Japan’s Demographic Challenge


June 1, 2017

Background

Underlying Japan’s long-term economic struggles is profound demographic change. With a combination of low birthrates and the world’s longest life expectancy, Japan’s population is rapidly greying and shrinking.

This demographic revolution has already had significant effects on macroeconomic conditions and consumption patterns as well as the health of the social safety net. It has dramatically affected communities outside of Japan’s major cities, because rural areas have aged faster than the country as a whole, threatening their future viability. It may also be forcing Japan to update its immigration and family policies to limit the impact of demographic change.

By the Numbers

Here is the reality of Japan’s demographic crisis: at eight births per 1,000 people, Japan’s birthrate in 2013 was among the lowest in the world. Meanwhile, the proportion of the population over 65 is now 25%, the highest in the world. In 2010, Japan’s population peaked at 128 million. Current projections show the population dropping below 100 million by 2048 and as low as 61 million by 2085. The country’s working-age population has been declining since the late 1990s, making it increasingly difficult to care for Japan’s retirees.

Precipitating Factors

These demographic changes have several major sources.

Japan is not alone among developed countries in seeing its birthrate decline as it has become wealthier. Government policies have also exacerbated the fertility problem. Japan has a weak safety net for workers and retirees. Prime Minister Abe has relaxed labor rules to help relieve economic stagnation, making it easier to hire “non-regular” workers for jobs that had been restricted to permanent, full-time positions. Japan now has a labor force in which nearly 40% of workers are part-time and contract workers, who receive lower pay and fewer benefits. Lack of government support for working mothers (and fathers) has discouraged young Japanese from starting families. In addition, barriers to immigration have not been removed to offset the declining birthrate.

Looking Forward

The Abe government has announced that its goal is to stabilize Japan’s population at 100 million by 2050. Achieving that goal will require a multi-faceted approach, including debates over proposals to subsidize childrearing; measures like the Abe government’s “Womenomics” policies to include more women in the workforce and make it easier for them to hold jobs while having families; changing immigration policy to allow more foreign workers into Japan, particularly in the health and eldercare sectors; raising taxes to provide a more secure foundation for pensions and healthcare spending; and encouraging employers to promote better work-life balance.

Sasakawa USA partnership with Tofugu.com

 

To promote better public understanding of this demographic crisis, Sasakawa USA teamed up with Tofugu.com, a Japanese language and culture blog. We provided our research on the topic, and they paired it with creative writing and explanatory graphics to create an article for mass consumption.

This demographic challenge that results in net population decline will be affecting most developed nations, including the U.S., in the next 30-50 years. Japan is leading the struggle, so the more we learn from their actions, the better.

Click here to continue reading on Tofugu.com.

 

Additional Sources:

• “Fighting Population Decline, Japan Aims to Stay at 100 million,” Nippon.com, 26 August 2014.

• Nicholas Eberstadt, “Japan Shrinks,” The Wilson Quarterly, Spring 2012.

• Hiroshi Yoshikawa, “Japan’s demographic challenges are also an opportunity,” East Asia Forum, 9 December 2014.

• Edward Hugh, “The Real Experiment That Is Being Carried Out In Japan,” EconoMonitor, 14 May 2013.

• Toshihiro Menju, “Can Japan Welcome Immigrants? A Shrinking Population Spurs a Growing Debate,” Civil Society Monitor, Japan Center for International Exchange, October 2014.

• Derek Anderson, Dennis Botman, and Ben Hunt, “Is Japan’s Population Aging Deflationary?IMF Working Paper, August 2014.

• “Implications of Japan’s Changing Demographics,” Roundtable, National Bureau of Asian Research, 10 October 2012.

• Population and fertility statistics available at the National Institute of Population and Social Security Research.

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