New distribution industry perks: Later retirement and the chance to work full-time

Oct 15

The distribution industry is one of the biggest employers of part-time labour, relying on flexible, low paid people to run stores and supply centres. The problem is there are fewer and fewer people around to do these largely mundane jobs – many young people see working in restaurants as far more fun. Now companies are looking for solutions to the short-fall by offering later retirement and the chance to jump from part-time to permanent contracts. 

Distribution faces a growing crisis of labour supply with fewer and fewer cheap, flexible workers to choose from. Other sectors, notably restaurants and basic office work, are seen as both easier and often pay more. As a result many companies in the industry are desperately seeking a solution.

Paltac, one of the largest wholesalers in the household and toiletries categories, has announced a new scheme to allow employees, including part-timers, to work until they are 70 years old. Currently the company’s retirement age is 60, with an option to stay until 65, but under the new plan employees can continue on an hourly wage for another five years still. This is the second 70-year retirement scheme introduced among large companies, with an earlier one announced by Tokyu Livable, a major real estate agency, in April, but Paltac’s is the first to include part-time employees.

The majority of Paltac’s 2,000 or so full-time staff work as sales agents, visiting clients, stock taking in stores, and generally working long hours riding trains. Only 160 of these are currently aged 60-64. In addition it has some 5,000 part-time workers, almost all of whom work in one of its 15 distribution centres across the country, and mostly on flexible shifts. While it hopes many of its older full-time employees will stay on, they will only be allowed to continue with a good bill of health. They’ll also be expected to leave their jobs in sales and be available to work flexible hours and in different locations – most probably helping out in those distribution centres. While this might help Paltac in the short-term, it doesn’t say much for the company’s desire to leverage the experience of its oldest workers.

On a different tack, Ito-Yokado will introduce a new system this month offering the possibility of permanent positions to its part-time workers. The 180 store chain currently employs some 36,000 people on a part-time basis. As ever, ‘part-time’ doesn’t necessarily mean fewer hours, with 35 hours a week common even for these employees, but it certainly means fewer benefits with health insurance and pensions left to employees to arrange themselves.

Ito-Yokado’s new system will offer temporary contracts to part-timers, elevating them to full-time positions for fixed periods. Once a year a lucky few of these new contract employees, just 30 in 2014, will be offered permanent positions allowing them to stay with the company until retirement, currently 60 years old at Ito-Yokado, draw full benefits and with the chance to rise to more senior positions.

Seiyu will also promote 70 part-time employees to permanent positions this year – although without the need to have a temporary contract first. Unlike its Japanese-owned counterparts who hire new graduates by the hundred, Seiyu hired just 30 new graduates this year, and the new system is designed to ensure permanent employees have suitable experience before being hired full-time. Other overseas retailers use a similar system.

There are some 19 million part-time workers in Japan with more than 4.2 million in retailing and wholesaling alone. With more interesting, higher paid jobs in other sectors and a falling supply of docile young workers, other companies in the distribution sector are likely to follow this precedent.