Can anything halt Japan's population decline?

Japan is a country full of people who are heading toward voluntary extinction. That's a dramatic statement to begin any article with, but it's true.

The population of Japan has shrunk year-on-year for the past nine years in a row. Every year, as soon as figures are released that confirm yet another population decline, the Government announces either a new policy or a new initiative to deal with it. So far, nothing has stopped or even significantly reduced the rate of decline, and before long, it will become a serious problem for the Japanese economy.

The latest population figures were made available just a few days ago, in the middle of April. They revealed that the population now stands at almost exactly 126 million. Clearly, that’s still a lot of people. Japan is not going to become a ghost town any time soon. There’s still plenty of reason to be concerned, though. Compared to the figures made available for the previous year, the population has decreased by over 250,000. In most countries, that’s enough people to fill a moderately large city. That’s a lot of lost tax revenue, and not enough young people entering the employment market to replace them. People should not be looked upon as fuel for the economy, but if there aren’t enough people available to work, a country is doomed to financial failure just as surely as a business is.

When we’re dealing with millions of people, it’s hard to provide a metaphor to illustrate the problem, but perhaps we can use online slots to make our point. Japan is a country that loves slot games, and has a gambling scene just as vibrant as Las Vegas or Macau. If you’re on a losing streak while playing online slots, you’ll eventually begin to run out of bankroll to put back into the game to make up for losses. As a result, you’re forced to make smaller and smaller bets in an attempt to make your bankroll last for longer. The net result of this is that even when you win, the wins aren’t enough to recoup the amount you’ve already paid into the online slots game. You’re eventually going to run out, and all your wins are doing are delaying the inevitable. Japan’s bankroll has been diminishing for a while now, and the point of no return will come sooner than anyone thinks if nothing is done about it.

The stated figure of 250,000, as shocking as it is, doesn’t even cover the true scale of the problem. If we were to look at Japanese citizens only, the problem is far worse. One of the tactics the Government has adopted in recent years to stem the tide is to make it easier for foreigners to work and live in Japan - but this has only been partially successful. More immigrants are coming to Japan than ever before, but not in sufficient numbers for the population to grow. If we were to focus on the number of Japanese citizens alive in Japan this year versus the number of Japanese citizens alive in Japan last year, we’d find that the number has dropped by just under half a million. Even with a population of hundreds of millions, it’s clear that the situation is unsustainable in the long term.

The declining population figures make for good headlines, but you have to do some deeper digging to find out what it's doing to the economy. The general population figure is deceptive. There might be 126 million people in Japan, but that doesn't mean 126 million workers. A massive thirty percent of the population is above the age of 65 and retired, and therefore no longer making any contribution to the economy at all. That equates to 36 million people, meaning Japan's workforce is, at best, around eighty million once you've also taken away the number of children and minors who are not yet old enough to work. That figure was once above one hundred million. If the decline continues at the current rate, Japan will have lost one-third of its population between the years of 2010 and 2060. Nobody knows what that will mean for the country's future, but it's not hard to see why it would result in Japan no longer being a global power.

Many people more informed and better qualified than us have tried to work out why young Japanese people are no longer having children. Conservative commentators blame it on the fact that Japanese women are now free to pursue education and careers of their own, and so they’re no longer interested in settling down and starting families. Liberal commentators prefer to point to the fact that well-paid jobs are hard to come by for young people, and so it’s harder now than ever before for a young couple to become financially stable enough to start a family of their own. Japan’s unemployment figures might be incredibly low - which, given the lack of people, is hardly a surprise - but the number of those jobs that pay well enough for people to prosper in life is also low. If companies aren’t willing to pay their employees to live, those employees won’t generate the next generation of employees. Without money, though, companies can’t afford to pay their employees any more than they already are. It’s a vicious circle, and it’s hard to see how Japan breaks out of it.

If the theory about a lack of well-paid jobs being responsible for the low birth rate is true, it has implications for the wider world. Japan isn't alone in having an economy propped up by workers on low wages, and what's happening in Japan today could easily happen in America and Europe tomorrow. That isn't Japan's problem to worry about, though. Japan's problem is to find an answer to the question of how to persuade its young citizens to produce children in large enough numbers to make up for the shortfall - and it's a question that needs to be answered urgently in order to secure the nation's economic future. Whether it's welfare incentives for couples having multiple children or practical support in finding a better balance between work life and home life, the answer needs to come now.