Challenges of Japan population ages and eventually shrinks

Japan’s population began falling in 2004 and is now ageing faster than any other on the planet. More than 22% of Japanese are already 65 or older. A report compiled with the government’s co-operation two years ago warned that by 2060 the number of Japanese will have fallen from 127m to about 87m, of whom almost 40% will be 65 or older. The government is pointedly not denying newspaper reports that ran earlier this month, claiming that it is considering a solution it has so far shunned: mass immigration. The reports say the figure being mooted is 200,000 foreigners a year.

An advisory body to Shinzo Abe, the prime minister, said opening the immigration drawbridge to that number would help stabilise Japan’s population—at around 100m (from its current 126. 7m). http://www. economist. com/blogs/banyan/2014/03/japans-demography According to the 2010 Population Census, which serves as the base year of these projections, the total population of Japan in that year was 128. 06 million (total population including non-Japanese residents). Based on the results of the medium-fertility projection, Japan is expected to enter a long period of population decline.

The population is expected to decrease to around 116. 62 million by 2030, fall below 100 million to 99. 13 million in 2048, and drop to 86. 74 million by 2060 Government policy, especially in the health care sector, will play a critical role in how Japan handles the challenges of its aging society. While it’s true that older people use three to four times more medical care than younger people, differences in the average age of the population among nations does not predict health care spending at all. For example, in 2000 Japan spent 7.

8 percent of GDP on health care and the United States 13 percent, although 17. 2 percent of the Japanese population was 65 and older, compared to 12. 3 percent in the U. S. Other factors – particularly, how health care systems are organized – are far more important. In addition to health care, the Japanese government has taken steps to permit older workers to continue in their jobs beyond previously mandated retirement ages. Until the 1970s, the retirement age in many large companies was 55; at that point, the government encouraged a change to 60.

In the 1980s, discussions began about raising the retirement age further, and 25 percent of baby boomers say they would like to continue working until 70. Pages 1 Graying population create for companies & Opportunities do graying population create for firms – Challenge-driven innovation In 1993 Toyota Motor Company shifted gears in its development of what it thought of as the car of the future. The deadline was the start of the 21st century. In America at that time car designers were sketching gas-guzzlers or sport-utility vehicles. But the Toyota team, mostly in their early 30s, wanted to create something that would “do the Earth good”.

Within two years they had come up with Toyota’s hybrid technology, in which a battery powers the car for short distances and a petrol engine kicks in at higher speeds, recharging the battery. Within four years they had their first Prius on the road. Since then Toyota has sold five million hybrid vehicles, and is working on other new environmentally friendly automotive technologies. This is the kind of thing you would expect from Japanese manufacturing, with its focus on craftsmanship, ormonozukuri. The Toyota project exemplifies some of the strongest traits: teamwork, in-house development and a desire to earn glory for the company.

The tradition of in-house innovation runs deep in Japan, and some of the resulting products may help the country to adapt to an aging society. Products that are already available, or will be soon, include: the Toto intelligent toilet that can detect the level of sugar in urine; Panasonic’s robotic bed that turns into a wheelchair; and Toyota’s battery-powered individual three-wheeler, with built-in sensors to avoid collisions. Already in Japan, in aggregate terms, older generations are contributing a more important share of consumer spending every year – not least because they are getting to be so numerous.

Products such as health supplements, pharmaceuticals, skin creams, mobility aids, cruises, personal development classes, etc. are in for a sustained boom for years to come. Entrepreneurship is not as developed in Japan as it is in some other countries, but more and more young people – as well as some retirees – are launching their own businesses, identifying market demands and filling industry niches. It is well-known that start-up companies – if they get off the ground – can move more quickly than larger, more established companies. The challenges presented by Japan’s aging society are unquestionably

creating market opportunities for companies of all sizes, and if Japan’s established firms can work with the country’s new entrepreneur class to develop innovative ideas and bring them to market, first in Japan and then globally, one result will be considerable economic growth. Page 2 Demographic changes effect the competitiveness of countries in the international market place As your population grows, more people usually means greater competition for jobs, which means lower wages which means a more competitive place to build your factory, that’s what is happening in Indonesia, Brazil and S.

E. Asia. But as your demographic balance shifts to, say, more educated workers, as happened in Japan and Korea in the ‘70s & ‘80s, then you have an advantage in higher-tech manufacturing, finance, and other white collar jobs. And when that population ages, as is happening now in Europe and Japan, the few workers left have a huge burden to care for the elderly and support social programs with fewer workers to do it because so many are retiring.

A gradual “crisis” A key point about the aging “crisis” is that it is a rather gradual crisis. Improved productivity, increased use of labor-saving technologies, and a shift in town planning and social welfare infrastructures will mitigate the economic effects of the demographic shift, and provide government officials and businesspeople around the world with a template for handling the challenges that many nations will eventually face.