Japan Population Decline and the Challenges of Decreasing Productivity

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EAST 2325
Japan population decline and the challenges of decreasing productivity xxxxxxxx  Student no. xxxxxx Department of East Asian Studies

University of Leeds

EAST 2325 Assessment
In a special report on Japan, published on 20 November 2011, The Economist noted that Japan would be ‘a test case of how big countries across the world should handle ageing and population decline.’ What makes Japan so special in this regard, and what specific challenges face the Japanese government in formulating and implementing suitable policies to increase productivity in the face of population decline?

Abstract
Currently Japan is considered as the leading high technology and as having the highest population density in the world. However, Japan is now facing the biggest challenges of ageing population in the world. This issue might lead the country into economy crisis, and labour shortage in the future. Therefore, it is very important for the every country to examine and to find the best solution to address the ageing population. In fact, many other countries, such as Europe soon enough will be facing the same situation as in Japan. Many countries are slowly observing how Japan is going to handle and overcome the current situation of ageing and population decline. The purpose of this paper is to first examine why Japan is so special regarding ageing population. And secondly, to observe facing policy challenges in terms of increasing productivity. Finally, conclude all the important facts about Japan’s ageing population. Why is Japan special?

Japan used to be one of the well known countries of "created a growth miracle" in terms of growing significantly numbers of the labour force and rising productivity after the Second World War. However, Japan is now facing the issues of low fertility and growing life expectancy, which has left the country with an ageing population. According to The Economist, 18 Nov 2010, Japan currently has the fastest ageing population in the world compared to other countries and this has increased dramatically in recent history. For instance, the median age is now 44.7 which is probably the oldest country in the world. Furthermore, scholars predict that in 2050, four out of ten of the Japanese population will be over the age of 65. On the other hand, Japan is also facing a deep debt to GDP ratio of 197.5%, in 2011.

Immigration
Due to Japan’s ageing population and low birth rate, a labour shortage is predictable in the near future. One solution to overcome this will be inviting more immigrant workers into the country. The idea of immigration has made a great impact in successfully increasing the productivity and the improvement of the employment rates in the United States. For instance, Giovanni Peri. The Professor of Economics at the University of California, Davis claims the "immigration creates new sources of employment and does not affect natives." [Immigration improves employment, productivity and incomes in the U.S] [Online] [Accessed June 9, 2010] Therefore, it is a good reason that the Japanese should try to increase their immigration in order to prevent and overcome the labour shortage that the nation might face in the future. According to the Chief of Japan’s Economic Planning Agency. Taichi Sakaiya. “In the face of ageing society, Japan must accept foreign human resources. Not only skilled workers, but a wide range of workers.” [Population decline and ageing in Japan: The social consequences, Pg.115] However, wide range of worker may not be able to help to improve productivity, because poorly educated or low skilled immigrants seem to be unlikely to help to improve Japan’s productivity. On the other hand, Japan is one of the most homogenous countries in the world. For that reason, it is believed that Japan will have the difficulty in accepting foreigners to their country. According to the UN special Report...
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