TOKYO -- Japan's working population has crossed a new milestone: for the first time, people age 65 and older made up more than 10% of the total last year -- a far greater share than the 1-5% seen in big Western economies.
Rising employment among the elderly can help an economy sustain growth even if its population shrinks.
Japan's so-called productive-age population, defined as 15- to 64-year-olds, decreased by 1.23 million last year, internal affairs ministry data show. Even so, the number of people employed increased by 410,000 to 63.1 million, expanding for the first time in six years. This increase owed partly to a rise in the number of working people 65 and older, which grew by 7% to 6.36 million.
The construction industry saw a jump of 60,000 workers in this age bracket. Fiscal-stimulus-driven public works and the ongoing reconstruction in the tsunami-ravaged Tohoku region have created plenty of jobs, but relatively few young people are applying for them.
With the buildup to the 2020 Tokyo Olympics ahead, more big contractors are hiring veteran works. "We are going to recruit people with dependable skills who can be self-starters," says Koichi Obara, president of Maeda.
Nursing care providers also see elderly workers as a resource. Care Twentyone, a midsize player in the sector, will end its retire-at-65 policy in April, hoping to pick up experienced retirees from rival companies.
Since last April, companies have been required to retain employees who choose to continue working past 60. This is also contributing to the increase in elderly workers.
In Japan, labor force participation for people age 65 and older stood at 19.9% in 2012. That is comparable to the 18.5% rate in the U.S., where mandatory retirement is uncommon, but much higher than rates in the U.K. (9.2%), Germany (4.6%) and France (2.3%).
Japan needs to make even greater use of elderly labor -- not to mention women -- to keep its economy spry as its population declines. This is also crucial for sustaining social welfare. The starting age for pension benefits will rise to 65 by fiscal 2025. Many say that elderly employment needs to expand in parallel with this change.
"There is a need to create an environment where older peoples' skills are valued and where they can earn the same pay for their particular job or skills regardless of whether they work full time or on contract," says the Japan Research Institute's Kenji Yumoto.