January 23, 2005


Japan's ageing workforce: built to last (Nick Mackie , 1/23/05, BBC)

By 2007, Japan's population is expected to peak at 127 million, then shrink to under 100 million by the middle of the century. This means 30 million fewer workers at a time when the number of elderly will have almost doubled.

"In the year 2050, if the birth rate remains the same people over 60 will make up over 30% of the population," explains Shigeo Morioka of the International Longevity Centre in Tokyo.

So how will Japan's finances stay on track?

After a decade of economic stagnation and huge deficit spending, the public sector debt is already about 140% of the country's gross domestic product (GDP), the highest rate among industrialised countries.

The International Monetary Fund predicts that as the falling birth rate takes grip from 2010, the cost of running Japan's welfare state will double to more than 5% of GDP, while current account balances will deteriorate by over 2%.

But unfortunately, Japan appears poorly prepared both financially and politically.

Glen Wood, Vice President of Deutsche Securities Japan, asks; "Who's going to fund the pension fund for the next generation and indeed who are going to be the new Japanese worker?

"Who is going to build the economy, who are going to be the leaders? Who are going to be the producers of the GDP going forward?"

One option is further welfare reform. Another is immigration, possibly from the Philippines and Indonesia. But so far, any emerging policy appears restricted to a limited number of nursing staff. [...]

In contrast to Japan - and of course the European Union - the US population is expected to increase by 46% to 420 million by the middle of the century.

Although President Bush must re-devise Social Security to take account of a 130% rise in America's over 65s, the IMF foresees a positive contribution to the US current account balance from the combined forces of fertility and immigration.

Here's a question they never ask even when they realize the rest of the developed world has a demographic crisis: why will even the few young people they do have stay in dying societies when they can just come here?

Posted by Orrin Judd at January 23, 2005 8:22 PM

Because the INS won't let them in?

Posted by: Annoying Old Guy at January 23, 2005 11:58 PM

As Japan moves to a post-industrial economy, it's workforce can continue to work longer. For much of postwar history, it was commonplace in Japan for workers in the 50s to get pushed out the door with minimal pensions. The 55 year old former salaryman forced to open a noodle shop was a common occurence. That will no longer be the case.

The relatively small changes in demographics over the next 50 years in Japan, after which most of us on this blog will be dead so any later discussion is irrelevant, will if anything be beneficial to the nation.

Posted by: Bart at January 24, 2005 6:47 AM

Majorities don't make themselves work harder.

Posted by: oj at January 24, 2005 7:04 AM

30% is not a majority

Posted by: Bart at January 24, 2005 8:28 AM

A majority of their voters will be over 50--find me a fifty year old whose going to pus back retirement age.

Posted by: oj at January 24, 2005 12:00 PM

Razor wire.

Posted by: LUCIFEROUS at January 24, 2005 6:31 PM