Japan hires older workers

Japan is running one of the most closely watched workforce experiments in the developed world, and it’s not by choice.

With one of the fastest ageing populations on the planet and a shrinking pool of working age citizens, the country has spent the past two decades gradually dismantling the idea that a career ends at 60.

The numbers illustrate how far this shift has gone. Roughly four in ten Japanese companies hired someone aged 70 or older last year, according to the country's health and welfare ministry.

Employment among people aged 65 and over has risen for two decades straight, placing Japan comfortably above the OECD average and behind only South Korea among major economies.

Legislation now requires firms to secure employment opportunities for workers up to 65, and many are going further still.

Some of the examples are striking. Air conditioning manufacturer Daikin rehires more than a hundred employees each year under an extended retirement scheme, and allows specialists in certain fields to keep working well past 65.

Zipper manufacturer YKK scrapped its retirement age altogether. A building maintenance company in Shizuoka has structured a quarter of its workforce, roughly 380 staff, around employees aged 70 and above, with its founder arguing that people in their sixties are still young in an era defined by labour shortages.

It would be easy to read this as an inspiring story about valuing experience. The reality is more complicated. Surveys of older Japanese workers found that more than half stay employed mainly because they need the income, with only a small share citing genuine enjoyment of the work.

Japan's public pension system was not designed for a population this old, and low pension benefits are pushing many seniors back into jobs out of necessity rather than desire.

Employers, too, adapted reluctantly at first, some restructuring older staff onto lower pay and reduced conditions after they turned 60, before labour shortages made that approach unsustainable.

What is genuinely instructive for New Zealand is not the pressure Japan is under, but how its labour market has adjusted once it had no other choice.

Employers have redesigned roles rather than simply keeping older staff in unchanged positions. At one aged care operator, staff in their seventies are assigned lighter daytime shifts and can work fewer, shorter days depending on their physical condition.

Regional job matching schemes specifically built around older workers have placed hundreds of people into new roles within months.

New Zealand faces a milder version of the same demographic pressure. The population is ageing, workforce participation among people over 65 has been climbing steadily, and sectors like healthcare and construction already report that experienced older workers are difficult to replace when they retire.

Businesses here still tend to treat 65 as a natural cut off point, even when an employee is willing and able to keep contributing.

The practical opportunity is to get ahead of the shift Japan was forced into, rather than waiting until it becomes unavoidable.

That means building genuinely flexible arrangements for older staff, reduced hours, adjusted physical demands, mentoring roles that draw on experience without requiring the same output as an employee in their thirties.

It also means being honest with older workers about what is on offer, since Japan's experience shows that simply extending an employment contract without rethinking the role underneath it does little for either productivity or morale.

There is also a structural point worth noting for any business thinking this is purely a Japanese cultural quirk.

Japan's working age population, defined as those between 15 and 64, is projected to fall sharply from the late 2020s onward, with some labour research bodies forecasting a shortfall of more than eleven million workers by 2040 compared to current levels.

That scale of shortage is what forced such a rapid rethink of retirement norms across an entire economy, not any sudden cultural shift toward valuing older workers for their own sake.

New Zealand's demographic curve is gentler, but it is bending in the same direction, and the businesses that wait until the shortage is undeniable will be doing the hard work of redesigning roles under far more pressure than those starting now.

New Zealand is not yet facing labour shortages severe enough to force this conversation the way Japan has. That is precisely the advantage.

Employers who start treating experienced older workers as a genuine talent pool now, rather than a stopgap once younger candidates run out, will be better positioned when the demographic pressure New Zealand is already tracking toward starts to bite harder.