The population of Japan is shrinking at an alarming rate, with the latest data revealing a significant drop in the number of Japanese citizens. This trend could have severe implications for the country’s economy and social welfare system.
What Happened: The number of Japanese citizens decreased by over 861,000 to 121.6 million in the year leading up to Jan. 1, marking the fastest decline since data collection began in the 1960s, reported Bloomberg. This marks the 15th consecutive year of population decline in Japan.
The overall population of Japan, including foreign nationals, shrank by 0.4%. While the foreign population increased by 11% to reach 3 million, it was insufficient to offset the decrease in Japanese nationals.
This demographic shift is posing several challenges for Japan, including a labor shortage. Despite the country’s unemployment rate consistently remaining below 3%, many businesses are struggling to find enough workers. The service sector alone has nearly three job openings for every worker seeking employment.
A record 260 companies declared bankruptcy in 2023 due to an inability to secure enough workers to sustain operations, according to a report by Teikoku Databank.
Another concern is the strain on Japan’s social security system, with a decreasing number of taxpayers to support the growing elderly population. The tax and insurance premium revenue is projected to drop by approximately 10% by 2040, complicating the country’s ability to finance expanding social security expenses, according to a 2018 estimate by Takero Doi.
Prime Minister Fumio Kishida has pledged to increase the government’s support per child to a level comparable to Sweden, where 3.4% of GDP is allocated to family benefits to boost Japan’s declining birthrate.
Why It Matters: The declining birth rates in Japan have been a cause for concern for several years. This trend is starting to have significant economic impacts, as evidenced by the shift in focus of Japanese diaper manufacturers to the adult market. Companies like Oji Holdings and Daio Paper are experiencing a surge in demand for adult diapers due to Japan’s aging population and declining birth rates.
Japan’s population decline has also been highlighted by figures such as Tesla Inc. CEO Elon Musk, who pointed to the ratio of “adult diapers” to “baby diapers” in Japan as a cause for concern. Data from Tokyo showed that the waiting list for admissions in daycare facilities in Japan stood at a record low, further emphasizing the impact of the declining birth rates.
Japan is not alone in facing these challenges. China and Russia are also grappling with declining populations. In Russia, President Vladimir Putin has urged families to have more children, citing the preservation of the nation’s ethnic identity as the primary reason behind this appeal. Best-selling author Jim Rickards has also warned about the declining population in China, terming it an “epic collapse.”
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Image Via Unsplash
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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