Officials are expecting the workforce to shrink by a fifth by the time 2040 rolls around. | BLOOMBERG

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Japanese workforce projected to be 20% smaller by 2040

Kyodo

The workforce in 2040 is projected to be 20 percent smaller than in 2017 due to overall population decline if the economy sees no growth and women and the elderly continue to have difficulty landing jobs, according to government study released Tuesday.

A study group of the labor ministry, releasing the first official projection for the size of Japan’s workforce in 2040, called for additional policies to boost employment and promotion of artificial intelligence as measures to sustain productivity.

The study did not take into consideration the expansion of the foreign workforce in 14 fields, including construction and nursing care, from April this year.

The panel on employment policies set up by the Health, Labor and Welfare Ministry estimated that the number of workers in Japan will stand at 60.82 million in 2025 and 52.45 million in 2040, down from 65.3 million in 2017.

The number of male workers in 2040 will fall by 7.11 million from 2017, while that of females will decrease by 5.75 million.

By industry, the wholesale and retail sector will be hit the hardest, with the workforce expected to drop by 2.87 million between 2017 and 2040, followed by mining and construction with a 2.21 million fall, and manufacturing, down by 2.06 million.

The group said an increase is foreseen only in the medical and welfare sector, where the workforce in 2040 is estimated to rise by 1.03 million, reflecting the country’s aging society.

However, if policies to promote the employment of women and the elderly bear fruit to some extent, the total number of workers in 2025 will be 63.43 million, down 1.87 million from 2017, and 56.44 million in 2040, down 8.86 million.

Recent data released by the ministry shows that Japan saw a natural population decline of 448,000 in 2018, the largest ever, due to the falling birthrate.

As for the entry of additional foreign workers under a new initiative to help tackle serious labor shortages, the group called for support measures such as more Japanese-language programs.

The government has said it expects to accept up to 345,150 foreign workers over a five-year period starting this April, including 60,000 in nursing care.