Japan prepares for old age

The world’s third-largest economy faces a challenge as its population declines and the number of elderly citizens increases. But efforts are being made to deal with the impact.

Elderly residents at a temple in Tokyo. Japan expects a shortage of labour, medical and nursing care services as its population ages. Yoshikazu Tsuno / AFP

TOKYO // In less than a decade, the approximately 6.5 million members of the generation born during Japan’s first baby boom (1947-49) will all be 75 years old or older, according to the country’s cabinet office.

Japan will become an aged society the likes of which no other country has ever experienced. As a result, it expects a shortage of labour, medical and social care services, especially in metropolitan areas, a situation referred to in Tokyo as the “2025 Problem”.

While the problem is not yet at crisis levels, the government, health services and businesses are priming themselves to deal with the ageing issue.

For their part, construction firms are seeing opportunities regarding housing provision for the ageing population, Akira Harada, the general manager of the Japan Federation of Housing Organisations, tells The National. "Already many Japanese housing companies are proposing houses where elderly people can live safely and conveniently."

The government has not yet specified the amount of housing required to meet the needs of older people, not least because the present number of housing units in Japan is a little over 60.63 million, exceeding the total number of households. “So people are not only thinking of building new houses … but also of renovating old houses” for older people’s needs, Mr Harada says.

New housing boasts not only superior earthquake resistance but also better material durability and heat insulation. In addition, builders also keep each floor on a level plane so older people can move around safely, and ensure corridors are sufficiently wide for nursing purposes such as wheelchairs, Mr Harada says. “Besides detached housing, new condominiums also offer various features for elderly people,” he adds.

A report by the Japan cabinet office’s economic and social research institute, titled Economic Effects of Retiring Baby Boomers, says Japan’s population peaked at about 128 million in 2010 and is expected to be about 52 million in 2100 following a decrease in population.

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At a glance

What: The Japanese population is ageing rapidly and decreasing so steps must be taken.

Why: With fewer workers across all sectors, the economy could be negatively impacted.

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Japan’s total fertility rate (TFR) – the number of children who would be born per woman if she were to pass through the childbearing years bearing children – has decreased rapidly since the first baby boom. From the mid-1950s until the mid-1970s, the TFR was about 2, but has been decreasing steadily since then, the report says.

Consequently, the ratio of the dependent population (0 to 14 and 65 and over) is increasing rapidly (in Japan, compulsory schooling runs through junior high school, with graduation at 15). The generation of the first baby boom is particularly expected to increase dramatically from around 2025, when its members will reach 75 years of age or older, the institute says.

Japan’s productive age population (15-64) peaked in 1995 and is decreasing steadily. The ratio of the productive age population to the 15 to 64 total is expected to be only about 50 per cent in 2060, the report says.

Compared with other developed countries, the labour force participation of elderly people (65 and over) in Japan is high, at 19.3 per cent, compared with 16.7 per cent for the United States, 8.8 per cent for the United Kingdom and 2 per cent for France. The results of a survey the cabinet office conducted in 2013 showed 25 per cent of the first baby boom generation want to work as long as possible.

Demand for doctors, nurses and medical staff is expected to increase by about 30 per cent in 2025 over 2011, and demand for social care staff is expected to increase by 50 per cent in 2025 compared to 2013. However, the productive age population is expected to decrease by 10.4 per cent during the same period, the cabinet report says.

National health insurance is one of the two major types of insurance programmes available in Japan. The other is employees’ health insurance. National health insurance is designed for people who are not eligible to be members of any employment-based health insurance programme.

Although private insurance is also available, all Japanese citizens, permanent residents, and any non-Japanese residing in Japan with a visa lasting three months or longer are required to be enrolled with either the national health insurance or an employees’ health insurance scheme.

National health insurance requires medical services users to pay 30 per cent of their medical expenses. People 70 to 74 years old with a taxable annual income of less than ¥1.45 million (Dh48,824), as well as their dependants, pay 20 per cent. Dependants are an adult’s spouse or offspring whose monthly working hours are less than three quarters that of average workers, with an annual income of less than ¥1.3m. People over 75 years old with a taxable annual income of less than ¥1.45m, as well as their dependants, pay only 10 per cent. Children under six pay only 20 per cent.

The ministry of health, labour and welfare plans to provide additional financial support to the national health insurance system starting in fiscal year 2018. The government will raise the national consumption tax from the current 8 per cent to 10 per cent in October next year, allowing it to add money to the health insurance system, the Japan Medical Association executive board member Kunihiko Suzuki tells The National. The association has about 168,000 members.

“We hope and expect to have these new amounts made available as financial resources for this purpose,” Mr Suzuki says.

No money will come from the private sector, however. “In Japan, private enterprise participation is not permitted in the healthcare system,” he says.

Pharmaceutical research is undertaken by private companies and university research centres as well as through joint ventures, says the Japan Pharmaceutical Manufacturers Association senior managing director Akira Kawahara. Population ageing will not impact the direction of the 72 members’ research priorities, Mr Kawahara says.

“The mission assigned to us as a life-related industry is clear, and there is nothing in the future that will change it, despite a very intense environment for such a change,” he says.

The manufacturing sector has not yet been overly affected by population ageing and decline, says Nicholas Smith, an analyst at CLSA Japan, the Tokyo office of the Hong Kong brokerage agency CLSA. However, the government does plan to give an increasing amount of money to machine research to cover a future deficit in manpower, Mr Smith says, without giving details.

But the service sector will have trouble attracting people, as it is the least popular sector to work in, Mr Smith says. “The salary is low, businesses tend to be low-grade, pride in the job is lower, job security is lower,” he says.

The Ireland-based journalist Eamonn Fingleton, who has written three books on the economies of East Asian countries, says the ageing of Japan’s population means the workforce is declining, thus growth in overall GDP is a lot slower than it was when the workforce was expanding.

These demographics are ultimately traceable to a Japanese government decision in the late 1940s to reduce the birth rate, Mr Fingleton says. “The main programmes were implemented under the Eugenic Protection Act of 1948, and within a few years, the birth rate was reduced by half,” he says.

Looking to the longer term, it is a reasonable bet that the Japanese population will stabilise of its own accord, as most couples want to have two children and some have three, thereby generating enough children to replace those people who are at the end of their lives, Mr Fingleton says.

Japan will continue to rank as a major player in manufacturing, and particularly in advanced manufacturing, he says. “That is the sort of industry that requires large amounts of capital and production know-how,” he says.

For Kokichi Shoji, a professor emeritus of sociology at the University of Tokyo, Japan’s main stumbling block in resolving the issues of ageing society and depopulation is Tokyo’s refusal to take in immigrants in any significant number.

"If we do not accept more serious and cooperative people from abroad, there will eventually be not only a shortage of general workers but also of specialised ones such as care workers, nursery school teachers, nurses, which will hinder social revitalisation," Mr Shoji, a specialist on contemporary social change, tells The National.

“It is unfortunate that Japanese citizens and the Japanese government are closed-minded and do not want to accept either refugees or immigrants.”

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