The announcement by Honda Motor Co., Tokyo, that it will raise the company's retirement age is part of a program of far-reaching changes to meet the needs of an increasingly diverse workforce.
A Dec. 1 announcement said the company also will consider adding a defined contribution plan to its retirement program.
The proposed changes — the fruit of two years of discussions with the company's labor unions — should go into effect during the fiscal year that starts in April.
Boosting the formal retirement age to 65 from 60 will allow Honda employees to work another five years without facing sharp salary cuts, as those who continue to work under the prevailing system do.
Likewise, greater support for child care and nursing care, and the introduction of more flexible working hours and telecommuting, should meet the needs of female as well as male employees who increasingly might be caring for both children and elderly parents.
A spokeswoman for the giant auto and motorcycle maker said the proposed changes reflect the evolution of Japan's labor environment.
Currently, employees looking to work beyond the formal retirement age of 60 have to sign successive one-year contracts, and typically earn 50% of their pre-retirement-age salary, the spokeswoman said.
The proposed extension of Honda's formal retirement age to 65 would allow employees to continue working at 80% of their previous salaries or better, she said. Employees still can decide to retire at any point between 60 and 65.
At a time when Prime Minister Shinzo Abe has urged companies to boost employees' salaries as a means of invigorating the Japanese economy, Honda's proposed changes effectively would provide a 60% salary increase to employees working beyond the age of 60.
Steps to facilitate workforce participation by older employees could become an ever higher priority for Japanese policymakers and companies alike. The country's demographic profile leaves Japan's labor force set to shrink at an unprecedented clip over the coming decades.
The moves to create an environment where a diverse range of employees can thrive also will see greater disparities in compensation — in terms of both salaries and bonuses, the company announcement said.
