The Japanese government is warning that declining birthrates and an aging population will hamper the country's economic growth.
Japan's annual economic report released Friday warns an aging citizenry and shrinking population are drawbacks for its economy. The report says these trends will lead to a shortage of workers, a lower national savings rate and ultimately, a slowing of economic growth in coming decades. The government urges reforms of labor practices to counter these trends.
Japan is experiencing its highest aging rate ever, with more than 18 percent of the population now 65 or older. The report says the growing number of retirees will erode the pension system, which means people who are now 40 or younger are likely to put more funds into the system than they will get back.
Couple that with Japan's record-low birth rate and a forecast that the population will shrink by one fifth by the year 2050, and it becomes clear why the government is worried: Japan could soon face a shortage of workers who are needed to keep welfare coffers full and businesses running smoothly.
Economy Minister Heizo Takenaka encourages people to not be pessimistic, despite the issues raised in the report. He urges the country to move ahead with reform plans in order to solve its problems.
The government report offers some other suggestions. It proposes more research on innovative technologies that could help boost productivity. It also recommends the opening of more childcare centers so a woman can balance her career and children.
The report notes the average Japanese working woman will lose $770,000 over the course of her career if she leaves work to have a child, even if she eventually returns to work. The report urges companies to hire women as well as older candidates to stave off the impact of the dwindling pool of workers. Japanese companies often overlook these candidates in favor of younger male applicants who have traditionally dominated the labor pool.