The retirement of Japan's baby boomers will help Japanese companies trim several trillion yen from their salaries and speed much-needed restructuring, according to a study by a private economic institute released Monday.
The more than 2 million baby boomers, making up about one-sixth of the population, will reach retirement age from 2007 through 2010. Their retirement will relieve employers of 4 trillion yen in salaries and other personnel expenses, according to the study published by Nomura Research Institute.
The institute estimated companies' operating profits could rise by an estimated 3.6 trillion yen.
"When the boomer generation, who are currently in their 50s, reach their retirement, companies can carry out their labor cuts naturally," the report says. "Boomer retirement would help companies return to profitability and play an important role in structural reforms."
Boomers nearing retirement are top salary earners, and companies can either not replace those who are redundant or fill the needed slots with younger, cheaper workers, the report says.
The trend is not necessarily a good one for Japan, however.
The retirement of baby boomers will mean less tax income for the government, and a bigger burden for the younger generation to shoulder.
A labor shortage may also ensue, the report says, noting that the birth rate has been falling for the last three decades, slipping to 1.32 children per woman last year. Demographers say people over 65 will account for more than a third of the population by 2050.
The government forecasts those now in their 20s through 40s will pay more into the system than they will receive due to the large numbers of elderly the country will support in coming years.
Experts have urged the government to take steps to reduce the burden for working mothers, and consider hiring more skilled foreign workers to cope with the labor shortage.