Sumitomo Chemical, for instance, plans to raise the retirement age from 60 to 65. Employees who continue working after turning 60 will receive the same pay as before, a significant improvement compared to the previous practice, which offered only 40% to 50% of their previous wages.

Addressing talent shortages

Amidst a looming labor shortage, Japanese companies are recognizing the value of senior talent. The Recruit Works Institute predicts a labor deficit of 11 million workers in Japan by 2040, prompting firms to explore innovative ways to utilize experienced professionals.

Shifting retirement age and pay reforms

Murata Manufacturing, an Apple parts supplier, is also taking action by increasing the retirement age to 64 and reforming its pay scale for employees aged 60 and above.

Traditionally, mandatory retirement has been commonplace to create opportunities for younger employees to advance in their careers.

However, there is now a recognition that promoting active participation among seniors requires reconsidering the seniority-based personnel systems to maintain opportunities for mid-career and young workers.

Aging workforce participation

The Ministry of Internal Affairs and Communications reports a substantial rise in the employment rate for individuals aged 65 to 69 over a decade, reaching 50.8% and accounting for 21.6% of the employed population.

Expanding age limits and higher pay for older employees

To encourage active engagement, Toridoll Holdings and Royal Holdings have increased the age limit for certain positions.

Toridoll Holdings extended the age limit for on-site supervisors to 70 from 65, while Royal Holdings offers higher pay to older employees who return to work after retiring at 60. These employees now receive 85% of regular employees' wages, up from the previous 78%.

Read more about age discrimination in Japan in our international pages.