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-ageing countries.
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, compensation for senior employees aged 60 or over has risen by an average of 15 per cent over the last two years in Japan. Nomura Holdings added paid sick leave to their benefits last year, on par with what younger peers get. Sumitomo Mitsui Financial Group’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 towards 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. “Labour shortage problems are expected to become even more dire from now.”
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People at or over 60 accounted for a record 14 per cent 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 per cent from 36 per cent in 2002.
Other firms in Japan are also taking action. The nation’s biggest lender Mitsubishi UFJ Financial Group plans to raise salaries by up to 40 per cent 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.
Beyond pay rises, Daiwa Securities has also removed the upper age limits for some jobs, according to a spokesperson from Japan’s second-largest brokerage. Mizuho Securities moved to a new personnel system in July where those rehired enjoy the same welfare perks.
“We want employees to stay on and play active roles past the age of 60 if they have the ability, experience, and value needed,” a spokesperson for Mizuho Securities said.
Mitsubishi UFJ Morgan Stanley Securities has been working to build a personnel system that allows senior staff members to play not only supportive roles but the same ones as younger employees, a spokesperson said.
These changes may be having an effect. At Nomura’s flagship brokerage subsidiary in Japan, the number of those who were rehired after reaching 60 or over has grown 20 per cent to 800 since the year ended March 2019, according to company data.
“Those who knew firsthand how things were before Japan entered the ‘lost three decades’ have a certain value,” said Hideyasu Ban, a Bloomberg Intelligence analyst, referring to the cohort in their late 50s and early 60s who have worked through the rise and fall of Japan’s financial markets. “Their experience can be advantageous.” BLOOMBERG
