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Japan – Further labour reforms needed for shrinking workforce: OECD

15 April 2019

With Japan’s population projected to remain the oldest within the Organisation for Economic Co-operation and Development (OECD), a survey from the OECD emphasised the need for wide-ranging labour market reforms for Japan’s shrinking workforce.

The OECD Economic Survey of Japan states that a shift to more flexible employment and wage systems based on performance rather than seniority would enable Japan to better utilise its human capital, including women and older persons.

According to the survey, these reforms should include the abolition of firms’ right to set the mandatory retirement at age 60, reducing the link between seniority and wages, and renewed focus on measures to remove obstacles to employment, to increase women’s access to childcare, and to allow them to play a greater role in the workforce.

Japan’s population is projected to be the oldest in 2050 among OECD countries.

Meanwhile, the OECD said boosting labour productivity will be another key to offsetting the impact of a smaller workforce.

“Policy should specifically seek to reduce the productivity gap between large firms and small and medium-sized enterprises,” the survey said.

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