Carrying on with fewer people

Japan’s population started shrinking this year, according to two separate reports by the Health, Welfare and Labor Ministry and the Internal Affairs and Communications Ministry. The shrinkage began one year earlier than the National Institute of Population and Social Security Research had projected.

A continuing population decline will have a strong impact on the nation’s economy and on social security resources. The government should not lose any more time in developing effective measures to create a social environment that is friendly toward working and raising children. The government reports serve as a strong reminder that various measures taken since 1990 to give people incentives to have babies have not worked well.

Based on preliminary data up to October, the health ministry estimates a record low 1,067,000 births for all of 2005, 44,000 fewer than in 2004. This compares with an estimated 1,077,000 deaths, up 48,000 from 2004. Thus an estimated 10,000 fewer births than deaths are expected this year. Deaths include those of many elderly people who died of flu between January and March.

This is the first time that the number of natural deaths has surpassed the number of babies born since 1899, when statistics were first compiled. (Data are not available for three years during and immediately after World War II).

It appears that 2005 may be remembered as the year when the population uptrend reversed course. The internal affairs ministry report, based on census that included foreign residents, shows that the nation’s population stood at 127,756,815 as of Oct. 1, about 19,000 fewer than a year earlier. For a long time, the general public and policymakers took a growing population for granted. From now on, though, a new way of thinking will be needed if the Japanese economy and society are to adapt to the effects of a shrinking population.

Japan’s population, about 43 million in 1899, exceeded 100 million in 1970, then hit a peak of about 127,830,000 in December 2004. One estimate shows the population falling to 100 million by 2050. In 1974, the national fertility rate, or the number of children on average that a woman was expected to give birth to during her lifetime, started to drift below 2.08 — the minimum rate required for the population to sustain itself. As the population continued to increase after that year, most people and the government did not give much thought to what a declining fertility rate would bring about.

It was only after 1989 that the government started to take measures in earnest to try to counter the decline. In that year, the rate slipped to 1.57, even less than the 1.58 registered in 1966 — the year of the Fiery Horse (Chinese zodiac), when many people apparently avoided having babies because of the superstitious belief that girls born in such a year would bring ruin to their husbands. In 2004, the fertility rate fell to a record low 1.2888. One estimate puts the 2005 figure even lower.

A decreasing population means a smaller future workforce, which could hamper economic growth. It will also affect pension, medical service and nursing care, since contributions from the young working population play an important role in sustaining these social security programs. In fact, a population bracket called the production population, which covers people aged 15 to 64, has been on the decline since 1995 when it hit a peak of about 87 million. Several hundred thousands of people are said to be draining from this bracket every year.

To minimize the effects, it will become important to create a social environment in which those born after the war (including the 1947-49 baby boomers) can continue to work and women can find stable employment while raising their children. The 8-million-strong baby boomers will start reaching retirement age (60) in 2007. Yet most are still energetic and ready to work. To force them to retire would be a loss socially and economically. Giving them a chance to keep working will help reduce the financial burdens shouldered by younger generations to support pension and other social security measures.

For women who have children or who want to have children, merely increasing the number and improving the quality of nurseries is not enough. Many women have difficulty finding full-time work after having children and end up as part-timers. Vocational training may help heighten their value in the labor market, but changing the thinking of enterprises is more important.

The government must encourage businesses to work out an action plan that enables workers to pursue careers and raise children. The plan should include convenient provisions for taking child-care leave and working fewer hours temporarily for purposes of child-rearing. Enterprises should also brace for possible rises in their portion of social insurance premium payments in the future.