The government said Wednesday it plans to urge companies to hire employees until age 70 as part of measures to address a severe labor shortage amid Japan's rapidly graying population.
The government of Prime Minister Shinzo Abe also plans to call on companies to provide support for retired employees to find new jobs, launch their own companies or work freelance.
Many companies in Japan set a retirement age of 60, but employees are legally allowed to work until 65 if they desire and employers are obliged to rehire them.
"It is necessary to provide a variety of options to make use of the expertise of elderly workers," Abe said in a gathering to discuss future growth policies.
The government plans to submit a bill to parliament next year to revise related laws, the prime minister said, but there will be no penalties at this stage if companies fail to comply.
Ensuring an adequate workforce is also important to secure funds to meet the rising social security costs of an aging society.
One in every three people in Japan is expected to be 65 or older in 2025, government data showed.
The government has already introduced a series of steps to make up for the labor shortfall, such as bringing in more foreign workers and promoting women's participation in the labor market.
Still Japan is expected to face a shortage of 6.44 million workers in 2030, according to an estimate by Persol Research and Consulting, and Chuo University.
Among the 66.64 million workers aged 15 or older last year, 8.62 million, or 13 percent, were 65 or older, the government said.