Asia Program


The Demographic Dilemma: Japan's Aging Society

October 31, 2002 // 2:00pm4:00pm

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Japan is the most rapidly aging country in the world: By 2005, one-fifth of the population will be aged 65 years or older. Should the demographic dilemma be termed a "crisis," or is it a manageable problem for Japanese policy makers? The panelists differed markedly in their answer to this question.

Paul Hewitt, director of the Global Aging Initiative at the Center for Strategic and International Studies, painted a grim picture of Japan's economic future, due to aging and depopulation. Hewitt explained that Japan's birthrate is now 1.3 children per woman-less than two-thirds of replacement. In a dramatic illustration, he pointed out that, should the current rate continue, there will be only 500 Japanese people left in the year 3000, down from 127 million today. In the less far distant future, severe economic challenges will include a contracting labor force, lower domestic output, sagging consumption, falling tax receipts, and public debt rising even beyond current dangerously high levels. Even before retirement, the aging workforce will hurt Japanese competitiveness. Older workers are less technologically savvy and therefore less efficient, at the same time they are overpaid by Japan's seniority system. Moreover, an aged population will hurt Japan's efforts at structural reform, since older people are less prone to take risks or start businesses, and tend to use their disproportionate clout at the ballot box to protect old industries from competition.

John C. Campbell, professor of political science at the University of Michigan, agreed that population aging is a challenge, but argued that the problem will prove less dire than Hewitt and others suggest. According to Campbell, economic growth of two percent will be enough to offset the negative effects of aging. Aging and depopulation are gradual, and associated costs probably go up only 1-1.5 percent per year. If the government plays its cards right, this will not prove an insurmountable burden. Retirees in Japan enjoy good health and are more likely than those in other countries to continue contributing to the economy?more than 50 percent of men aged 65 to 69 continue to work in some capacity. Even to the extent that the old members of society pose a burden, Japan will be able to cope by increasing productivity. Campbell pointed out that women contribute more to the economy than in the past and the proportion of dependent children has gone down.

Chikako Usui, professor of sociology at the University of Missouri in Saint Louis, also expressed hope that Japan would be able to cope with its aging population through economic growth and increased productivity. She pointed out that demographic trends can be changed or rendered less harmful through technological innovation. For example, in 1900 more than one-third of the American labor force was necessary to feed the nation, but now two percent can accomplish the same task through improved organization, increased crop yields, and new technologies. As society becomes more efficient?shifts from a "Fordist" to a "post-Fordist" system?it will be able to cope with challenges that now seem insuperable, Usui argued. She suggested that analysts tend to over-emphasize the "aged dependency ratio" (the number of actively working individuals divided by the number of "aged dependents") without taking into account the wider economic and technological context.

While the panelists disagreed on Japan's ability to cope economically with demographic change, they agreed that the societal impact of the aging population will be profound. The "gray dawn" will likely transform the way almost everything is done in Japan, altering family relations and business practices. Even as it ages, Japan's population will have to prove itself capable of resilience flexibility, innovation, and openness to change.

Amy McCreedy, program associate, Asia Program, 202/691-4013


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