How Japan is rebuilding economic stability for its ‘employment ice age generation’

Secure and stable employment is a cornerstone of a resilient society. Yet, when challenges arise, entire generations can be left behind, undermining long-term stability.

In Japan, the collapse of the economic bubble in the 1990s triggered a steep drop in corporate hiring. Those who entered the job market from the 1990s through the early 2000s are referred to as the “employment ice age generation.”

Today, an estimated 17 to 20 million people in their 40s and 50s fall into this category. Many remain in non-regular employment, which typically offers lower pay, fewer benefits and limited job security.

As of 2023, non-regular workers earn about 70% of the hourly wage of regular employees. Such an environment limits their ability to maintain a stable lifestyle or make long-term plans. It also adds issues where wage growth for this generation has lagged behind other age groups.

According to a survey by Japan’s Ministry of Health, Labour and Welfare (MHLW), wage growth among workers aged 20 to 24 reached 10% due to rising starting salaries, while workers aged 40 to 44 saw only a 7% increase, those aged 45 to 49 only 6.9% and 50 to 54-year-olds just 2.9%.

As a result, many in this generation have limited savings and lower home ownership rates. Their financial outlook in retirement could become even more precarious. Projections suggest public pension payments may decline by up to 30%, raising concerns about the post-retirement security of as many as 20 million people.

If this generation is unable to achieve basic economic self-sufficiency in the coming years, the effects could ripple through society. Supporting the employment ice age generation is, therefore, not only a matter of fairness but also an urgent issue for national resilience.

The Japanese government and private sector are now ramping up efforts to provide employment support and career development opportunities for this cohort.

Since 2020, the Japanese government has implemented a five-year intensive employment support programme for the so-called “unwilling non-regular employees” in this generation – those who seek regular employment but have been unable to secure it.

According to the Cabinet Office, the programme cut this group by 110,000 and added 310,000 additional regular employees to the labour force.

In April 2025, a cabinet-level meeting was held to reinforce support for this generation. In June 2025, the government released a draft Basic Framework of the New Support Programme for the Employment Ice Age Generation.

The proposed measures include expanding recruitment of this generation into public sector jobs, scaling up designated training programmes tied to certifications and national skill standards, increasing certified courses on digital skills such as artificial intelligence and enhancing support for municipalities that offer free reskilling programmes in conjunction with other initiatives.

Additionally, MHLW expanded the age range for targeted support through Hello Work, its public employment support centres, from 59 to 35. The ministry also introduced subsidies to incentivize employers to hire and train individuals from this generation, while offering seminars to promote career development.

Companies are also actively recruiting individuals from this generation through major job platforms such as Indeed and Standby.

The employment ice age generation occupies a pivotal position in the workforce between younger and older employees, making them well-suited to bridge generational divides and enhance workplace communication.

With appropriate matching and upskilling support, hiring this age group can help alleviate labour shortages and offer significant value to businesses.

Daiko Corporation, a logistics firm, was struggling to secure talent until it participated in a Chiba Prefecture-sponsored seminar, which led to successful hiring through the prefecture’s job matching programme.

The company now offers support to obtain licenses for operating forklifts and other machinery, as well as continued training to improve employee retention. Similarly, Aitec Corporation, which manages environmental infrastructure, tapped into this talent pool while reviewing its wage system to boost motivation and workplace culture.

According to the World Economic Forum’s Global Risks Report 2025, 5% of surveyed companies identified “economic stagnation” as one of the most pressing current risks. As economic instability becomes a global norm, other countries may face similar challenges to those of Japan.

Japan’s approach to addressing generational employment gaps offers valuable insights for building inclusive, future-ready societies. Supporting vulnerable cohorts is not just a social imperative but it is a strategic investment in long-term resilience.