Stem the tide of people into Tokyo

The latest demographics data show that the concentration of Japan’s population in the Tokyo metropolitan area is accelerating, not slowing as the government has sought. The flow of people into the greater Tokyo area (including Saitama, Chiba and Kanagawa prefectures) exceeded the outflow by 139,868 in 2018, with the net inflow increasing by 14,338 from the previous year. Of the nation’s 47 prefectures, 39 experienced a net population outflow, as did 72 percent of the cities, towns and villages. Greater Tokyo is the only one among the nation’s three big metropolitan areas — Tokyo, Nagoya and Osaka — to see a net population inflow last year.

The regional revitalization initiative, one of the key policy agenda of the Abe administration since 2014, set a target of balancing out the population flow into and exodus out of the Tokyo metropolitan area by 2020. But the administration’s policy measures to reverse the population flight to greater Tokyo — such as encouraging businesses to move their headquarters out of central Tokyo, transferring national government functions out of the capital, providing special grants to local governments to help revitalize their economies, as well as prohibiting universities in Tokyo from increasing their enrollment limits — have had little impact.

With the population concentration in Tokyo now greater than when the administration set the target and the goal practically out of reach, the government needs to assess why the measures it introduced are not having their intended effects and explore more effective steps to address the problem. More people keep moving to the capital because of the Tokyo-centric economic and social systems. Businesses that concentrate in the metropolitan area experience improved earnings and generate more local jobs, and the growing manpower shortage in the construction and service sectors to cope with redevelopment projects, hotel construction and projects linked to the 2020 Summer Olympic and Paralympic Games are also fueling the population inflow.

Large numbers of young people are attracted to Tokyo — despite the higher cost of living, often longer commutes and the various difficulties for child-rearing couples, including a chronic shortage of day care services — because it offers more attractive job opportunities. The net population inflow into the Tokyo metropolitan area among people in the 15-29 age bracket — when they enter new schools and find jobs — reached 127,000 in 2018. Meanwhile, the growing concentration of the youth population in Tokyo — where the fertility rate is the lowest among all prefectures due likely to the difficulties in raising children there — could exacerbate the rapid aging of the population with fewer births.

Last year, the government imposed a 10-year freeze on any increase in the enrollment capacity of universities located in central Tokyo — in the hope that the measure will slow the inflow of youths. However, it has been pointed out that many of the students who choose to study at universities outside of Tokyo would eventually move to the capital area anyhow unless there are enough attractive jobs in other parts of the country. The government has set a new target of increasing the number of employed workers and entrepreneurs in parts of the nation outside of big metropolitan areas by 300,000 in the six years from fiscal 2019. However, efforts to prod companies — which employ most workers — to move out of Tokyo make little progress.

The government introduced a program in 2015 that offers tax incentives to Tokyo-based companies that move their headquarters out of the capital and those that expand their operations in regions outside the big metropolitan areas. However, only 19 companies transferred their headquarters out of Tokyo in the first three years under the program. According to Teikoku Databank, companies that moved their headquarters to Tokyo outnumbered the firms that moved out of the metropolitan area for seven years in a row starting in 2011. Research by Keidanren (the Japan Business Federation) also reportedly shows that many companies dislike the idea of moving their headquarters out of Tokyo, as doing so would inconvenience their operations as many of their trading partners and the government institutions they deal with are concentrated in the capital.

On the other hand, the concentration of so many big firms in Tokyo poses a serious risk to the continuity of their business and the whole economy in the event that a large-scale disaster such as a mega-quake hits the area. The government should consider more radical policy steps to encourage businesses to diversify their locations, such as delegating administrative powers and tax resources to local authorities so they can compete and come up with innovative measures to convince companies to invest in their areas. The government should also lead by example by stepping up its own lagging efforts to decentralize its functions.