Bleak population prospects

The latest demographic forecast by a governmental think tank — that Japan’s population will decline by one third in the coming 50 years — points to mounting policy challenges ranging from depletion of the workforce to sustainability of the social security system. Steady and persistent efforts are needed to slow and hopefully reverse the demographic trend, but we also must explore how we can live with the rapidly shrinking and graying population.

According to the National Institute of Population and Social Security Research, which every five years releases long-term demographic estimates up to 50 years ahead, Japan’s population in 2065 will be 88.08 million — a roughly 30 percent fall from the 127 million people living in Japan in 2015. That will be equivalent to losing an average of 780,000 people every year.

The population will not just shrink but will be much grayer. People 65 or older will account for an estimated 38.4 percent of the total population, up sharply from 26.6 percent in 2015. There were 2.1 people in the 20-to-64 age bracket for every one person in the elderly ranks in 2015. Fifty years on, that ratio will be 1.2 to 1— a daunting prospect for the social security system, in which welfare programs for retirees are sustained by premium payments from the working population. That Japan had nine working-age adults for each of elderly person in 1965 shows the radical changes in population structure.

Indeed, the estimate released last week projects the population decline to slow down a bit compared with the previous forecast — as the think tank projected the fertility rate in 2065 at 1.44, compared with 1.35 that it estimated for 2060 five years ago. Japan’s population is now projected to dip below 100 million in 2053, instead of 2048 in the 2012 forecast. That, however, does not mean significant changes in the long-term trend of population decline and aging.

The nation’s population turned downward after peaking in 2008. The population in 2016 declined by a record 271,834 from the previous year for the seventh annual fall in a row. The number of newborns last year is estimated to have dipped below 1 million for the first time since the government began taking comparable statistics in 1899 — far below the peak of 2.69 million in 1949. The fertility rate — the estimated number of babies born to an average woman in her lifetime — has been inching up since bottoming out at 1.26 in 2005 to reach 1.45 in 2015, but is still far below 2.07, the level deemed necessary to sustain the population. And despite the slow recovery in the fertility rate, the downtrend in the number of newborns is expected to continue given that the ranks of women in their primary childbirth age of 20s and 30s have already dwindled.

Alarmed by the rapidly graying and falling population, the Abe administration in 2014 set a goal of maintaining a population of 100 million in 2060 — which officials say will be achievable if the administration’s target of bringing the fertility rate back to 1.8 by the mid-2020s is met. The government has spelled out policy steps to support child-rearing by working mothers. It is believed that such steps encouraged more women in their 30s and 40s to have babies, contributing to the pickup in fertility rates. The latest estimate, however, underscores that these efforts may slow but will not reverse the demographic trend.

To restore the fertility rate and slow the population decline, measures should continue to be explored to fight problems that discourage the younger generation from marrying and having children, including insecurity over jobs, financial concerns over having a family, or insufficient public support for child-rearing.

At the same time, the government must not shirk from the stark demographic prospects. It must come up with a design that copes with the shrinking and aging population and start building a public consensus on the way forward. It cannot avoid such efforts by merely setting out an ambitious population goal.

A fundamental overhaul of the pension, medical services and nursing care programs to rebalance the benefits to retirees and the burden on working-age generations will be inevitable. Wealthy retirees will need to be asked to shoulder an increased share of the cost or face reduced benefits. The demographic estimate shows that the “productive age” population between 15 and 64 in 2065 will have fallen 41 percent from 2015 — much faster than the decline of the total population. Both in order to secure manpower and contain rising medical and nursing care expenses, efforts will need to be made to help more people 65 or older stay fit and remain in the workforce.

An economy that experiences a 30 percent population decline will not be sustained the same way it was in the past. Along with the problem of the shrinking manpower supply, consumer spending — which today accounts for 60 percent of the gross domestic product — will obviously dwindle. Whether immigration can be a solution for sustaining the economy should be publicly discussed.

A steep population decline and aging as projected in the estimate is already a serious problem in rural Japan, where the population exodus to big metropolitan areas like Tokyo threaten the survival of local communities and maintenance of basic services. In fact, the Abe administration’s “regional revitalization” bid to reverse the population flight makes sense as a solution to the nationwide population woes — because the exodus to Tokyo, where the cost of living is high and the fertility rate is the lowest among the nation’s 47 prefectures, exacerbates the situation. The problem is that the administration’s initiatives seem to be making little progress, and the concentration of people and resources in the capital continues unabated. The government needs to redouble its efforts in this area.