Social benefit costs in Japan will grow more than 50 percent over the next two decades as the population rapidly grays, the government said Monday.
The costs, which include pensions and health care coverage and are to be primarily funded by the government and insurance fees, are expected to balloon from an annual ¥121.3 trillion ($1.11 trillion) in fiscal 2018 to around ¥190 trillion in fiscal 2040.
The amount would be the equivalent to 24 percent of Japan's gross domestic product, up from 21.5 percent, according to the government's "baseline" scenario for economic growth.
The outlook for social security costs — released following a meeting of an economic policy panel consisting of members of Prime Minister Shinzo Abe's Cabinet, Bank of Japan Gov. Haruhiko Kuroda, academics and private-sector business leaders — will become the basis for the drawing up of the government's long-term plans to deal with the demographic shift.
Of the total costs, pensions are projected to rise to ¥73.2 trillion from ¥56.7 trillion, while medical benefits could rise to as high as ¥68.5 trillion from ¥39.2 trillion. Nursing care benefits are meanwhile expected to more than double to ¥25.8 trillion from ¥10.7 trillion, while benefits for child-rearing will grow to ¥13.1 trillion, from ¥7.9 trillion.
As for how the costs will be funded, the government said the ¥46.9 trillion currently shouldered by taxpayers is forecast to climb as high as ¥80.4 trillion, while insurance premiums will rise from ¥70.2 trillion to as much as ¥107.3 trillion.
In addition to the rising costs of social benefits, the surge in the elderly population will require more workers in the medical and nursing care sectors.
The labor ministry said the number of such workers is expected to increase to 10.65 million by fiscal 2040, or 18.8 percent of the country's entire workforce, compared with the current 12.5 percent.