The Heisei Era, which will close in less than two weeks, witnessed an acceleration of the nation’s demographic woes — the falling number of births and the rapidly aging and shrinking population. The demographic problem — which the government has come to describe as a national crisis — clouds Japan’s future economic growth potential and casts doubt on the sustainability of the social security system. Efforts made over the years to reverse the trend appear to have achieved little. The challenge of coping with the aging and declining population will continue to be a priority in the Reiwa Era.
The year that the Heisei Era began, 1989, saw the birth of 1.24 million babies. That number dropped to an estimated 920,000 last year — a nearly 30 percent decline over 30 years. The number of newborns on record was the highest in 1949 at 2.69 million. During the early 1970s, when the children of the first postwar baby boomer generation were born, there were still more than 2 million babies born every year — before a long-term downtrend began. In 1975, the total fertility rate, indicating the average number of children born to a woman in her lifetime, dipped below 2.0 — the level above which is deemed needed to maintain the population — and kept falling. The fertility rate fell to a record low of 1.26 in 2005 before gradually inching up in subsequent years to reach 1.43 in 2017. Since the number of women in the primary child-bearing age has already declined significantly, however, any modest recovery in the fertility rate is not expected to result in a substantial pickup in the number of newborns in the coming years.
The dramatic changes to the demographic picture over the past 30 years were evident in the latest population statistics released by the government this month. As of last October, Japan’s total population, including foreign nationals, fell by 260,000 from the previous year to 126.44 million for eight consecutive year-on-year declines. Notable was the steep fall in the productive-age population made up of people aged 15 to 64, who constitute a key part of the nation’s workforce. Their number fell by 510,000 to 75.45 million, accounting for 59.7 percent of the total population, the lowest since comparable data became available in 1950. Their share of the total population declined by roughly 10 percentage points from the peak in 1992 — and their numbers shrank by 11.81 million from 1995.
Reflecting the declining number of births, children up to the age of 14 numbered 15.41 million, or a mere 12.2 percent of the total. On the other hand, those aged 65 or older hit 35.57 million, or 26.5 percent of the population — more than double the 11.6 percent in 1989.
People born during the 30 years of Heisei number 33.52 million, or 26.5 percent of the total population, whereas 91.51 million others were born during the slightly more than six decades of the preceding Showa Era (from 1926 to 1989), accounting for 72.4 percent of the total. Those figures also point to the stark contrast between Heisei and Showa in terms of demography.
The declining youth population, along with the increasing manpower demand with the economy’s uptrend in recent years, has resulted in a serious labor supply crunch — which has come to pose one of the most serious impediments to the nation’s economic activity. In response to growing calls from industries facing manpower shortages, the government has amended the immigration control law to welcome more workers from overseas to fill manual labor needs — in a turnaround of the previous policy that limited foreign workers to professional jobs requiring expert skills. However, the anticipated inflow of up to 345,000 foreign workers in the first five years of the program may not be enough to make up for the loss of an estimated 500,000 productive age workers each year. While more women and senior citizens have joined the workforce, much more needs to be done to reform the established labor practices to make the best use of their potential.
The government has also set ambitious targets to reverse or slow down the demographic trend, such as raising the fertility rate to 1.8 by 2025 or by maintaining a 100 million population as of 2060 — despite the latest forecast by the National Institute of Population and Social Security Research that the population will dip below that level in 2053 and fall to 88 million in 2065. It has promoted measures to provide support for young couples in the child-raising generation, such as free pre-school education and day care service. But while such efforts are critical and should be expanded, they have not produced visible changes in the demographic picture.
The long-term demographic downtrend that marked Heisei will likely continue in Reiwa. The challenge will continue to explore ways to maintain the vitality of the economy and keep the social security system sustainable as the population rapidly ages and shrinks.