Blog – Japanese Solution? Put Off Retirement Until 70
Japan’s finance minister, Fukushiro Nukaga, suggested a way to alleviate the country’s strained finances as its population ages rapidly: Work till you’re 70.
Japan is already the world’s oldest big nation, and between 2005 and 2020, the number of Japanese aged over 65 is forecast to rise to about 36 million from 26 million. Meanwhile, the number of working age Japanese will shrink to 74 million from 84 million.
That is already hurting economic growth, and is expected to have an even greater effect in the future. Japan’s productivity “” a measure of how much each worker produces “” will rise a healthy 2.2% a year between 2009 and 2013, according to a forecast by the Organization for Economic Cooperation and Development. But the shrinking workforce will strip 0.7 percentage point from that, leaving the country with just 1.5% annual growth.
“We are at a historic turning point,” Mr. Nukaga told a news conference Wednesday.
While output growth is slowed, more people are living off pensions. Japan over recent years has already introduced some changes designed to make its pension system workable. Between 2000 and 2025, the age at which men can receive their full pension is being raised from 60 to 65. (The changes affect women five years later.) Pension premiums paid by workers are rising.
This still isn’t enough however. Other ways to alleviate the problem, he said, could include allowing a greater number of foreign workers in Japan, which has traditionally not allowed large-scale immigration.
The ultimate solution to aging is to change the definition of old age, and make people work longer. “It’s said that people will be able to work actively till 70 in future,” said Mr. Nukaga, 64. “So I think it would be reasonable to move to this step by step.” —Sebastian Moffett