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Labour market reform in Japan to cope with a shrinking and ageing population


  • Randall S. Jones
  • Haruki Seitani


Fundamental reform of traditional Japanese labour market practices is essential to cope with rapid population ageing and the era of 100-year lives. A shift to more flexible employment and wage systems based on performance rather than age would enable Japan to better utilise its human capital. Abolishing the right of firms to set mandatory retirement – typically at age 60 – would enable employees to extend their careers and reduce the link between wages and seniority. It would also facilitate a further increase in the pension eligibility age above 65, thereby helping to reduce poverty among the elderly. Life-long learning is another key element to extending careers. It is also crucial to address a range of issues that discourage the employment of women, namely the lack of work-life balance and shortages of high quality and affordable childcare and long-term care for the elderly. Fighting discrimination and gender stereotypes is also important to allow women to assume greater leadership roles. Coping with population decline also requires pursuing recent efforts to increase the role of foreign workers in Japan. Breaking down labour market dualism is crucial to expand employment opportunities for women and older people, while reducing income inequality and relative poverty.This Working Paper relates to the 2019 OECD Economic Survey of Japan(

Suggested Citation

  • Randall S. Jones & Haruki Seitani, 2019. "Labour market reform in Japan to cope with a shrinking and ageing population," OECD Economics Department Working Papers 1568, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1568-en
    DOI: 10.1787/73665992-en

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    Cited by:

    1. Randall S. Jones & Haruki Seitani, 2019. "Meeting fiscal challenges in Japan’s rapidly ageing society," OECD Economics Department Working Papers 1569, OECD Publishing.
    2. Bod’a, Martin & Považanová, Mariana, 2021. "Output-unemployment asymmetry in Okun coefficients for OECD countries," Economic Analysis and Policy, Elsevier, vol. 69(C), pages 307-323.
    3. KIKUCHI Shinnosuke, 2024. "Trends in National and Local Market Concentration in Japan: 1980-2020," Discussion papers 24049, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item


    childcare; dualism; female employment; foreign workers; Japanese economy; labour force participation; labour market; labour shortages; lifelong learning; mandatory retirement; non-regular workers; older workers; pension eligibility age; population ageing; womenomics; work-life balance;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J8 - Labor and Demographic Economics - - Labor Standards

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