Labour market reform in Japan to cope with a shrinking and ageing population

Randall S. Jones and Haruki Seitani

No 1568, OECD Economics Department Working Papers from OECD Publishing

Abstract: Fundamental reform of traditional Japanese labour market practices is essential to cope with rapid population ageing and the era of 100-year lives. A shift to more flexible employment and wage systems based on performance rather than age would enable Japan to better utilise its human capital. Abolishing the right of firms to set mandatory retirement – typically at age 60 – would enable employees to extend their careers and reduce the link between wages and seniority. It would also facilitate a further increase in the pension eligibility age above 65, thereby helping to reduce poverty among the elderly. Life-long learning is another key element to extending careers. It is also crucial to address a range of issues that discourage the employment of women, namely the lack of work-life balance and shortages of high quality and affordable childcare and long-term care for the elderly. Fighting discrimination and gender stereotypes is also important to allow women to assume greater leadership roles. Coping with population decline also requires pursuing recent efforts to increase the role of foreign workers in Japan. Breaking down labour market dualism is crucial to expand employment opportunities for women and older people, while reducing income inequality and relative poverty.This Working Paper relates to the 2019 OECD Economic Survey of Japan(http://www.oecd.org/economy/japan-economic-snapshot/)

Keywords: childcare; dualism; female employment; foreign workers; Japanese economy; labour force participation; labour market; labour shortages; lifelong learning; mandatory retirement; non-regular workers; older workers; pension eligibility age; population ageing; womenomics; work-life balance (search for similar items in EconPapers)
JEL-codes: J2 J3 J7 J8 (search for similar items in EconPapers)
Date: 2019-09-18
New Economics Papers: this item is included in nep-age, nep-dem and nep-lab
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Citations: View citations in EconPapers (5)

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