Workforce reductions by companies that are performing well have become apparent, with more than half of listed firms that offered workers voluntary early retirement programs in 2019 operating in the black.
Similar trends are likely to continue this year, too. While different markets are expected to taper off due to such factors as the declining birthrate and aging population, companies, in a bid to steer themselves further in the direction of growth sectors, are increasingly making moves to review their personnel makeup.
Major convenience store operator FamilyMart Co. announced in November that it would offer early retirement incentives for staff at its head office. The plan aimed to streamline the headquarters in order to reinforce support for franchise owners who are having difficulty keeping up 24-hour operations amid the labor shortage for those jobs. In early February, the company implemented the voluntary early retirement plan, targeting 800 jobs among workers 40 or older: 1,111 employees applied, with 1,025 slated to retire early.
The business performance of FamilyMart is not bad. It is expected to post a 10% increase year-on-year in net profit for the year ending Feb. 29. However, with sluggish sales growth among the more than 55,000 total convenience stores in the country, the prevailing view is that the business model for these stores has neared a plateau.
Kirin Holdings Co. last autumn also offered an early retirement plan for those 45 or older in managerial positions. The company has not made public how many have applied. But the company is moving ahead with the recruitment of experienced mid-career personnel chiefly for its medical and pharmaceutical lines of businesses, which the company has been beefing up.
Kirin also reported itself in the black for the fiscal year ended Dec. 31 despite posting a year-on-year net profit decline of 63.7%.
Kirin Holdings President Yoshinori Isozaki said: "When taking a hard look at the future, many things are uncertain. We need not only those whom we fostered for a long time but also those with competency. Our business performance remains good, and this is the very reason we can carry out this [early retirement] plan."
According to Tokyo Shoko Research, Ltd., the number of listed companies that offered voluntary early retirements for workers in 2019 totaled 35, with the number of job cuts reaching a combined total of 11,351. This marked the first time in six years that job cuts through early retirement programs among listed companies exceeded the threshold of 10,000. Of the total, 20 firms had reported being in the black in net profit in their account settlements made immediately before the offering of early retirements.
Traditionally, personnel reductions through early retirements have remained the domain of companies operating in the red that need to restructure to survive, which makes the recent restructuring by companies operating in the black more conspicuous. These moves have been spreading not only among such industries as electric appliances manufacturing, where the competition for securing talented personnel in information technology-related sectors is fierce, but also into retailing and food businesses.
Workers of middle and advanced age are the usual targets in restructuring, partly because many were hired during the period of the country's asset-inflated bubble economy.
The majority of Japanese companies have a seniority-based wage system. According to the Health, Labor and Welfare Ministry, the average monthly wage for male workers 50 to 54 is about 510,000, yen nearly twice as much as for 25- to 29-year-olds, who get an average monthly wage of about 260,000 yen.
Taking a hard look at the likely prolongation of their working years, there is an increasing number of people who want to switch careers at an early stage and to work longer.
Ajinomoto Co., for one, is offering, until this month, an early retirement plan for those 50 or older in managerial positions. But at the same time, it provides support in finding them new jobs.
Hisashi Yamada, vice chairman of the Japan Research Institute Ltd., said that job cuts among companies that are operating well can be considered a forward-looking effort, rather than their doing so because they are driven to do so. But he added that, "These companies also need to take policy responses, such as the support for workers finding new jobs or the provision of certain amount of allowances should their wages drop markedly as the result of their career change."
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