Japan's Gray Tsunami
Ryutaro Hashimoto, a former Prime Minister of Japan, is presently Minister
of Administrative Reforms. The following is adapted from remarks by Hashimoto
at a conference on aging organized in Zurich in February by the Center
for Strategic and International Studies.
Tokyo - Elderly persons in Japan aged 65 or older numbered 21 million
as of October 1999. According to estimates by the Ministry of Health,
Labor and Welfare, this elderly population will increase by more than
3 million persons every five years up to 2015. During the peak period
of this increase, from 2010 to 2015, the population aged 65 and over will
increase by approximately 4 million persons, pushing the total number
of elderly citizens beyond 31 million by 2015.
A FEW YOUNG PEOPLE | Over the next 10 years Japan is likely to see
a drop of nearly 4 million in the number of workers aged 15 to 29, while
the number of persons aged 55 and up will grow by approximately 3.8 million.
The workforce, too, is therefore likely to undergo further aging. Companies
will thus find it crucial to address the structural changes to the labor
supply that will be produced by "fewer young people and more older
In the 1980s many European countries attempted to reduce unemployment
among younger persons by adopting a policy of encouraging early retirement
by older workers. This generated higher costs in terms of unemployment
benefits and pensions, and new social security costs added to companies'
operating costs. In the end the policy forced down overall demand for
employment and failed to produce greater employment opportunities for
younger adults. The lesson learned from this bitter experience was that
lessening the burdens faced by an aging society requires the continued
employment of older workers and not their early retirement.
Though it is still a point of contention in Japan, the traditional lifetime
employment system should fundamentally be maintained. When I was younger
the mandatory retirement age was 55, but it is now 60. The age of eligibility
for retirement benefits will likely rise in incremental steps to 65, and
it is likely for the mandatory retirement age to move toward 65.
Under these conditions, however, it will become increasingly difficult
to maintain the seniority-based system. By switching to a merit-based
wage system, labor productivity will be improved and continued employment
of the elderly will become possible without compromising corporate and
industrial efficiency. We must discuss in further depth such questions
as whether Japan should follow the US model of banning age discrimination.
To that end, last December the Labor Department decided to pursue the
idea of abolishing age limits in recruitment and employment with the aim
of achieving an age-free society, in which people can work irrespective
of their age so long as they have a will and capacity to do so. Participation
by the elderly in employment is essential for a vigorous economy in terms
of both quantity and quality, the former because they help make up for
a decline in younger workers and the latter because they bring to the
market a tremendous diversity of skills and experience. Putting it in
other terms, building an economic and social framework that encompasses
the elderly as an indispensable labor resource is an issue that we must
OLD WORKERS | There are several key measures that must be taken to
expand elderly employment. The first is eliminating the mismatch between
labor supply and demand. While employment of the elderly makes sense from
the standpoint of total supply and demand, it must be smoothly coordinated
with actual employment needs in individual jobs. With the industrial structure
set to undergo major changes, it will not be a simple matter to match
up labor supply and demand. Job placement offices and temporary employment
agencies can fulfill an important bridging function in Japan. Retraining
elderly persons in new skills is also an important challenge, and the
employment insurance system is being administered to extend its coverage
to this area.
To make up for the labor shortages forecast to come, we should for the
time being rely on vigorous elderly workers as well as encourage more
women to seek employment. To that end, we need as a society to consider
establishing childcare centers and taking other steps to allow women to
both work and raise their children.
On the issue of immigrants, Japan has basically been the sender of people
to other countries for more than 100 years. We are not used to accepting
foreign workers or immigrants in our society. I, therefore, believe that
it is a matter that requires careful study and deliberation, taking into
account various issues such as possible social impact of accepting them.
In considering the economic impact on the national economy of the plunging
birthrate and our rapidly aging society, some observers have suggested
very gloomy scenarios, including higher social security burdens, reduced
personal consumption, lower household savings rates, a falloff in labor
productivity, and a decline in industry through decreased competitiveness.
I will not be a party to such negativism.
INDUSTRY OF THE ELDERLY | On the contrary, we need to view our
dropping birthrate and aging society as a potential engine for economic
growth. The aging of societies will expand the industrial sector one might
call "aged society industry" that is composed of not only medical
and nursing care but also supplying the product to meet the needs of the
aged, including barrier-free and universal design products, housework
assistance and leisure activities. The Industrial Structure Council estimates
that the market for these industries will climb from the present ¥39
trillion (about US$340 billion) to ¥150 trillion (about US$1.3 trillion)
by 2025. One can see a growing number of energetic elderly people who
are working and consuming significant amounts of goods and services.
As the door opens to a new century, I find myself, with a sense of solemnity,
confronting many important issues. The term "aging society"
itself seems to imply a stagnant society of old people. I believe the
key to success for the first decade of the 21st century will be transforming
this image to one of a bustling, cheerful long-lived society.
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