Ageing workers in East Asia are essential. More are needed

Ms Honda is the oldest of some 220,000 McDonald’s crew in Japan. But she is less an outlier than a harbinger. As people live longer, they are staying healthy for longer and working longer, too. Japan and its neighbour South Korea, two of the most rapidly ageing countries, are at the forefront of this transition. Nearly 40% of South Koreans and more than 25% of Japanese aged above 65 remain at work, the highest rates in the OECD, a club of mostly rich countries (see chart). But labour markets and social systems designed for a different demographic era struggle to make the most of those who can work and to support those who cannot.

Many people in both Japan and South Korea keep working out of necessity. More than half of elderly employees in Japan say they work for income. The financial pressure is even greater in South Korea, where the pension system failed to keep pace with the country’s rapid development after the Korean war, leaving generations of people with inadequate support. The average public pension replaces only about a third of pre-retirement income, leaving nearly 40% of South Koreans over 65 impoverished, the highest rate in the OECD. Many in South Korea fear being made to retire too early: bus drivers in Seoul went on strike earlier this year demanding that the retirement age be raised. “In the past, 65 was considered quite elderly, but now, even at 65, people live a youthful life,” says Shin Gyo-beom, who drives Seoul’s bus number 107. “Wouldn’t it be better for someone more experienced to drive?”

Yet money is only part of the story. Many want to keep working for a host of other reasons. “There is infinite value that can’t be quantified in monetary terms,” says Kim Mi-gon of the Korea Labour Force Development Institute for the Aged, a government-affiliated think-tank. Staying employed can help stave off health problems and keep loneliness at bay. “When you’re this age, if you stay at home, you lose it mentally and physically,” says Ms Honda, who belongs to McDonald’s Japan’s “Premium Age Crew”, as employees above the age of 60 are known. “My family keeps telling me to quit, but I know that if I stop working and stay home I’ll be a burden to them and end up in a facility.”

Across East Asia, studies show older people who keep working tend to be less frail and less likely to report depressive symptoms. (The direction of causality is hard to establish, as those who work may also have been less frail and less depressed to begin with.) Ro Ick-kyun, a 60-year-old from Hanam, east of Seoul, has beenthrough several jobs since he retired from his original career as a corporate executive. “My wife says when I work I seem younger and more full of energy,” he smiles.

Some companies are making concerted efforts to use older workers. Consulting on later-stage career options has become common practice at large Japanese firms, says Kashitani Yasutaka of the Mitsubishi Research Institute, a think-tank in Tokyo. Companies are adjusting roles and responsibilities to accommodate older workers. The boss of an auto-repair shop in Kashiwazaki, a small city in northern Japan, says that with fewer young people, he needs to get more out of his existing staff.

Yet too often those who want to keep working face high barriers and unpalatable options. Lots of human capital is wasted, argues Randall Jones, a former head of the Japan/Korea desk at the OECD. Seniority-based wage and promotion systems are still common in Japan and South Korea, which makes keeping workers on full-time staff contracts costly for companies. Many thus rehire older workers after their official retirement on new temporary contracts with reduced pay and responsibilities.

Those who look for new jobs can struggle, not least because discrimination is rampant. “Korean case law and social norms tend to view hiring discrimination based on age…as reasonable,” says Kwon O-hun, a labour lawyer at Gapjil119, a South Korean watchdog that combats workplace abuse. Some start new small businesses. Others take on temporary work as cleaners, carers or security guards. “There’s a huge mismatch: lots of supply of desk workers and lots of demand for menial work,” says Kitao Sagiri of the National Graduate Institute for Policy Studies in Tokyo. “The skills older folks accumulated are not necessarily what’s needed.”

Those who struggle to find new jobs can turn to a host of government programmes and agencies to support older workers. South Korea’s national government finances over 1m part-time jobs for seniors as a quasi-welfare policy. The Seoul 50Plus Foundation, an arm of the capital’s municipal government, aims to help those on the cusp of retirement from their first career plan for a second one. At one airy outpost in the city’s east, older job seekers can get advice on how to polish their résumés or receive training in AI. Japan has more than 1,300 Silver Human Resource Centres, which help match people aged 60 or above with job opportunities, from caring for even older folk to cleaning up family gravesites for those not up to visiting.

Policymakers want to encourage these trends. Keeping people employed for longer helps compensate for the shrinking number of young people in both countries; to the extent it keeps people healthier, it also helps reduce health and nursing-care costs. Since 2006 Japan has urged companiesto offer job opportunities until the age of 65; in 2021, the government began urging employers to keep workers on until 70. In 2013 South Korea raised its statutory retirement age from 59 to 60. But that does not tackle the underlying issue about what kind of work older people should do.

Getting the most out of those who can keep working while providing support to those who cannot will require a more ambitious redesign of social systems and hiring practices. For older workers it also means reconceiving the latter stages of a working life as something more akin to the beginning of it. Murazeki Fumio, the head of Koureisha, a temporary-employment agency for elderly workers in Japan, encourages his new employees to shed their attachments to their old roles: “I always tell everyone: once you’re over 65, approach it as if you were a new hire, with the mindset of starting over from scratch.”