(Bloomberg) -- Japan’s biggest securities firms are raising pay and benefits for workers who reach retirement age, highlighting the urgency to retain talent in one of the world’s fastest-aging countries.
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Workers who reach 60 or above typically face a steep drop in their salary when they are re-employed, and diminished roles such as creating documents. Now, they are increasingly getting paid for performance and given heavier responsibilities in line with their experience.
At Daiwa Securities Group Inc., compensation for senior employees aged 60 or over has risen by an average of 15% over the last two years in Japan. Nomura Holdings Inc. added paid sick leave to their benefits last year, on par with what younger peers get. Sumitomo Mitsui Financial Group Inc.’s securities unit also hiked pay levels for senior workers for two years in a row.
“The diverse experience and skill sets of employees at 60 or over are important for our business,” Japan’s biggest brokerage Nomura said in response to queries from Bloomberg. As an example, “employees with experience in the world where interest rates are above zero can provide information that is difficult for younger generations to imagine.”
As Japan’s fertility rate extends a record-breaking drop, spurring desperate government action, companies are also having to adjust their mindset toward their workforce. Firms should do more to motivate older employees, such as setting wages in line with performance and job responsibilities, according to a report by the nation’s biggest business lobby Keidanren.
“Redeploying senior people as a workforce will be essential if companies want to stay in business or achieve growth,” said Nobuhiro Maeda, a senior analyst from NLI Research Institute’s gerontology promotion office. “Labor shortage problems are expected to become even more dire from now.”
People at or over 60 accounted for a record 14% of all employees at Japanese financial firms and insurers last year, according to data from the internal affairs ministry that stretch back to 2002. The proportion of those who are 20 to 34 years old fell to 26% from 36% in 2002.
Other firms in Japan are also taking action. The nation’s biggest lender Mitsubishi UFJ Financial Group Inc. plans to raise salaries by up to 40% for people at its main banking unit who rejoin the firm after retiring at 60, according to a Nikkei report.
For Japan’s brokerages, the issue of retaining older talent is especially pertinent. Their experience of navigating bond markets that are booming again after a decades-long, policy-induced lull is being sought out by financial firms.