FLEXICURE EMPLOYMENT OF OLDER PEOPLE IN SUPER-AGED SOCIETIES.

AuthorLee, Yoonseock
  1. Introduction

    Japan has become a super-aged society on an unprecedented global level. According to the estimates published by the National Institute of Population and Social Security Research (2012), the working-age (ages 15 to 64) population ratio in Japan is expected to decline by 12.9 percentage points from 2010 to 2060 because of the effects of the aging population and a falling birth rate. Meanwhile, the elderly population ratio is expected to increase consistently from 23.0% to 39.9% in 2060 (an increase of 16.9 percentage points).

    However, employment of older people in Japan is a different issue compared to Western countries. In Japan, there is a mechanism in which people can have a lifelong career or simply work for a long period of time--rather than retiring from the labor market in early old age--to obtain personal fulfilments through work. In 2005, the Japanese government published the 6th International Study on Living and Consciousness of Senior Citizens (White Paper on Labor and Economy, 2005), stating that 40.3% of Japanese respondents in their 60s said that the ideal retirement age is around 65, while 31.3% said it is around 70. More than 80% of respondents reported that 65 or older is the ideal retirement age. Compared to other countries surveyed, such as the United States, Germany and Sweden, the ideal retirement age for Japanese is higher than the ideal age reported in most countries [1].

    Given these circumstances, Japan has implemented a variety of labor market policies to accommodate the aging population. Unlike other OECD countries, Japan did not introduce an early retirement program during past economic downturns, and it has still not done so during the current recession and period of increasing unemployment rate. In the past, Japan's retirement age system stated that employment would be terminated when a worker reached the age of 60. Given the increased average life expectancy and the corresponding growth of the older population, there was a desire to extend the retirement age because people wanted to continue working past the age of 60. Japan enacted the Law Concerning Stabilization of Employment of Older Persons, and has subsequently amended it several times since the law was enacted in the 1970s. Specifically, the law was amended in 2004 to mandate companies to do one of the following items: 1) eliminate the mandatory retirement age; 2) increase the mandatory retirement age to 65; or 3) implement a program for re-employment after retirement. A survey was jointly conducted in 2008 by Nippon Keizai Shimbun (Nikkei Inc.) and JoongAng Ilbo (JoonAng Media Network) on the employment of older people among 211 Japanese and South Korean companies to determine the effects of this new amendment. According to the results, 95.2% (n = 119) of the Japanese companies offered a re-employment program for retirees while only 2.4% (n = 3) had extended their mandatory retirement age since 2005. Of the remaining companies that had not yet extended their retirement age, only 9.2% planned to do so in the future (Lee, 2011). These results indicate a significant shift in the direction of elderly employment policies in Japan. Specifically, there is a movement away from the stabilization of employment for the aged population and towards an approach that emphasizes the flexible nature of employment for the elderly.

    In Japan, reemployment programs that allow balancing of the flexibility and security of work are becoming more prevalent. In this study, I analyzed the effect of reemployment as a new alternative for employment in the super-aged society as well as the effect of female employment aiming to utilize female human resources and promote the male-female joint participation in the labor market.

    As an analytical concept, I have used 'flexicurity' of labor, which is popular in Europe. The concept of flexicurity was systematized by Wilthagen (1998) in the Netherlands. The European Union defined it as 'an integrated strategy for enhancing, at the same time, flexibility and security in the labor market' (European Commission, 2007), and announced flexicurity as their future strategy (European Union, 2007).

    Specifically, flexicurity includes hiring/termination flexibility (external-numerical flexibility), work hour flexibility (internal-numerical flexibility), a variety of employment possibilities (functional flexibility), wage flexibility, employment security within the same company (job security), security in employment possibilities within the labor market including job change (employment security [2]), income security [3], and work-life balance security (combination security; Wilthagen and Tros, 2004).

    Further, I have analyzed other flexicurity factors using a three step process. First, using the inductive model, I analyzed the probability of employment in order to verify the specific personal factors that improve the employment security. Second, the wage function is estimated to verify the form of employment that improves income security. However, because the wage rate variable used in this study is only applicable to employed individuals, it is likely to cause sampling bias for women with a lower employment rate than men. Therefore, I have used Heckman 2SLS (two stage least squares) estimation model, which controls factors such as retirement experience that influence the reservation wage, to conduct the estimation.

    Finally, a marginal structural model analysis is performed in order to verify the impact that the form of employment improving income security has on employment security. Because work-life balance security around work and household chores pertains especially to women's employment, it was analyzed throughout the entire process.

  2. Literature review

    In this paper, I discuss the types of re-employment from the perspective of flexicurity and analyze how the probability of being employed and wage rates in a super-aged society are affected by the Japanese government. I also discuss how re-employment is viewed as a new potential countermeasure for businesses.

    Through his analysis of industries and occupations, Hutchens (1988) demonstrated that the employment opportunity is limited among older people; however, he did not analyze the limitation of employment opportunity among women and disabled individuals.

    In addition, the internal labor market theory that has supported the existing Japanese retirement system was theoretically based on deferred compensation (Lazear, 1979). However, Heywood et al. (1999) explained that delayed compensation more effectively deters shirking among young workers than among older workers. In addition, Daniel and Heywood (2007) presented weaker evidence that firms, which require greater specific human capital, also hire a smaller share of older workers. Recent studies by Heywood, Jirjahn and Tsertsvardze (2010) have also demonstrated the significant role of deferred compensation and internal labor markets as a negative predictor of hiring older workers.

    Regarding the flexicurity concept, previous studies have examined whether it can be applied to countries other than the Netherlands and Denmark. The one that analyzed Spain--the country with serious segmentation of labor market similar to Japan --is interesting. According to Golsch (2003), the Spanish labor market is highly segmented with 'insiders' in permanent positions, and 'outsiders' (unemployed and inactive) and work-insecure employees on temporary posts. In other words, it indicates that the job insecurity does not seem to play a role for women. However, the subjects of this study are only young people aged 16-38. In another study, Kahn (2012) provided an analysis of the employment of new entrants (disproportionately women, youth and immigrants). According to this study, making labor markets more flexible reduces demand-side barriers faced by these groups, at the expense of higher levels of economic insecurity for incumbents and higher levels of wage inequality. Through their research on older people in Taiwan, Chang and Yen (2011) found that part-time employment is significant and positively associated with life satisfaction, while elderly with full-time employment have lower life satisfaction. According to Heyes (2011), the economic crisis has demonstrated the dangers inherent in prioritizing 'security in the labor market' over job security. Ultimately, the course of the recovery from the jobs crisis will depend on the policy choices of the governments. These will in turn be influenced by political and social struggles and the nature of accommodations reached within other countries and at the international level. Therefore, it suggests that studies and discussions are required at the international and policy levels in each country. Studies that analyzed the labor market in relation to the governance include Hobbs and Njoya (2005). They identified how reflexive governance approach has influenced regulatory developments at the European level, and illustrated the potential significance of this approach for the regulation of employment relations in the UK. This review therefore suggests that a reflexive approach for regulating employment relations presents many positive opportunities, but the hopes invested in such an approach remain to be fulfilled yet. Another study on flexicurity is the one by Muffels and Luijkx (2008). According to this study, using comparative panel data for 14 European countries, they create dynamic outcome indicators for flexibility and employment security to assess the differences across countries and welfare regimes in balancing the two. The findings, that human capital investments promote upward mobility, also support the notion of the 'flexible employment relationship'. However, there is a limit that says our analyses were restricted to male transition patterns.

    In this study, I have analyzed whether the concept...

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