Life on the side in Tokyo



Monday, October 10, 2005

Cracks In The Wall



Immigration is a touchy issue everywhere these days, though it seems largely absent from public policy debate in Japan. This is surprising for anyone who has taken a serious look at demographic trends. According to one study, the United Nations Population Division predicts that if immigration policy remains as is, the Japanese population will peak this year at 127.5 million and decline to 104.9 million by 2050. Furthermore, the ratio of working aged population (15-65) to retired population (65 and over) would go from 4.8 in 1995 to 1.7 in 2050. That's a heavy tax burden on workers. To avoid this, and a collapse of the pension system, let alone the economy, the retirement age would have to be moved to 77 years old. Wow! Just what most people want to still be doing at 77--WORKING.
Yes, there is the Angel Plan, the New Angel Plan and the New-new Angel Plan. Ouch! Which suggest that somewhere, sometime, somebody should do something so that young families get with it and start making babies. Bad news. The birthrate is dropping faster than the popularity of NHK. A few days ago another panel was set up to look into the problem . Ouch, ouch.
In their wisdom, the Ministry of Finance carefully examined the effects of a shrinking population and came up with 4 startling (ho hum) findings.

(1) A fall in labor supply and an increase in the welfare dependent ratio.
(2) A fall in the savings ratio.
(3) Unfavorable impact on economic growth.
(4) A strain on social security funds.
Real Meaning = Economic Typhoon Warning. Time to pack up and leave.

Yes, there is one other option to prevent economic decline: Immigration (whispering). The UN Population Division calculated that for Japan to maintain its current population through to 2050, ONLY 381, 000 immigrants per year would be required. Uh oh. By 2050, this would be an increase of roughly 17 million immigrants, who would--together with their descendants--make up almost 18% of the population. If we consider that just over 1% of the population of Japan are visitors and permanent residents (there really is no official "immigrant" status) and that many of these people are the descendants of Koreans and Chinese left in Japan after the war, then we can understand why immigration seems like the least favorable option.
But eventually the government, in response to the labour demands of companies, if not for the sake of long-term national economic prosperity, will come around to this option. The problem is that if it waits too long, the economy stagnates and taxes rise to pay for social security and medical costs, who will want to come?

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