It is now or never, Kishida said, to deal with the country’s population decline. The prime minister has announced his intention to double public spending on child-related initiatives. The country has been grappling for years with falling birth rates due to the high cost of living, rising female labor force participation, contraception, and the changing social and cultural values of Japan’s youth.
Long days, few holidays
What also plays a role is that of all the industrialized countries, Japan has the longest working hours and the fewest vacation days. Which makes raising kids with a full-time combination a dangerous undertaking. Especially since there are almost no affordable childcare options. Either way, Japan is one of the most expensive places in the world to raise a child, given skyrocketing house prices and education costs. The decline in the number of children leads to the closure of schools, the situation is particularly dramatic in rural areas.
Senior in prison
Japan’s declining birth rate, rapid aging and shrinking working population are taking a heavy toll on health care, social security and the economy. Japan now has the second-highest proportion of over-65s in the world, according to the World Bank. Population aging has led to an increase in the sad phenomenon of ubasutoa form of ‘granny dumping’, in which demented elderly people are often abandoned by their families in a public place such as a hospital, train station or public library.
Japan’s prison system is also noticing an aging population. In 2019, 20% of Japanese inmates were over the age of 65, and the number of inmates over the age of 65 has doubled in the past 20 years. To escape poverty and loneliness, more and more elderly Japanese are consciously choosing to stay in jail, for example by committing petty crimes such as shoplifting. By way of example: the percentage of elderly criminals has increased from 5.8 to 20 percent of total crimes in just ten years.
Japanese prisons are therefore increasingly starting to resemble old people’s homes. So much so that prison guards increasingly have to help older inmates wash, dress and go to the toilet instead of maintaining order and safety
New baby boom
Prime Minister Kishida now wants to reverse the declining birth rate in three ways: higher income for parents, “change of structure and consciousness of the whole society” and support for all families raising children. Kishida also wants to aim for more generous student loans for higher education and better regulated care leave: if both parents take care leave, the supplement they receive will be increased so that the couple’s net salary does not decrease.
From the mid-1950s to the early 1970s, people aged 14 and under consistently made up about 20-30% of the population and are projected to make up less than 10% by 2050. This is offset by the spectacular increase in the number of over-65s. In 2020, 1 in 3.5 people will be 65 years of age or older, by 2070 this figure will rise to 1 in 2.6. Japan’s population now numbers 125 million and is projected to fall to 86.7 million by 2060. For example: this is a decrease equivalent to the entire population of Peru or Malaysia.
Economic disaster
In 2020, healthcare costs exceeded 8% of Japan’s gross domestic product for the first time. Thus, health insurance premiums paid by employees continue to rise, largely to meet the needs of those over 75. This imbalance is causing Japan’s pension system to creak, calculates Nikkei.com. Workers who are burdened even more with maintaining other people’s pensions will be less likely to have children. In Japan, therefore, there are calls to rethink how different age groups should contribute to the social security system, for example by increasing insurance premiums for high-income seniors.
According to an IMF study, this rapidly declining population is leading to rising vacancy rates in homes due to oversupply. This is depressing house prices, especially in rural areas. Such an effect on the housing market poses risks to the financial health of Japanese households and banks. Ergo, the vulnerability of Japan’s financial sector will increase as the demographic transition continues.
Decline of the working population
Fewer children, more seniors, Japan’s third problem is a shrinking workforce. The 15-64 age group is projected to shrink by 30 million over five decades to 45.35 million in 2070. This age group is responsible for the greatest consumer spending, and its decline hurts growth economy of Japan.
Although the Japanese government is trying to increase the labor force participation of the elderly and women, per capita productivity hardly ever increases. It is possible that digitization and increased innovation could increase that productivity. Another possibility: attracting migrant workers. Not an unrealistic scenario now that Japan’s Ministry of Health predicts that the health and care sector will be short-lived by 960,000 workers by 2040.
Commitment to labor migration
Incidentally, foreign workers are already crucial for shops, restaurants and other service companies. But even there, problems lurk: Japan faces increasing competition from other Asian job destinations as wages rise there. It is untenable to view foreign workers as cheap labour, say Japanese economists. By 2070, one in nine Japanese residents is expected to come from abroad.
They realize it even in Tokyo. The Japanese government is therefore considering expanding a program for skilled workers from shipbuilding and construction to 12 other sectors also facing labor shortages. The five-year special visas can be extended an unlimited number of times and holders can also bring their families. Those who have lived in Japan for 10 years can qualify for permanent residency.
The Justice Department’s new Immigration Services Agency is no longer just there for the necessary paperwork, but also provides support for the daily lives of migrants. Other ministries are also introducing measures to help migrants, for example, in teaching the Japanese language. A policy focused on labor migration is not an unnecessary luxury: not only is Japan in desperate need of migrant workers, but it is difficult to attract foreign workers because the Japanese yen hasn’t been this low against the dollar in years.
Will Japan be able to attract foreigners? Last June, the Ministry of Justice published its ‘Roadmap for a society in coexistence with foreigners’. Of 104 countries rated by the Singapore-based Chandler Institute of Governance for the effectiveness of their governance, Japan ranked 15th this year. There was room for improvement, you’d say.