There have been statements made by some that Japan does not have a good economic future because already 22% of its population is over the age of 65. This is projected to reach 29% by 2029 and this will overwhelm the employed population in terms of support needs – both physical and financial. However, it pays to examine the numbers beyond the obvious.
In total the number of working age persons (that is persons aged between 15 and 64 years inclusive) in Japan is projected to decline from 82.995 million in 2009 to 71.025 million in 2029. A drop of 12 million persons and a trend that is almost inevitable given that these people are alive today. However Japan is changing both its propensity to be employed as well as the length of time they are employed – that is, extending working age. With a good nutritional history and a well established health system Japan has one of the longest life expectancies in the world. As such the expectation that people should stop working at age 65 is less accepted and by 2029 it will surely be to age 69.
If the definition of working age is steadily increased from age 64 to age 69 in a linear pattern through to 2029 and these additional working age persons have half the average propensity to be employed as the rest of the working age population this would add an additional 3.0 million persons to the labour force which gives a total employed population of 62.8 million in 2019 compared with 63.7 million in 2009. This means a decline of 896,000 persons in the labour force (1.4%) between 2009 and 2019. This compares very favourably with the expected decline of 3.3 million persons (3.8%) under the traditional case.
After 2019 the scenario changes as an increasing proportion of the population is then over 69 and now leave the workforce. As such the labour force is projected to decline more rapidly after that date. However, even then the overall dependency rate (number of unemployed persons per worker) is low – by 2029 it has reached 1.04. This compares with 1.8 for India today. In addition Robotics will have helped lift Japan’s workforce productivity further thereby maintaining household incomes.
