Japanese companies turning to early retirement to cut costs during pandemic

The number of Japanese companies introducing early retirement programs in the first 10 months of the year was more than double the level of the whole of the previous year amid the coronavirus pandemic, according to a survey by a research firm.

A rapid drop in demand is pressing executives to quickly cut costs through reducing personnel, Tokyo Shoko Research said.

Early retirement was offered by 72 listed companies to a total of around 14,000 employees as of Oct. 29, topping 35 companies and about 11,350 employees in the previous year, the credit research agency said. The figures compared with 85 companies and around 12,200 employees in 2010.

"Some companies lowered the eligible age to the 30s or even to the 20s (from the typical age of around 45 or older), as they urgently need to scale back their workforces in response to rapidly worsening earnings," the agency said.

The government has taken measures to support companies reeling from the pandemic, offering subsidies to help such firms pay leave allowances until the end of the year.

Even if the subsidies are extended beyond their scheduled expiration at year-end, companies will remain concerned about the future end of the scheme and a large number of companies are expected to rely on early retirement in 2021, the research firm said.

The combined net profit of companies on the Tokyo Stock Exchange's First Section in the first half ended Sept. 30 dropped 43.6 percent from a year earlier, based on the results of 484, or 33.1 percent, of the listed companies, SMBC Nikko Securities Inc. said earlier.

Stay-at-home requests in Japan took a heavy toll on the restaurant and textile sectors in particular, as consumers became cautious about going shopping and eating out.

Of the 72 companies, 12, or roughly 17 percent, were businesses in the two sectors, according to Tokyo Shoko Research.

Among the 14,000 job cuts sought through early retirement, Hitachi Metals Ltd., a maker of auto, infrastructure and electronic parts, has set the most ambitious job reduction goal of 1,030, followed by rental apartment operator Leopalace21 Corp. at 1,000 and Coca-Cola Bottlers Japan Holdings Inc. at 900.