As Japan faces an aging population and shrinking workforce, Japan Airlines (JAL, Financial) will adjust its compensation scheme for rehired retirees starting in October. The company will offer salaries similar to pre-retirement levels for experienced employees over 60.
Although Japanese law sets the retirement age at 60, pensions are not accessible until 65. Therefore, many elderly workers prefer to continue working during these five years. Approximately 80% of Japanese companies have policies to extend employment.
Previously, JAL offered annual contracts to employees wishing to work after 60, with salaries reduced by 40% to 60%. The new policy will affect around 1,000 employees aged between 60 and 65, including ground staff, maintenance personnel, pilots, and cabin crew. However, the existing salary reduction rules will still apply to employees over 65.
Under the new framework, rehired retirees will be classified into four levels and will have opportunities to earn performance-based pay and bonuses. The highest-level ground staff are expected to earn over 10 million yen (approximately $68,000), which is higher than JAL's average employee salary of 9.21 million yen for the 2023 fiscal year.
This change aims to retain more senior employees as Japan Airlines faces an overall reduction in the workforce. Currently, 40%, or 5,800, of JAL's employees are between 50 and 60 years old. While "60+" employees are increasingly vital to the daily operations of Japan’s aviation industry, many are reluctant to continue working for half their previous pay.
According to Japan's Ministry of Land, Infrastructure, Transport and Tourism, 30% of the country's 7,000 captains and first officers are over 50. Pilots who began flying in the 90s are nearing retirement age. The current policy allows pilots to fly international routes until 64 and domestic routes until 67, given they pass medical exams and necessary training. Notably, 90% of JAL pilots choose to continue working post-retirement age.
JAL President Mitsuko Toritori expects the new compensation framework to increase annual expenses by "several billion yen." However, she emphasized that investing in talent is not a cost but an investment. JAL also plans to take steps to ensure the new policy does not negatively impact younger employees, such as increasing overseas assignments for those with less than ten years of service.
