Episode 384: Japan’s Ageing Workforce: Why “Recruit and Retain” Must Include Seniors

What problem is Japan actually facing with its ageing population?

Japan is ageing rapidly, and most of the attention goes to welfare, health, and pension systems. The less-discussed problem is what to do with the “young” oldies—people reaching 60, the retirement age, while still having decades of life ahead of them. Because many are healthy, active, relatively digital, and well-connected, therefore they do not fit the old model of “retire and disappear”. They also believe the government pension system will break down under the weight of their cohort’s numbers, therefore they do not feel confident about having enough money to last their lifespan. The result is straightforward: they want to keep working, and many can.

Mini-summary: Japan’s challenge is not only an ageing society, but an ageing workforce that still wants, and needs, to work.

Why is “recruit and retain” becoming harder for Japanese companies?

Japan’s working population aged 15–64 is projected to decline from 73.7 million in 2024 to 44.2 million by 2060, a 40% drop. Because there are not enough younger workers to match corporate demand, therefore the usual hiring playbook fails. At the same time, because the population itself is getting older, therefore the share of experienced people who could keep working increases. This creates a talent paradox: companies are short of people, but they are also pushing capable workers toward retirement. If companies keep treating 60 as an exit point, they will intensify their own labour shortage.

Mini-summary: A shrinking 15–64 population means the talent pipeline tightens, and the “retire at 60” habit becomes a business risk.

Why is immigration not the main solution being pursued?

The script is clear that bringing in foreigners is not considered an option to make up the difference. The Takaishi Cabinet has stated it will never adopt an open immigration policy to solve the labour shortage and will set “strict boundaries”. Because immigration is now a big and contentious political topic, therefore the trade-offs feel even sharper. Japan values social harmony highly, and the idea of tolerating large numbers of foreigners with different languages, ethics, morals, social values, and ideas is described as unattractive. Whatever the merits of immigration, the practical point for company leaders is this: they cannot build their workforce plans around it.

Mini-summary: If immigration is politically constrained, then the labour shortage must be solved with domestic talent and productivity.

What role does the trainee system play, and why is it limited?

At lower skill levels, the so-called trainee system has functioned as disguised immigration, bringing in cheap workers from Asia for factory-level work. Because trainees can be repatriated easily, therefore the system has flexibility. However, the system is also attacked for exploitation, and the Labour Standards Inspection Office in 2016 found 70.6% of workplaces hiring foreign trainees were violating labour laws. The government tweaked the system to reduce some of the worst aspects, but trainees remain a temporary approach. They must go home after three years or obtain a work visa. So even where foreign labour exists, it is not a stable, long-term pipeline.

Mini-summary: The trainee system can provide short-term labour, but it is temporary and controversial, so it cannot anchor long-term workforce strategy.

How are companies handling people who would normally retire at 60?

The script points to a common corporate approach: salary drops to half once a person gets to 60, even if they keep working. Because this is a fixed-cost adjustment strategy, therefore it may feel convenient for companies in the short term. But as the bite of not having enough skilled staff becomes more powerful, that thinking must change. If companies need capability, networks, and experience, then a blunt pay-cut model can weaken motivation and reduce the chance that seniors stay engaged and productive.

Mini-summary: A standard pay cut at 60 may control costs, but it can undermine retention and productivity when skilled labour is scarce.

How is technology being used to avoid the immigration option?

Japan is planning to get around the immigration option with technology: Big Data, Artificial Intelligence, robotics, online services, and automation. Retail banking is given as a conservative example. Tokyo Mitsubishi UFJ Bank saw branch visitors drop by 40% from 2007 to 2017, and 10,000 positions were eliminated over a ten-year period. Because customers moved to mobile devices and PCs, therefore service consumption moved online. This shift changes workforce needs: fewer roles tied to physical branches, and more roles that fit a digital service model. Technology is not only replacing tasks; it is reshaping the job mix.

Mini-summary: Technology reduces reliance on physical labour by moving service delivery online and automating tasks, especially in conservative sectors like banking.

What is the hardest leadership problem with keeping seniors employed?

The leadership issue is not simply “keep them”. It is how to migrate older workers internally—retaining their networks and experience—while making them more productive in terms of personal output. Leaders want seniors to vacate current leadership roles to make way for the younger generation, but they do not want to lose them at the same time. In banking, older workers who once commanded teams may be asked to move into commission sales arrangements, paid according to productivity. They can work another 10–15 years if they can make the leap to a different role, but that leap is not automatic.

Mini-summary: Companies must redeploy seniors into productive roles while opening leadership pathways for younger staff, without losing senior capability.

What support do seniors and their managers need to make this work?

Seniors may need training in modern sales for new commercial roles, plus support to adjust from being “the boss” to being “one of the troops”. Because Japan is a formal hierarchical society, therefore that transition is hard. Mindset shifting is described as the most difficult training at their age and stage, but it can be done. The people leading this group also need excellent people skills. Leaders may need retraining on how to lead their sempai or seniors—an uncommon requirement in Japan, where age is closely tied to power and authority. The workplace becomes a new constellation, and it is described as a zero-sum game of those who get it and those who do not.

Mini-summary: The shift demands reskilling, mindset work, and manager retraining—especially for leading older seniors in a hierarchy-driven culture.

What is the practical takeaway for executives in Japan?

Recruit and retain are described as the bywords of business success now and in the future. The warning is direct: if you have not put together a strategy to motivate seniors to play a more personally productive role, you are behind the eight ball. Because the workforce is shrinking and immigration is constrained, therefore the most realistic pool of near-term capability is already inside the company—among people approaching or past 60. The competitive advantage will come from leaders who can redesign roles, training, pay logic, and leadership pathways to keep seniors contributing while the next generation grows.

Mini-summary: In Japan’s labour market, senior talent strategy is not optional—it is a core part of “recruit and retain”.