This Japan that won’t stop surprising us

This Japan that won’t stop surprising us

January 24, 2020 1 By Michel Santi


Japan has been able to face up to its destiny, and even to force it. It has handled perfectly one of the essential components of economic growth, that being demographics. In fact, the number of people on the payroll has increased there these last ten years, much more than in any other developed economy.

This country has a lot to overcome though, with its 70,000 citizens that are now over a century old. The statistics indeed speak volumes. The pensions and public spending assured to the oldest monopolized in 1975 less than a quarter of the Japanese tax revenue, whereas that number is reaching 55% today! In other words, demographics weigh heavy on the budget of the Japanese government, in truth not so much because of the ageing population but because of the birth rate that is sinking to less than 900,000 births a year, the lowest since the 1870s when the country’s population was much smaller. However, the country’s authorities have been able to scupper this endemic problem because, while it is true that the working-age population declined there in the way of 4.7 million over a decade, the number of people on the payroll – as for that – increased there by pretty much the same figure.

Japan – led by the energetic Shinzo Abe – was in fact able to ward off the bad luck thanks to an actual cultural revolution and to values that regenerated the labour market with women, elderly and foreigners. From 2004, this included extending the retirement age from 60 to 65, an obligation imposed on companies to prolong their outgoing employees’ contracts and to hire retirees, with the unprecedented level of the unemployment rate in Japan (2.5%) granting employers much more incentive. Today, it is normal to meet workers in Japan (of all professions) aged 70 and companies no longer dither in offering women contracts of 40 hours a month, knowing that the number of female workers between 55 and 65 years old in Japan has jumped by 10 percent in 10 years. Finally, the influx of foreign workers has managed to fill in the gap, an unprecedented phenomenon in Japan, hither to known for its restrictive policies. The labour code – and access to naturalisation – have indeed been considerably loosened by the Abe government and therefore brought in a substantial 1.3 million extra foreign workers in the space of less than 10 years.

For Europe, whose population is embarking on a dangerous decline, particularly in countries like Germany, Italy and Spain, the lessons to be learned from Japan’s success are precious, because demographics are a major component of growth – or on the contrary – of economic regression.