Shrinking and aging population in Japan becomes an economic problem


Japan is looking for ways to deal with the problems caused by a shrinking and aging population. The number of births dropped 2.9 percent last year while deaths rose to a post war high. The population shrank by a record 280,000. CCTV`s Mike Firn reported from Tokyo.

Japan’s birth rate has been dropping since the 1970`s, down to a record low of just over one million last year in a population of 127 million.

Four decades of falling births have eaten away at the number of workers.

“One percent shrinkage in population will slow Japan`s economic growth by about half a percentage point each year. So 0.5 percent of GDP is about 2.5 trillion yen ($20.95 billion) every year that`s potentially lost economic revenue,” Takuji Okubo, Japan Macro Advisor’s chief economist, said.

Although the death rate is rising, Japan has one of highest life expectancy in the world with an average of 84 years, which makes fewer people paying and more claiming social security.

Spending on healthcare and pensions accounts for about a third of Japan’s annual budget and looks set to rise to a record in the next fiscal year.

The International Monetary Fund said this rising social security burden, particularly health, is adding to Japan’s already high fiscal risk and making increasingly hard for the government to manage its public debt burden.

The government tries to encouraging people to start families by scrapping taxes on cash gifts to pay for weddings, home buying and childcare and promising to cut daycare waiting lists to zero.

“The efforts are commendable, but they do not address a broader problem that is probably not exactly within the reach of the Abe administration or any government, which is the need for societal change. A broader societal change that has the husbands doing more of the housework,” visiting scholar, Jun Okumura, from Meiji Institute for Global Affairs said.

Even if the birthrate rises, Japan needs to consider another societal change to address labor shortages before those children reach working age.

“I think its just a matter of time that Japanese society as a whole will have to decide that they have to embrace the idea of immigration,” Okubo said.

If birthrates and immigration levels stay low, the government said, by 2060 only 51 percent of Japanese will be working age, while 40 percent will be 65 years or older.

Steven Kramer from Wilson Center discusses problems of shrinking population

For more on the reason why about 20 countries are losing population while virtually all others are growing, CCTV America interviewed Steven Kramer, who is a public policy scholar at the Wilson Center, a non-partisan think tank.