A worker does not suddenly lose their capability on the day they turn 60

Japan has long wrestled with the gap between continued employment and post-retirement pay. Its Older Persons Employment Continuation Benefit covers certain workers aged 60–64 when monthly pay falls below 75% of the level at age 60. For people newly qualifying from April 2025, the benefit can reach up to 10% of monthly pay depending on the size of the decline.

That 75% threshold is not evidence that Japanese workers typically lose a quarter of their pay. It is an eligibility line for a public benefit. What it does show is that a sharp change in pay at age 60 has been common enough to become a longstanding policy problem. If the work has barely changed, the obvious question is what exactly justifies the new price.

Korea has moved from “an ageing society” to a market that must design continued employment

Statistics Korea reported that people aged 65 and over accounted for 20.3% of the population in 2025. The share is projected to reach 30% in 2036 and exceed 40% in 2050. Ageing is therefore no longer only a welfare-policy issue; it is becoming a workforce-design and knowledge-retention problem for employers.

A Korea Employment Information Service study published in 2026 surveyed 1,500 firms that regularly employ people aged 60 or older and conducted FGIs with 20 firms. Its policy discussion goes beyond the form of continued employment to selection criteria, wage-system reform, work rules and organizational culture. Because the sample consists of firms already employing older workers, it should not be treated as representative of every Korean company. It is still valuable evidence of the issues employers encounter once continued employment becomes real.

Japan’s 2026 policy moves beyond extending work toward improving treatment

Japan’s Ministry of Health, Labour and Welfare set new targets for 2029: employment of at least 79.0% for ages 60–64, 57.0% for ages 65–69, and measures supporting work through age 70 at 40.0% or more of firms. The 2024 employment rates were 74.3% and 53.6%, while the age-70 measure stood at 34.8% of firms as of June 2025.

More important for compensation is the policy’s emphasis on treatment. It calls for stronger support for firms that redesign pay and HR systems around roles and capabilities and for better placement and treatment that make use of older workers’ knowledge and experience. The policy question is shifting from whether older people can keep working to what role and price make that work sustainable.

The pay gap is narrowing, but keeping the pre-retirement price is not yet the norm

A 2026 JILPT summary of the new policy reports that 39.6% of Japanese firms had post-retirement wage levels at 80% or more of pre-retirement pay in 2024, up 15.1 percentage points from 2019. That is a meaningful sign that more employers are narrowing the retirement pay gap.

But 39.6% is a firm-level share, not an average pay cut for individual workers. Industry, role, hours and responsibility vary widely. The more useful question is not a single average but how firms are redesigning work and compensation — and whether the reasoning is clear enough for employees to understand.

Some companies are putting the job — not age — back on the price tag

A JEED case on Ogawa Shoten describes a familiar problem: post-retirement pay cuts lowered motivation even though employees continued much of the same work, and the basis for pay was difficult to understand. The company raised its retirement age, introduced a job-based component into base pay and linked evaluation to raises. Its principle became that people doing the same work should generally receive the same base pay regardless of age.

Yamatoyo took a different route. When it raised retirement age from 60 to 65, it kept its base-pay, raise, bonus and evaluation structures in place. After 65, continued employees whose workload and responsibility remain unchanged have pay based on their retirement-point base and age pay. The two systems are not identical. What they share is an attempt to explain compensation through actual work and responsibility rather than age alone.

This does not mean pay must always stay unchanged after 60

If working hours fall, management responsibility is removed, night or heavy work is reduced, or the job is redesigned for safety, compensation can reasonably change as well. But if a company still expects the same customer relationships, quality judgment, mentoring and problem-solving, an automatic age discount becomes harder to explain.

The better sequence is role design first, pricing second. Define hours, scope of responsibility, decision rights, performance expectations, physical burden and knowledge-transfer duties, then attach compensation. That is more coherent than cutting pay first and fitting the job around the number later.

Employers should redesign roles before retirement; individuals should prove functions, not just tenure

For employers, treating the post-60 workforce mainly as a lower-cost labor pool becomes less attractive as labor shortages intensify. The cost of retaining experience has to be weighed against the cost of losing it. In technical, sales, quality and production roles, tacit knowledge may include customer trust, handovers, risk prevention and mentoring — all of which can carry economic value.

For individuals, longevity alone is not enough either. Experience needs to be translated into functions a company can price: customer relationships that protect revenue, judgment that prevents defects, project experience that spots risk early, or mentoring that makes younger colleagues independent. Senior-career value is more likely to come from the role a person can still perform than from preserving an old title.

BANSEOG VIEW

Retirement can be a boundary in an employment contract without becoming a boundary in the value of the work

The easiest senior-employment system is to change contract and pay automatically at a certain age. But as labor shortages deepen and the same people stay in the same workplaces longer, the contradiction becomes more visible. If the role stays the same, age alone is a weak reason to change the price. If the role changes, the company should first define what changed and by how much.

Executive search faces the same issue. Asking only “how old can this person work until?” misses much of the value of senior talent. The better question is what risks this person can reduce and what judgments they can carry across customers, technology, quality and organization. The price of senior talent is likely to be repriced around the role that can still be entrusted to them — not simply their age or former title.

SOURCES

Primary sources and references

Korea’s 20.3% figure is the population share aged 65+, not an employment rate. The KEIS sample covers firms already employing people aged 60+ and is not representative of all Korean companies. Japan’s 39.6% is the share of firms where post-retirement pay is at least 80% of pre-retirement pay, not an individual average pay-cut rate. The 75% threshold in Japan’s continuation benefit is an eligibility rule, not a statement about typical wage decline. JEED examples are individual company cases, not market-wide causal evidence.