Japan’s Aging Society Essay

I. Introduction/ Topic Explanation Japan has the fastest aging population in the world. After the second world war, rising productivity and a fast-growing labor force created a growth miracle, in which Japan went from the ruins of war to the world’s second-largest economy. In the next few decades, that process will go in reverse as the working-age population shrinks, along with the declining birth rate. The economy will shrink unless Japan finds a way to make its productivity rise faster than the decline of its workforce. This paper will examine the economic and social effects of an aging society and offer recommendations to alleviate the issue. II. Identification of Problem The extent and impact of a rapidly aging society (koreika shakai) is of great public concern in Japan. Already 23% of Japanese are age 65 or older, with the expectation that over-65s will grow to 41% by 2055. Caught by the dual impact of an aging society and a plummeting birth rate, Japan’s total population is estimated to decrease by 25% from 127.8 million in 2005 to 95.2 million by 2050. By 2050, four out of ten Japanese will be over 65 (PBR, 2010). The impact of these trends will affect every aspect of Japanese society in the decades to come. Source: PDR Source: The Economist Japan’s demographic problem has its roots in decreasing birth rates and longer lifespans. The former have begun to starve the country for young workers to replace those retiring, while the latter ensure that a growing population of retired citizens will be dependent on a diminishing working population. Although every industrialized country faces this problem, Japan’s situation is by far the worst, not least because Japan has no hope of an influx of youthful immigrants to lessen the problem. According to Japan’s Ministry of Health and Welfare, in less than five years the country’s demographic trends will give it a population profile like Florida’s. By 2015, one in four Japanese citizens will be 65 or older. In 2010, Japan had fewer than half the workers per retiree it had in 1997, a mere 2.5 people of working age for every pensioner. And since not all of working age choose to work or can find employment, it is likely that in the early 21st century Ja pan will have fewer than two people at work for every retiree. Death rates have fallen dramatically, and the average life span of a Japanese citizen has increased by about 30 years over the past half century. Life expectancy is now 82 for women and 76 for men. People in their eighties and nineties have become commonplace in Japan, and even the number of centenarians is rapidly increasing. As of September 2012, Japan now has more than 50,000 centenarian citizens. (Wall Street Journal, 2012). Population began to fall in 2008 and in 2012 stood at 127.6 million. The median age is 45.6 years – much higher than the regional average. The aging of Japanese society could undermine economic performance. The government estimates that 40% of the population will be of retirement age by 2060. The marriage rate has fallen by a third from its peak in 1972 and the fertility rate currently stands at just 1.4 births per female, down from 1.9 in 1977. (Passport GMID, 2012). There will soon be a dire shortage of caregivers for the elderly. When visiting elderly facilities and nursing homes, we can see that the elderly are cared for by the near-elderly (Birt, 2010). What happens when the caregivers need care? Who will provide the physically and mentally demanding work of caring for those suffering from dementia, those who are infirm with disease, and those who are most vulnerable? Governments can build hospitals, nursing homes, and long-term care facilities, but there is no immediate solution for supplying caregivers when the population pyramid has been turned upside down. Analysis/ Evaluation Japan’s population is aging faster than that of any other country in the world. The unprecedented increase in retirees relative to the size of Japan’s work force will force extreme change if the nation is to avoid a economic and fiscal crisis, or worse. Japan’s income inequality has worsened over time. One reason is that as the country ages, the income of its elderly falls relative to that of wage earners. These dramatic demographic changes will force Japan to shrink its high savings rate, reverse its trade surplus, send more industry overseas, liberalize its tightly controlled markets, and take on a more active, high-profile foreign policy. As a result of the increasing number of elderly retirees, the Japanese government’s social security spending is predicted to increase dramatically. Between the years 2000 and 2006, two million additional people began using Japan’s social security services. Currently, elderly or retired Japanese workers account to 70% of all social security spending. Between 2000 and 2005, Japanese social security spending for the elderly grew 16%, from 53 trillion yen (532 billion USD) to over 61 trillion (617 billion USD). The 2005 total social security spending comes out to 23% of the Japanese national income, with 12.6% of that accounting for pensions alone. In 2008, social security spending accounted for over 26% of the Japan’s national government expenditures. With the number of participants in these programs projected to increase by 11 million people by 2050, the expenditures will increase at an extremely rapid rate. (Whytock, 2009). The 2011 Earthquake and Tsunami hit the elderly populations of Japan hard, with many of them unable to flee to higher ground. Japan’s elderly were hardest hit by the crisis, as noted immediately in media coverage from both Japan and abroad. Unable to move to higher ground and vulnerable in every sense of the word to natural disasters, the elderly suffered terribly. In one particularly shocking incident, Japan’s Self Defense Force discovered 128 elderly people abandoned by medical staff at a hospital very close to the Fukushima nuclear plant. Many were ill and 14 died shortly afterwards. (East Asia Forum, 2010). IV. Potential Strategies/ Solutions One solution to the unbalanced worker-retiree ratios is that Japan may have to consider allowing and even encouraging more immigration. Japan is frequently thought of as an anti-immigration country, however they have allowed an increasing number of foreigners to take up residence. In 1950, there were 599,000 non-Japanese in the country, the vast majority Koreans.8 By 2006, the number had risen to 2 million from many countries, with the number of Koreans declining and the number of Chinese rising (PBR, 2010). If Japan can overcome its traditional resistance to immigration and become a more diverse society, it may ease the burden in caring for the increasing proportion of elders. In an effort to spur population growth, the government recently introduced a child benefit program which provides parents with  ¥13,000 per month (Passport GMID, 2012). The sum is substantial compared with earlier programs but is not generous relative to the support offered in other industrialized countries. Another possible solution to increase birth rates is for the government to increase funding for similar child benefit programs. V. Concluding Comments Japan has a tremendous capacity for change and adaptation, as evidenced from their Post-War transformation from a country in ruins to a sophisticated world economy and democracy. Now with their population triangle turning upside down, they will again need to transform their society to care for their many elderly. Now they will have to draw on their legacy of technology, entrepreneurship and social innovation to meet challenges they will face in the next few decades. The same demographic forces—rapid aging and plummeting birth rates—are also at work in other Asian countries such as Singapore, Korea, Taiwan, and China. The United States as well has to deal with their aging baby boomers and a social security crisis. However, Japan leads the way in terms of the severity of their elderly crisis, and if they can find a way to solve it, they can lead the rest of the world down the right path.