On October 14, 2008, Nippon Keidanren announced its policy proposal "An Economy and Society That Responds to the Challenges of a Declining Population."
Based on a time horizon of 50 years or so, this proposal brings together measures that Japan should begin implementing immediately so that citizens can maintain vigorous and prosperous lives despite the advent of serious population declines. In developing this proposal, field surveys were undertaken in four European nations, including Germany and the United Kingdom, and with respect to the European Union.
Japan's total population is expected to contract by 30 percent in the next 50 years, and the working-age population will shrink to about one-half its current size. As a consequence, it will be necessary for just 1.3 persons of working age to support one person who is 65 years or older. Such a rapid population decline will slow the economic growth rate, make it difficult to sustain government finances and the public pension system, and also make it hard to maintain an economic and social system requiring manpower in such areas as health care and long-term care. Based on certain assumptions, a shortage of about 1.8 million workers is estimated for the health care and long-term care fields.
As the population decrease becomes more acute, the acceptance of foreign workers and the promotion of their permanent residency should be considered seriously if Japan is to strengthen its competitiveness and stably maintain the functions of its economic and social system. With global competition increasing over labor, it will be essential to (1) actively accept highly skilled labor, (2) expand the acceptance of foreign students and promote their employment, and (3) accept foreign workers with a certain level of qualifications or skills.
To achieve these ends, an urgent issue is to consider seriously comprehensive Japanese own immigration policies, such as the enactment of legislation and the development of administrative systems, including the establishment of a responsible minister.
Moreover, with the view of maintaining a vigorous economy and society over the long term, measures that should be implemented immediately are:
Strengthening of growth capacity, such as through the promotion of research and development and through human resources development
Fostering of future generations, such as through the promotion of bold measures that address the challenges of a declining birth rate
With the advent of a society with a declining population, Japanese citizens feel more uncertainties toward the future with regard to the waning of economic vitality and the diminishing prospects for maintaining the social insurance system, among other issues. Nippon Keidanren therefore proposes measures based on a time horizon of 50 or so years that Japan should begin implementing immediately, with the view of maintaining economic vitality in the long term and of enabling citizens to realize prosperous lives.
a) In the next 50 years, Japan's total population will decrease from 127.77 million (2005) to 89.93 million (a decline of 30 percent), and the working-age population will contract sharply from 84.42 million (2005) to 45.95 million (a decline of 46 percent). This means that 50 years hence just 1.3 working-age persons will be supporting one elderly person (Chart 1). Furthermore, the distribution of the population by region will grow more uneven.
Also, the percentage share of foreigners in Japan's total population is even low compared to European and other developed countries (Chart 2). Moreover, Japan has been falling far behind in the international competition over securing highly skilled labor.
b) Given these circumstances, it should be difficult to keep economic growth, the sustainability of government finances and the public pension(Chart 3), and the economic and social system requiring manpower in such areas as health care and long-term care.
c) The effects of a declining population will grow more serious as time goes by. Also, should the younger generation lose hope in the future, the population will flow overseas in the context of globalization, led by highly skilled workers, which will risk accelerating the population decline.
d) To overcome these problems associated with a decreasing population, it will be essential to clarify a path toward new growth and to promptly begin implementing measures with immediate effect together with measures requiring a relatively longer time span.