Social Security Benefits and Employment Policy in an Aging Society

ABSTRACT

As society ages, social security benefits relative to GDP in Japan will likely reach the current level in European countries in 10 to 20 years. Changes in the demographic structure indicate these benefits will lean heavily towards the elderly generation. If this trend continues, the ratio of benefits going to the younger generation, such as policy promoting families and employment, will likely be forced even lower. This raises concern that dissatisfaction among the younger working generation will lead to intergenerational conflict.

On the other hand, maintaining and strengthening Japan’s global competitiveness requires improved efficiency in the labor market and enhanced practical education and training. Flexibility in hiring and firing should be maintained while a change in public understanding from “employment by companies” to “employment by society as a whole” should be promoted. It is also necessary to make genuine efforts to upgrade and expand practical education and training from a broad perspective that goes beyond human resource development at individual companies.

Japan should quickly develop the following: (1) a labor market model that strives to achieve both labor market flexibility and employment; (2) an employment system based on increased elderly and female labor power from job growth in the welfare-related sector. The government should consider the current “employment crisis” an opportunity to reform the employment system, present to the public a strategic blueprint that anticipates a super-aging society, and work to build consensus among citizens in Japan.