Japan's Ageing Population

Last year, Japan's total population fell by 538,000, bringing the population down to an estimated 124.77 million to start 2023 from a peak of just over 128 million in 2018 (Armstrong 2023). This decline results from Japan's ageing population, which has resulted in one in 10 being over 80 (Ng 2023). This poses significant socio-economic challenges for Japan, including workforce shortages and increased healthcare costs. Prime Minister Fumio Kashida has pledged to address the issue because it threatens the persistence of Japan's society (Armstrong 2023).

In the not-so-distant past, Japan's population growth was driven by a natural increase (more births than deaths). However, this has slowed since the 1970s, and in 2005, the growth rate became negative. This negative trend has persisted and intensified, currently at -4.3%, primarily due to a falling birth rate (United Nations 2022).

Japan’s fertility rate has fallen from 2.09 to 1.31 in 2023 (United Nations 2022). If this trend continues, Japan's population will decrease from 125 million to 42.066 million by 2100 (United Nations 2022). Compounding this demographic challenge is that Japan ranks as the third most expensive country globally to raise a child. This, combined with stagnant wages, presents a formidable deterrent to starting families. Furthermore, there's a growing inclination towards smaller family sizes and a sharp decline in marriage rates, with a notable number of young individuals opting out of marriage and relationships altogether. Additionally, women are increasingly delaying or forgoing childbearing due to the societal expectation that they cease working once they have a child (Statistics Bureau 2022).

In 2023, Japan's older population (65 and over) reached 36.21 million. This demographic shift is underpinned by Japan's status as having the fourth-highest life expectancy in the world 84.95 years. By 2100, this is expected to reach 87.3. years (Statistics Bureau 2022).

They also have a high median age of 49.1 years, compared to the global median of just over 30 (Statistics Bureau 2022).

Like Japan, Australia is facing an ageing population due to increasing life expectancy and declining fertility rates. The number of people at older ages is growing, and older people represent an increasing share of the total population. This, however, is happening at a much slower rate.

In 2020, there were 4.2 million Australians (aged 65+), accounting for 16% of the population. For those aged 85 and over, the proportion has increased from 0.5% (63,200) in 1970 to 2.1% at 30 June 2020 (528,000).

Australia's median age is 37.9, over 11 years younger than Japan's (Australian Institute of Health and Welfare 2023).

It is common in demography to split the population into three broad age groups:

• children and young adolescents (under 15 years old)
• the working-age population (15-64 years) and
• the elderly population (65 years and older)

A large share of the population is typically in the working age bracket. This is seen as critical to economic and social stability. And since the younger and older people are typically not working, these groups are labelled 'dependents'.

Japan’s working-age population (15-64) has been declining since the 1990s due to the rapidly ageing population and falling birth rates. By 2100, the median age of Japan is expected to  be up to 54.4 . As a result, the workforce is expected to only account for half of the total population, meaning the dependent age brackets will account for 49.99% (38.7% are elderly) - approximately a 1:1 dependency ratio (United Nations 2022).

A 1:1 dependency ratio where the number of dependents is equal to the number of working age individuals can have several impacts on society, including labour shortages in critical sectors, including healthcare, agriculture and manufacturing. This is partnered with significant economic strain. A smaller workforce can reduce economic growth and put a significant strain on social services, as more resources are needed to provide for the growing dependent population.

“Japan is standing on the verge of whether we can continue to function as a society,” Fumio Kishida - Japan's Prime Minister in 2023.

With a dwindling youth and workforce population,  Japan's government has been scrambling to design population policies that foster higher birth rates  (McCurry 2023). The country has been trying to boost its birthrate for years, including a lump sum of ¥500,000 yen (approx. $5000 AUD) and offering women up to two years of maternity leave. However, cultural expectations and job security fears mean few take this option, with many young people rejecting parenthood altogether (Matsuyama 2023).

The government is also increasing the number of day-care facilities available, providing free care and education and even covering the costs of some fertility treatments. Despite all of this, the high economic and social costs associated with raising a child in Japan have made it a luxury. The work culture in Japan affords few this option, demanding long hours with little flexibility. Stagnant wages have also made it difficult to cover tuition and living costs (Matsuyama 2023).

While much attention has been given to boosting Japan's birthrate, it may be more feasible to focus on immigration. Japan is turning to skilled workers to meet the demands of an ageing population by expanding its Specified Skilled Workers Program to more southeastern countries, attracting specialists in critical fields, such as healthcare and agriculture (Ministry of Foreign Affairs Japan 2023). However, net migration is low compared to other developed countries at 0.5 per cent in 2023, partly due to opposition to immigration. That said, most migrants to Japan are on seasonal visas. Only 2.2% of Japan's permanent residents are immigrants (OECD 2022). Migration, however, is a short-term strategy as immigrants age in place.

While fertility and migration policies have been explored,   studies have found that neither option is aggressive enough to benefit Japan in the long term.  Instead, Japan should consider a strategy focused on enhancing workforce productivity, increasing workforce participation (e.g. raising the retirement age), and actively investing in technological innovation (Parsons 2018). Japan benefits from having a highly educated and innovative population and a robust social care system. Therefore, it is a worthy case study for other countries with ageing populations on potentially minimising the impact of such demographic challenges.