The government's decision to urge companies to secure employment opportunities for their workers up to the age of 70 aims to make up for Japan's tightening manpower shortage and help ease the pressure on the social security system brought on by the rapidly aging and declining population. It makes sense to enable the growing ranks of senior citizens to remain in the labor market if they are healthy and willing enough to keep working. At the same time, various challenges lie ahead to keep senior citizens motivated to work longer and under decent conditions.

The law on promoting stable employment of the elderly makes it mandatory for companies to provide jobs for employees if they wish to keep working until they turn 65 — the age at which people in principle become eligible for public pension benefits — by either abolishing or extending the mandatory retirement age — 60 at most Japanese firms — or by rehiring them under a different status after they retire.

The government's plan, revealed at a recent meeting of the Council on Investment for the Future, urges employers to make efforts to extend job opportunities for workers until they turn 70 through a range of options, including the abolition or extension of the retirement age, rehiring after retirement, support in finding new jobs at other firms, freelance contracts and support for entrepreneurship. There will be no penalties for companies that fail to take such steps, but the government plans to offer financial incentives for firms that are proactive in making such efforts. After amending the law as early as next year, the government intends to assess the progress and consider the introduction of mandatory measures in the future.