By Palash R. Ghosh: Subscribe to Palash's RSS feed
July 21, 2010 7:04 PM EDT
Like many Western European countries, Japan's population is aging while its birth rate is falling. But due to a number of unique factors – including the nation's historical isolation, among others – Japan's demographic crisis is more acute and how it plays out over the next few decades are largely unknown.
Most observers agree, however, that unless steps are immediately taken, Japan faces a demographic disaster from which its economy many never recover.
The numbers are daunting.
As of 2008, the national birthrate was 1.37 children per woman, according to the Japanese health ministry. If this trend continues, Japan's population will drop from 127 million currently to 95 million by 2050.
Simply put, Japan has too many non-working elderly people and too few people of working age to support them. As this discrepancy widens in the coming years, the costs of taking care of the aged will become an ever-greater burden on the already-weary Japanese of prime working age.
“We have never seen a country of the size and importance of Japan face these kinds of demographic issues before,” said Dr. Stephen Bronars, Ph.D., a Washington D.C,-based senior economist with Welch Consulting, a labor & employment consultancy.
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Japan's overall public debt is more than twice its entire $5-trillion economic output, which far exceeds any other industrialized country. An effort to curb the nation's huge public debt by Prime Minister Naoto Kan's new government by raising sales taxes was soundly rejected by the populace.
Not only does Japan suffer from a very low fertility rate, but the problem is compounded by a very high life expectancy and a traditional discouragement of immigration.
Japan's average life expectancy is the highest in the world – as of 2008, it was 86.1 years for women and 79.3 years for men.
European nations like Germany, Italy and Spain (and even the U.S.) are experiencing similar aging demographic woes, but these countries allow relatively high numbers of immigrants to sustain and replenish their labor forces. By contrast, it is estimated that less than 2 percent of Japan's population is currently foreign-born.
“It's not just that the overall population of Japan will decline, the crucial issue is that the size of the labor force relative to the overall population will decline,” Bronars said.
According to government figures, in 2008, the combination of the elderly and young population divided by the working-age population amounted to 55.2%. Also, the proportion of elderly in the total population has remained above that of the younger age group since 1997.
It is also believed that Japan's workforce will be cut by 18% by 2030.
Bronars noted that many developing countries also are seeing higher life expectancies, but their fertility rates have not declined as much, so that the labor force grows as a fraction of the overall population.
Japan's economy has stagnated with deflation for about the past two decades, but Bronars does not think the country's aging population was the principal culprit behind this phenomenon.
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