Home to more centenarians than anywhere else, Japan boasts an aging population that is now the oldest in the world. Almost 29% of people in Japan are aged 65 or over and it is likely that those over 65 will represent one-third of the population by 2026. Thanks to high life expectancy and a low birth rate, the population is both aging and shrinking.
The aging population in Japan is already delivering considerable social and economic impacts. Japan's economic growth has certainly been affected. Growth is predicted to decline by 0.8% each year for the next 40 years due to demographic changes alone.
What is the impact of the aging population on the labour market?
Japan now boasts the highest old age to working age ratio in the developed world. It is possible that by 2060, there could be one person aged over 65 for every person of working age. This is despite recent increases in the proportion of the population that is working. That ratio remains much lower than that in the EU.
The labour force in Japan is diminishing and is not being boosted by immigration. The Japanese Government is considering changes to the law such as abolishing mandatory retirement and raising the pension age. It is also introducing measures to encourage a higher birth rate. But there are already labour shortages that industry must find ways to cope with.
Labor Shortages in key sectors
Manufacturing and construction are labour-intensive sectors and have been particularly hard-hit. The shortage of younger workers has forced companies to either automate processes or outsource labour to other countries. In construction, the shortage is problematic for infrastructure and housing projects, especially in rural areas.
The healthcare industry faces a paradox—while demand for services is skyrocketing due to the elderly population, the workforce needed to provide these services is dwindling. This has led to staffing shortages in hospitals, nursing homes, and care facilities, putting immense pressure on the sector. Caregiving roles, traditionally low-paid and demanding, struggle to attract workers.
Japan's agriculture sector is also heavily affected by its population aging. Farmers in Japan tend to be older, with many over the age of 65. This trend threatens the sustainability of domestic farming, as younger generations are less inclined to take over family farms. As a result, there has been an increased reliance on imports to meet food demand.
Technological innovation and automation
In response to labour shortages, many Japanese companies are turning to automation and robotics. Japan is a global leader in robotics development, and its aging population is accelerating the adoption of technology in various industries.
The healthcare sector is adopting robotic assistants and AI technology to help manage the care of the elderly. For example, robotic caregivers can assist with tasks such as helping patients move or monitoring their health, reducing the burden on human staff.
Many manufacturers are automating processes to compensate for the lack of workers. Robots are now performing tasks such as assembling, packaging, and even logistics in industries ranging from electronics to automotive manufacturing.
Japan is also seeing the rise of automation in retail and hospitality, with the introduction of self-service kiosks, robotic hotel staff, and automated customer service platforms. These technologies aim to reduce the need for human labour in industries that traditionally rely on large workforces.
Healthcare and medical technology boom
The aging population has led to increased demand for healthcare services and products, driving growth in the medical technology and pharmaceutical industries. Companies specializing in elder care, medical devices, and pharmaceuticals have seen significant market growth as they innovate to meet the specific needs of older adults.
There is growing demand for medical devices that help monitor and improve the health of the elderly, such as heart monitors, mobility aids, and fall detection systems. Companies are also developing assistive technologies like hearing aids, wearable health monitors, and home-based medical devices to support independent living for seniors citizens.
With a higher prevalence of chronic diseases and age-related health conditions, Japan’s pharmaceutical industry has shifted its focus to geriatric care. Drugs that address issues such as dementia, arthritis, cardiovascular disease, and osteoporosis are increasingly in demand.
There are certainly new business opportunities in Japan in the medical sector thanks to the aging population.
Japan aging population impact: Specific tasking
Recruit Holdings is Japan’s largest employment and staffing firm. It has been working with employers for several years to encourage the breaking up of jobs into much narrower tasks with the aim of expanding the workforce.
For instance, creating specific roles such as the stocking of supermarket shelves early in the morning and cleaning industrial premises before other workers arrive. As elderly people tend to prefer working in the morning rather than at night, these roles are attractive to them and could encourage older people to remain working or to return to work.
Certain roles have also been created to accommodate mothers who could only work in the middle of the day. Disabled people can also be brought into the workforce if there are roles available that involve specific tasks that they can cope with.
Issues for the armed forces
The armed forces in Japan have failed to meet their recruiting targets since 2014. To address the problem, the maximum age for new recruits has been raised from 26 to 32. In addition, the retirement age for senior officers has begun to rise. But in 2023, the forces were only able to achieve 51% of their recruitment targets.
There are more job vacancies than applicants in Japan and so the military face stiff competition for recruits. Jobs in the private sector tend to offer better remuneration packages and that is an issue that will be hard to overcome.
Consumer demand and behaviour
Japan’s elderly population is reshaping consumer behaviour. The higher proportion of elderly citizens has seen a shift in demand towards products and services that cater to older adults including ergonomic furniture, accessible home appliances, and health supplements. Manufacturers and retailers are adapting by offering more senior-friendly products, such as easy-to-open packaging and assistive devices for mobility.
Older consumers are increasingly spending on healthcare, wellness, and lifestyle products that improve their quality of life. Services like rehabilitation, fitness programs tailored to the elderly, and even travel packages focused on wellness and relaxation have seen a rise in popularity.
Older adults in Japan tend to have more disposable income due to lifetime savings and pensions. This is leading to increased spending on luxury goods, travel, and leisure activities. Japan is seeing increased growth in industries such as high-end tourism, luxury retail, and retirement living communities.
Japanese demographics are proving to be profitable rather than problematic for some industry sectors.
Ahead of the curve
Many countries in the developed world are increasingly facing challenges caused by aging populations. But Japan is ahead of the curve. The situation that Japan now finds itself in will likely be replicated across Europe and North America. However, rises in the average ages of Western populations are being limited by unhealthy lifestyles.
Japanese lifestyles tend to be healthier and that is largely why the country now boasts a significantly older population than elsewhere.
Japanese industry is adapting to the aging demographic by using new technology and redefining working roles. Both businesses and the Japanese Government are making changes that encourage and enable citizens to work into old age.
Any successful strategies will surely be adopted elsewhere.
Japan is continuing to find new ways to tackle an aging demographic to reverse a shrinking economy and to ensure that older citizens are properly supported.
Related Posts
