Japan is short of workers, even recruiting people over 70 years old

Human resource crisis

In Japan, Nojima has removed the retirement age limit from 2021 and is recruiting about 30 workers aged 70 and over, including three 80-year-olds.

According to the Ministry of Health, Labor and Welfare, the proportion of companies with programs to hire people aged 70 or older has doubled in the past 10 years to 39%. The proportion of companies with a retirement age of 65 or older has increased by 25% over the same period.

The rate of businesses in Japan accepting workers over 70 years old has increased gradually over the years, from 2012 to 2022 (Photo: Nikkei).

Following a 2013 revision of the labor law, companies were required to hire workers up to the age of 65. Initially, businesses resisted, fearing that hiring older workers would increase costs. However, they later accepted the change due to severe labor shortages.

According to Japan's Ministry of Internal Affairs and Communications, the number of employees aged 65 and over at companies will total 6.39 million in 2022, accounting for a record 10.6%.

Notably, industries with a high proportion of older workers are also facing serious labor shortages. Of these, 15% of workers in the construction and nursing care industries are older (65 years and older); 10% in the transportation industry; and 30% in taxi and bus drivers.

Ukita Sangyo Kotsu, a taxi operator in Akita Prefecture (northern Japan), said it has just recruited about 25 drivers, most of whom are 65 years old or older. Of Japan's 47 prefectures, Akita has the highest proportion of people aged 65 or older.

According to Tadakatsu Ukita, president of the taxi company: "In 2 months, only 1 person applied for the job. Most young people leave the province, we cannot survive without recruiting elderly workers."

Average monthly wages of older workers in Japan in 2021 and 2022 (Photo: Nikkei).

The fact that Japan has a large elderly workforce has caused some significant consequences. In fact, as the number of elderly workers increases, so do work-related accidents. In 2022, the total number of accidents involving employees aged 60 and over was about 38,000, up 26% from five years ago.

What’s more, despite rising demand for jobs, older workers’ wages have stagnated. In the decade to 2022, the average wage for workers aged 65 to 69 rose 6%, but fell 9% for those aged 70 and older, according to the Labor Department. Good jobs aren’t always available to those over 70. They’re forced to take jobs that younger workers shy away from.

Difficulty recruiting young people and foreign workers

Faced with the human resource crisis, experts point out that the cause is due to businesses having difficulty finding foreign workers when the yen weakens.

In addition, the stagnant labor force participation rate of women with young children has also affected recruitment, with employers relying on older workers to compensate for the declining number of workers aged 15-64.

Among the industries, transportation and logistics are two areas facing serious labor shortages. Trucking companies are unable to attract young workers, partly because of low wages and long working hours.

In 2021, the average annual working hours of a heavy truck driver were 2,544 hours, 432 hours longer than the average for all occupations. Meanwhile, the annual income was 4.63 million yen, about 5% lower than the industry average.

The number of elderly workers in Japan is increasing due to the country's severe labor shortage (Photo: Nikkei).

Hiring foreign workers is an option, said Naoaki Fujino, senior strategist at Nomura Research Institute. But he cautioned against exploiting them as cheap labor.

"In addition to digitalizing and standardizing operations, increasing wages for drivers is also necessary to attract young workers and foreign personnel," he said.

To address the problem, Japan is planning to expand its visa framework for skilled workers to attract foreign personnel. The Japan Federation of Taxi Associations and the Nihon Bus Association are also making efforts to recruit foreign nationals.

"A serious challenge that bus companies are facing and need to solve is the lack of drivers. The number of buses operating is decreasing, so we cannot wait any longer," said a representative of the Nihon Bus Association.

If nothing is done to address the problem, the industry could be able to transport about 35% less cargo by 2030 than it did in 2015, according to estimates by Nomura Research Institute.

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