Japan’s Population Problem

Japan. A place known for its exceptionally good food, its pop culture, and its sprawling, fast-paced cities. When it comes to geopolitics though, it doesn’t get talked about as much as neighbors like Russia and China. 

But out of the spotlight, and behind the curtain, Japan is a powerful global player, and one of the United States’ most important allies. The partnership has been cemented over decades, grounded in shared goals, and shared values. 

But Japan also has a problem: it’s running out of people. Its population is growing older, and not enough babies are being born.

If the trend continues, it could weaken the country’s role on the world stage, and this could have serious implications for the U.S., and the future of Asia. 

I’m Gabrielle Sierra, and this is Why It Matters, today, a demographic problem in Japan. 

Gabrielle SIERRA: So the world's attention is going to be turning to Japan soon because the Olympic Games are going to be beginning. Is there a simple way to describe what life is like there?

Motoko RICH: It's sort of the lifestyle superpower of the world. It's a very easy place to live, at least on the surface. 

This is Motoko Rich. She’s the Tokyo bureau chief for the New York Times. 

RICH: And then I think it's when you dig just a little bit below, you see that there are a lot of problems, some of them looming in the future and some of them very much there today, and that makes it a place of somewhat cognitive dissonance, maybe like all societies, but I think Japan, because it looks so beautiful and so efficient and so fun, especially in a place like Tokyo or Osaka and Kyoto on the surface, I think people don't realize what might be lurking beneath.

SIERRA: Right. So let's talk about one of those issues. Can you tell me a little bit about Japan's demographic problems?

RICH: Well, the predominant issue is that it is rapidly aging. It's currently considered the oldest country in the world in terms of the proportion of the population that's already over 65. It's approaching about 30%, and it will be more than that in about 10 years. And the population has also been declining for the last decade. So there are a lot of old people and fewer and fewer young people.

SIERRA: It's just actually kind of hard for me to imagine life in a country where everyone is so old. I was kind of hoping that you could help me imagine it. So let's say I'm a young woman in Japan, maybe in the countryside or maybe in a city, can you take me sort of on a walk? Like what do I see? Do I feel this happening around me?

RICH: Well, if you're a young woman in the countryside, you're alone.

SIERRA: Wow.

RICH: I mean very recently I reported about a young woman who she and her sister were literally the last people to be born in their town. In their late 20s, they're the youngest people in their town. And she left her town to study to become a nurse about two hours away, but she's planning to go back and she's going to specialize in geriatrics because what else is there to do? She can't be a pediatric nurse or a neonatal nurse.

SIERRA: Right.

RICH: If she were to walk to the bank, there will be a rack with three different sets of prescription reading glasses.

SIERRA: Oh my gosh.

RICH: Because the assumption is that somebody might walk in, forget their glasses, and need the reading glasses to look at the deposit slip. If you go into the city office and there are seats at the counter, there will be little slots to put your cane. And then, like I said, walking around town, everybody will be old.

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SBS Dateline: With fewer babies being born and a rapidly aging population, Japan is facing an unprecedented demographic crisis with vast social, economic, and political repercussions. 

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5 News: Couples are waiting longer to get married, are working more and having fewer children, and there's a huge cultural difference. Within around 20 years it's going to be Losing 1 million people a year; the size of a city. 

This slowdown may come as a surprise if you associate Japan with bustling cities and cutting-edge youth culture. But it’s real. Japan’s 2020 census recorded a population decline of 800,000 people, a year later the percentage of its population under age 14 had fallen to its lowest level ever - just 11 percent.  

It’s a big change. For much of the 20th century, Japan was a story of booming growth. By the 1980s, it had become the world’s second-strongest economy, and there were widespread fears that it might even displace the United States. That didn’t happen, but the country remains a pillar of the global economy and a considerable force in international diplomacy. But all of this is threatened by their declining population. 

SIERRA:  So what kind of obstacles is this issue creating, then, for Japan? What are people worried about at the national level? 

Sheila SMITH:  So first and foremost, obviously, is that the government will have to spend more to take care of the elderly in Japan, be that in health care costs, or be it in pensions. 

This is Sheila Smith, Senior Fellow for Asia Pacific studies at the Council on Foreign Relations, and a widely followed expert on Japan. 

SMITH: The second is and it's related also to the government, its revenue and that is that the working population, as it gets smaller right as more people retire and then the population doesn't grow the share of the people who are working-age diminishes and that means less revenue, less taxes, less income taxes specifically. So there'll be fewer Japanese taking care of a larger proportion of the population. So that ratio between working and retiree will shift considerably. But there are larger social questions and Japan for the last decade or more has been grappling with some of this. Traditionally, the Japanese lived with their nuclear family, so often you'd have grandma and grandpa living in the house with you. That has changed as Japan became more urbanized as attitudes towards households and families changed. You've now got a lot of elderly people living alone. And so you've had a pretty widespread shift in the norms regarding elderly care. So now you have a lot more nursing facilities, you've got public-private partnerships on how to deal with that, especially as I noted in rural sectors of Japan, this elderly care question doesn't just affect, you know, do we build a home? And how do we get caregivers to take care of elderly people, but also just simply the hollowing out of Japan's smaller cities and towns. 

Eldercare is expensive, and once they retire, older people are no longer contributing directly to the economy through labor. Countries need young and working-age people to pay taxes that keep the country running, and to start the businesses that fuel growth. If the percentage of elderly keeps rising, and the percentage of young people keeps falling, this system breaks down, tax revenue decreases, and labor shortages set in. One UN study found that Japan would have to raise the retirement age to 77 in order to maintain its current worker-to-retiree ratio. 

RICH: Japan is kind of a place where the world can look to see what the future looks like, right? We now know that the population is declining in the United States. China's going to be facing this. South Korea is already facing this. So there are a lot of lessons that could be learned by looking at Japan. A little bit of history. We go back to after the war when Japan was occupied by the United States until early 1950s, and then after that, it kind of took off economically. And the way they accomplished that, by and large, was creating this work culture where everyone sort of were pulling together as part of what they call Japan Inc to kind of rebuild the country and make it an economic superpower. And it was largely men, and the men would devote their entire lives to the company, not just in terms of their entire careers, but literally every day of their lives, that they were there long, long hours. They often worked weekends. And the structure that enabled that was having a very strong traditional nuclear family with women at home taking care of the children. Then the bust came when the kind of real estate bubble in Japan collapsed in the very early '90s, and then women were starting to go back to work partly because of necessity. If they were part of a nuclear family, the family needed more income, the women were entering the workforce. Then there was this sense, a little bit of, trying to empower women and actually allow women and encourage women to have their own careers. And then at the same time, Japan was not kind of changing those standards of what was expected of women in the home. So if they wanted to have those careers but also marry and have children, they were expected to do so much at home, that many women were looking at that and saying, "We can't do that. We can't do both." I mean, these are similar themes that are now just starting to play out in the United States, but Japan has been kind of ahead of the curve, if you will, on that trend since the '90s.

Many women are choosing not to marry, and to delay or avoid childbirth altogether. As a result, the youthful side of Japan’s population scale grows lighter and lighter. Meanwhile, the elderly side grows heavier. And that’s because Japanese people tend to live for a very long time. The average life expectancy in Japan is 84 and climbing, the highest of any nation on earth. 

SMITH:   So every year in Japan, when you're watching TV, you get to see, you know, the elderly ladies that are 104, 108, or 106, you know, so their diet has allowed them to have a healthy, older age. But that means that the percentage of the population that's elderly is larger because of that extended life expectancy.

RICH:  Longevity is of a feature of Japan. People live really long lives, they're very healthy, and you can just sort of see that when you walk around. I mean, we use the word genki, which means very healthy, and it's sort of astonishing I think, certainly compared to the West, where you just see people hiking and walking, and even if they have canes, even old women who are stooped over and practically horizontal with the ground are still doing their own shopping. It just sort of extraordinary how people continue to be active at such old ages in Japan.

SIERRA:  Can you just paint a picture of what Japan might face if its demographic decline continues? You know, what are the fears?

SMITH:  So I think the fears of an aging society are obviously that Japan will lose its economic vitality. And therefore it won't be able to compete internationally in the way it has so demonstrably in the post war era. But there's also the Japanese fear, of course, that their aging society may compromise your ability to manage the geostrategic changes that are taking place in the region. China is on the rise. It's a bigger, more populous,  more economically vibrant country, Japan is going to have to maintain its own economic and political vibrancy if it is to live in the world, which has a stronger China. Finally, I think it's important that Japan doesn't turn inwards, that younger Japanese don't say that the problems of the world are too much for them. Japan has been such a partner of the United States and many other countries in support of the world that we've created in the post war period. It's been a vibrant advocate of liberal values, of an open trading system of peace and security. And so I think there is a slight danger that Japan's younger population will turn inwards and Japan will no longer be the strong partner of ours, and of Europeans and of many others in Asia, that you'll see a quiet isolated Japan and that would be a loss for all of us. 

Japan’s demographic decline is first and foremost a problem for Japan itself. But it could also be a problem for its many allies, including the U.S. More on that, and a look at potential solutions, after the break. 

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Joe BIDEN: Prime Minister Suga and I affirmed our ironclad support for U.S.-Japanese alliance, and for our shared security. We are committed to working together to take on the challenges from China and on issues like the East China Sea and the South China Sea.

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H. R. MCMASTER: Our relationship is in full bloom because the Japanese and American people understand more and more that our two nations and other like-minded liberal democracies must work together.

If you went back in time 75 years, a lot of Americans would be surprised to hear that the U.S. and Japan are now so close. After all, the two countries were fierce adversaries in World War II. But in the wake of that conflict, they forged a partnership that has grown and thrived through the decades. The alliance was initially designed to address Cold War-era concerns in Asia. But that focus has changed. 

SIERRA:  Can you sort of walk me through the most important elements of the US Japan alliance as it stands now?

Zack COOPER: The US-Japan alliance is very focused right now, on the China challenge. 

This is Zack Cooper, research fellow at the American Enterprise Institute and Co-Director of the Alliance for Securing Democracy at the German Marshall Fund of the United States.

COOPER: It's arguably the most important thing for American leaders today, especially on foreign policy, it has been the most important thing to Japan for years. And so in a lot of ways, the Alliance is actually getting stronger, because the challenges that we're facing are growing more severe. China is very close to Japan, right? They share some disputed territory and maritime areas. It is the world's second largest military and growing very rapidly. It is surging that military often into areas that are disputed with Japan, and it often exhibits some public anger at Japan. And so I think from a Japanese view, the perceived threat level from China is quite high at the moment. And obviously, the same is true of the United States, especially over the last two or three years.

SMITH:  They have a sovereignty dispute. China disputes Japan's administrative control over a small set of uninhabited islands in the East China Sea. The Hong Kong security law, and the quelching of democratic practice in Hong Kong has really worried the Japanese as well. And then of course, there's the military activities that the Chinese have been conducting recently in and around Taiwan, which verge on two pieces of that puzzle. One is the question about whether or not China would actually use force against a democratic nation. And the second is, this is perilously close to Japanese territory. So it spills over into Japanese thinking about what the Chinese might do, or whether a conflict over Taiwan might actually spill over to involve Japan directly.

And China isn’t the only worry. Japan is also a neighbor of North Korea, and plays an essential role in U.S. military planning for a crisis on the Korean peninsula. 

Plans like these are only possible because Japan hosts several U.S. military bases on its territory. 

COOPER:  The first thing to be aware of is that most of these bases are absolutely critical to the US military's ability to carry out its operations in East Asia. So we are more dependent on Japan than any other location, arguably, in the world. There are about 50,000 American forces in Japan, and many of them are accompanied. So there's something like 100,000 American service members and families.

RICH: Part of the reason that the United States has its largest contingent of military personnel outside of the United States stationed in Japan is precisely because they recognize that that is a strategic location to protect the whole region. It's not just about protecting Japan. And I went down to Okinawa one time and was meeting with the general who's in charge of the Okinawa operations where there are 25,000 US Marines based. And he pulled down this huge wall map and just showed me, "Look, Okinawa, Southern end of Japan. It's so close to Taiwan, so close to China, it's so strategic in the region." That is why the United States is there. If they pulled back and everything was based in California, it would take so much longer to get to the region in the case of the necessity to bring an aircraft carrier. They have an aircraft carrier base in Yokosuka, Japan. So it's right here if God forbid there was something that they needed to do, they're here. And that's not just for the protection of Japan, that's for the protection of the whole region. And in that sense, it is also for the production of the United States.

Nobody wants war, or conflict. But if conflict does break out in the Pacific, the U.S. is deeply dependent on Japan to be able to face the threat. And Japan, in turn, depends on our backing. This two way street isn’t limited to military concerns. The Japanese and American economies have been similarly intertwined for a long time. 

COOPER:   So many people don't remember this. But Japan is the world's third largest economy and by quite a bit. So when we talk about Japan, it still has a remarkably dynamic economy. And it is globally integrated right into supply chains and everything from microchips to automobiles. And so Japan in a lot of ways, is a real engine for global growth. And so sometimes I think it's easy to forget that if you're buying an automobile in the United States, there's a pretty good chance that either the car you're buying was designed in Japan, or that a lot of its components were designed or made there. And that's, that's going to continue, right. And so I think these deep economic ties are part of why the two countries are so closely interlinked. 

SMITH: Japan hovers at the number one or number two position in terms of foreign direct investment in the United States. Japan creates pretty much around a million jobs, American jobs every year through that foreign direct investment, in addition to providing capital and obviously goods that we Americans like to buy that are produced here in the United States. So it's a very vibrant relationship, both on the economic side and the strategic side as well.

And there’s another element at play, too. The U.S.-Japan alliance is built in part on shared democratic values, and shared diplomatic goals. 

COOPER: Japan is a democracy, it shares a lot of the same values as the United States. And so in each of these four areas, geo strategy, economics, technology and governance, Japan is a key player. And in fact, Japan might be the only country in the world that shares interests along all four of those areas. I think what's not talked about enough, though, is the fact that Japan is very active outside of Northeast Asia. And it is seen incredibly positively, in particular, in Southeast Asia. So these are the large and rapidly growing countries like Indonesia and Vietnam, that are vital, not just right now, but to the economy and the security situation in Asia, say 10 or 20 years from now, in those countries, Japan has by far the highest levels of trust of any nation, far higher than the United States, far higher than China, or even Europe. Because Japan has been there and been present and active and helping those economies grow. So our interests are very much aligned. We want Southeast Asian countries to be succeeding, we want them to be democratic, protecting human rights. And Japan has very similar interests there. So I would say across the region, we see very, very similar parallel efforts from both Washington and Tokyo.  And there are a lot of times when actually, Tokyo has more leverage to be helpful in Asia than Washington does, because it's built up so much goodwill over the years.

SIERRA: So it's kind of like we have a good friend in Asia, who has many good friends in Asia.

COOPER: That's right.

Japan needs a strong friend in the U.S., and we need a strong Japan in turn. And that’s where Japan’s demographic problem becomes a global problem. If Japan continues to shrink, it could begin to lose its regional influence. It’s voice could grow quieter. And this in turn could reduce the power of the alliance. 

That said, Japan has explored a number of potential solutions to the problem. 

SIERRA: Yeah. So we know that the Japanese government is worried about all of this for a number of reasons. So what type of solutions are they attempting?

RICH: So one of the big solutions that they started doing under the Shinzo Abe administration, he had this, in consultation with a very high-powered banker at Goldman Sachs, she had looked at the sort of data and said, look, you have got this very amazing untapped resource of highly educated women who are not working to their full potential. Why don't you empower women to not just take, kind of part-time or contract jobs, or menial labor, but really put them in the economy in a very strong and powerful way? And so he seized on this idea and dubbed it womenomics. And the idea was that if we empower women and support them in the workplace, we'll now have 50% more of the workforce that had not been fully exploited, for lack of a better word, and in some cases that's the truth, that that will help embolden the economy. So the main initiative was to open more daycare centers, add more slots, get more kids into daycare, but because of the previously mentioned, I mean, it's a demographic problem, right? To open more daycare slots, you need more daycare teachers. And if you don't have enough young people to fulfill those jobs at the same time that there are other women who want other jobs, but need to send their kids to daycare, it's really hard to do that. So it's taken them a really long time. The new Prime Minister Yoshihide Suga has talked about subsidizing fertility treatments because a lot of couples have trouble getting pregnant because they're waiting until later to try to get pregnant, and so it's sort of the same issues that are faced in the West, but that again seems a little bit like a band-aid. They're not really addressing the fundamental core issue, which is that because of the way the workplace culture is, that it demands that people work these 16 hour days and on weekends and be available at all times, that's really not conducive to family life. And if the women have to do everything at home, that is not conducive to women really advancing in the workplace. So it's sort of this Catch-22 that women just can't get out of this cycle that they're stuck in, even if they want to. So it's very, very difficult for women.

SIERRA: And you certainly can't go to women and be like, "Have babies," 

RICH: No, which is what they have done. There are conservative politicians who from time to time say it's a woman's duty to go out and have at least three children and stay home and care for them. That is not an effective policy. So I think a lot of the things that they're trying to do are sort of these little band-aids on the edges and they're not really addressing the fundamental core issues.

Japan’s efforts to increase fertility haven’t worked so far, but that doesn’t mean that such policies can’t ever work. Take Sweden, which decades ago faced its own demographic decline. Since then, the country’s generous social security systems have been credited with encouraging gender equality and giving women the freedom to both work and care for their children. Key features include accessible daycare services and lenient leave programs for both mothers and fathers. Over time the strategy helped boost the country’s fertility rate, and could be a potential model for other countries. But increasing the fertility rate is not the only option for solving a demographic problem.

RICH: So, The other big, big, big elephant in the room is immigration. That is how population growth has been maintained in a lot of big, large aging countries.

COOPER:  You know, Japan has a remarkably advanced society. Where it's actually going to struggle to find people to do critical roles. So some of this is things like child care and elder care, where in fact, you know, people like home health aides are going to be really important. And there just may not be enough of a population in Japan to serve those roles. So there are a very large number of experts in this area from the Philippines who are well trained and very capable. And bringing in more of those types of immigrants is a potential solution for Japan to help solve some of its challenges. So I think, increasingly, it's going to be vital for Japan to expand its labor market look, not just internally for ways to convince women to have more children, but also externally to find ways to bring new people into Japanese society. This isn't easy. It's socially hard. It's politically hard. But I think it's kind of one of the only obvious solutions that's going to be out there as Japan society gets more grey hair over the years.

SIERRA: So what about automation? 

COOPER: Absolutely. Automation is one excellent opportunity we've already seen Japan had this way. And you can see that interest in automation in, for example, the military, where Japan has been investing in ways to decrease, for example, the number of people that are on Japanese Self Defense Force ships, by increasing robotics and automation. So effectively, it is investing more capital to decrease the amount of labor that it needs in these areas. And that's just a smart response, right from an economy that has more capital than it does labor. So I think automation will make a lot of sense in Japan. But some of the challenges are that automation won't solve all these problems, right,  eldercare, for example, which we were just talking about. That's something that's pretty hard to just automate. And so Japan is going to have to look to a mix of solutions. But I would expect that automation will absolutely be one of the primary means by which Japan tries to manage this difficult time.

There’s no doubt that Japan faces a serious challenge curbing its decline. The cultural and social changes required to do so are daunting. But nobody should count them out. Japan has demonstrated its capacity to innovate and overcome challenges many times in the past. There’s every reason to root for them. 

SMITH: I think the danger for us here in the United States is that we forget about Japan, we're so focused on China and its rising power. And that Chinese power often overshadows Japan, our long term ally and dynamic economy in its own right, but also a functioning and strong democracy. This is a friendship we shouldn't take for granted. This is a friendship we shouldn't take for granted. And I think it's important that Americans understand the strength and the depth of the Japanese partnership with the United States.

For resources used in this episode and more information, visit CFR.org/whyitmatters and take a look at the show notes.

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Why It Matters is a production of the Council on Foreign Relations. The show is created and produced by Asher Ross, Jeremy Sherlick, and me, Gabrielle Sierra. Our sound designer is Markus Zakaria. Rafaela Siewert is our assistant podcast producer. Sophie Yass is our summer intern.  

Robert McMahon is our Managing Editor, and Doug Halsey is our Chief Digital Officer. Extra help for this episode was provided by Lindsay Maizland and Kali Robinson. 

Original music is composed by Ceiri Torjussen. Special thanks go to Richard Haass and Jeff Reinke. 

For Why It Matters this is Gabrielle Sierra signing off. See you soon!