Administrative services amid the falling population

Japan’s accelerating population decline poses a set of daunting challenges ahead for local governments as they struggle to sustain administrative services for residents. A study group at the Internal Affairs and Communications Ministry, in a mid-term report on the agenda for local governments toward 2040, urged municipalities across the country to use and share their resources such as manpower and facilities in “wise and strategic” manners by overcoming organizational and regional divisions. Particularly in rural depopulated areas it is clear that municipalities with depleted finances will no longer be able to provide full administrative services for their residents. They will need to work with other government or private-sector organizations to serve their needs. What ultimately matters is that local residents’ needs are met, not who provides the services.

The demographic picture of 2040 painted in the ministry’s report released last month, citing data from the forecasts by the National Institute of Population and Social Security Research, is quite bleak. The nation’s population, which peaked at 128 million in 2008, will have dropped to 110.9 million in 2040 — around which time the population is forecast to fall by roughly 900,000 each year. It’s feared that the population decline will reach 40-50 percent in many small municipalities. It’s estimated that the annual number of newborns, which has finally dipped below 1 million, will fall to 740,000 — compared with 2 million in the early 1970s when the postwar baby boomer generation had children. The population decline is set to continue over the long term even if the fertility rate recovers in the coming decades.

It’s estimated that the aging of society will peak in 2042, when people aged 65 or older are expected to account for 36 percent of the population — while the number of those 75 or older is expected to continue expanding through the mid-2050s. Problem arising from this demographic trend will be even more severe in the big metropolitan areas surrounding Tokyo, Nagoya and Osaka, where large numbers of migrants from rural areas will enter their senior years, likely straining the medical and nursing care services. The anticipated increase in senior citizens living alone suggests that families and local communities cannot be counted on as a welfare safety net for the elderly.

Public infrastructure such as roads, bridges, tunnels and sewage systems — many of them built during the nation’s period of rapid economic growth that ended in the early 1970s — are aging and will need repairs. The growing cost of repairing and rebuilding such facilities as well as social security expenses will further strain the coffers of local governments that are already under duress due to the falling population and declining local land prices. The number of local government workers — already down to 2.74 million in 2016 from 3.28 million in 1994 — will have to shrink further.

It seems obvious that the framework of administrative services based on the assumption of postwar Japan — that the population and people’s income will continue to increase — will no longer work. Choices will need to be made as to what services and public infrastructure should be maintained and what to be discontinued as the number of people who use the services and facilities declines. People who stand to be negatively affected by such changes will either have to be asked to accept the inconveniences or be asked to move to city centers as local governments try to consolidate their services.

Municipalities such as city, town and village offices have been the providers of administrative services for local residents. But the demographic challenges means that the municipalities can no longer be held responsible for all the measures in their jurisdiction — ranging from local construction to promotion of farming, forestry and fisheries as well as tourism, and medical and nursing care services for the elderly. To provide administrative services more efficiently under the limited resources, they will have to work together with other municipalities or prefectures, or commission private-sector firms and groups to take charge of the services, which would lead to creation of local jobs. From the residents’ perspectives, it should not matter who is providing the services, as long as they can get the services they need.

The government is reportedly seeking to promote cooperation between municipalities — such as between cities with sizable populations and adjacent smaller towns and villages to share some of their public facilities and jointly provide some services for residents — as a solution to the demographic challenges. That may not be enough. The government should promote deregulation to give municipalities more freedom to outsource their administrative services to local businesses and civic groups in order to sustain sufficient services for their residents.