The Lower House of the Diet, Japan’s parliament, gave its approval on Thursday of legislation that would raise the nation’s mandatory retirement age from 60 to 65. This is directly connected to the government’s attempts to manage the increasing cost of the pension system that has resulted from Japan’s rapidly aging society in combination with a decreasing birth rate. The debate about how to revise the country’s pension system has been heavily discussed between the two largest political parties, the Democratic Party of Japan (DPJ), and Liberal Democratic Party (LDP).
Japan’s Cabinet Office says that in October of last year, just over 23% of the nation’s population was aged 65 years or older, one of the largest ratios in the world. By the year 2050, that figure is expected to increase to nearly 40%. The current laws say that once an employee turns 60, it is up to the employer to decide if they want to keep them, and if they do, it is often at reduced compensation. The new law would increase that age requirement to 65, giving employees the right to choose if they want to stay or not for an extra five years.
The bill was supported in the Lower House by the DPJ and LDP, as well as the third largest political party, the New Komeito. Because of all the cross-party support, it is expected the bill will also be passed by parliament’s Upper House. While most trade unions are in support of the bill, saying it is a step forward, they are concerned that it doesn’t do enough to protect workers. A clause was added that allows employers to force retirement at 60 if there are “mental or physical defects” that obstruct their quality of work. Should the bill be passed into law, it will go into effect on April 1st, 2013.