest that large corporations will hesitate in raising their retirement ages. 45 Violators of the new law would face only “administrative guidance,” not penalties. Such resistance is hurting the effectiveness of the policies, which may thus prolong the aging problem.
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