OECD Calls for Fundamental Labor Market Reform in Japan


Tokyo, April 15 (Jiji Press)--The Organization for Economic Cooperation and Development on Monday called for fundamental reform of labor market practices in Japan, which is struggling with manpower shortages.

"Fundamental reform of traditional Japanese labor market practices is essential" to ensure sustainable economic growth amid the rapid aging of the population, the OECD said in its latest Economic Survey of Japan report.

Forecasting that Japan's labor force will decline by 16.1 million, or 24 pct, by 2050, the OECD stressed the importance of promoting the employment of women and the elderly to alleviate labor shortages.

Some Japanese labor market practices, such as lifetime employment, seniority-based wages and mandatory retirement, are not suitable to the era of 100-year lives, as they reduce job opportunities for older people, the report said.

Accelerating a shift to performance-based pay and abolishing mandatory retirement ages will allow a larger number of older people to continue working as regular employees, which would in turn help improve productivity in the country, according to the report.

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