Japan: The aging society

For many years, Japan has enjoyed one of the highest life expectancies in the world. While it is certainly an envious record, high life expectancy coupled with a decline in fertility is posing serious long term and short term challenges for Japan. Not only is Japan’s population in decline since 2004, but also the population structure is becoming increasingly weighted towards older members of the society. Japan’s population was estimated to be 127.3 million1 in 2013 and it is projected to be 97.1 million1 in 2050. What’s even more concerning is that the labor force (age range: 15-64 years), is projected to shrink from 62.1 million1 in 2013 to 51.5 million1 in 2050.

This demographic shift has various social, economic and political costs. The shrinking of the productive stratum of the population (age range: 15-64 years), will lower tax receipts, negatively impact potential growth and shrink Japan’s GDP. This also raises the danger that it will be difficult to sustain the pension system, healthcare costs and other elements of social welfare system, thereby bringing down the nation’s standard of living. The depopulation in rural areas may put in danger the very existence of some municipalities.

Over the years, a wide range of factors have led to a decrease in birth rate in Japan. First, an increase in labor force participation of Japanese women has resulted in the decline in fertility. Faced with society’s fixed gender roles with men at work and women at home, Japanese women find it particularly difficult to manage working full-time and child-rearing at the same time. Second, there is an increasing trend amongst Japanese women to stay single. It is widely believed that marriage ends a woman's working career in Japan, even though most women are well educated. Once they have a child, women face strong social pressure to quit their jobs and assume very traditional roles, serving both the husband and the child. Third, child care is scarce and expensive, while Japan's brutal work culture often demands that employees work more than 50 hours a week.

The central and regional governments have initiated a range of policies to deal with the population decrease, in particular the falling birthrate. Policies have been designed (a) to create an environment in which people who want to have children and could do so with ease, (b) to create a system in which society as a whole supports child rearing and (c) to facilitate measures that emphasize benefits to children. Initiatives have been introduced to support working women and to enhance child care services, but those initiatives haven’t really reaped benefits yet. Private sector participation is required to enhance the working environment for women and there is a dire need to align public policy design and private sector implementation. Additionally, the government has taken some direct measures to reverse the plunging birth rate trends by funding matchmaking and dating services to get more young people married and produce babies.

So far, the Japanese government has managed to keep the economy stable despite labor force issues. To improve efficiency of the workforce, there has been an increased focus on compact cities. This has brought workplace and home together helping ease traffic congestion and also improving access for elderly people. To counter the problem of a shrinking workforce, Japan has focused on technological innovation and has stood out as a world leader in robotics and automation for several years. Moreover, the central bank has managed to keep Japan competitive in the global market by undervaluing the Yen.

Redressing Japan’s population problem calls for fundamental changes in labor policy, corporate management, education, gender relations and economic structure; and continuing to encourage participation of women in the workforce yet providing them means to start and support families. In the short term, they can address the shrinking workforce situation by increasing the retirement age from 64 years. For the long term, one option is to open up the country’s borders and its society to immigration on a much wider scale, which the Japanese have so far appeared reluctant to consider. Perhaps, the Japanese can also take a leaf out of France’s success story of improving birth rates by providing incremental benefits such as tax breaks, etc. as family size increases.

Corporations and private companies have the responsibility of creating a workplace that has a single standard for both men and women. They can implement policies such as maternity and paternity leave, child care services, flexible working conditions such as work from home, etc. which will go a long way in changing the mindset of single women in Japan towards starting a family.

As the Japanese population continues to dwindle, one of the most obvious remedies to help stem the effects of the Japanese birth shortage would be to allow more immigrants in. Just like women, immigrants are a largely untapped resource which could boost the workforce right away and the children they have would be able to do the same for Japan down the road.

Since Japan is one of the first countries to be staring the demographic winter in the face, it has an opportunity to be a model, a leader to the rest of the world, to guide other nations toward the right way to deal with the issue. The countless number of stories in the international media about Japan’s demographics shows that all eyes are on Japan. This spotlight on Japan presents the perfect opportunity for it to remind the world of the forward thinking, ingenuity, and global leadership which the country possesses, giving it a renewed and more influential role on the world stage.