Shrunken Japan versus big Japan

All over Japan, companies are bracing for a demographic wave. Beginning next year, members of Japan's baby boom generation start turning 60 and will begin dropping out of the workforce. A falling population will compound what is already known nationally as the "2007 problem," say observers.

The combination has already led to an increasingly tight labour market, reaching as high as 1.72 job offers for every job seeker in some areas. Japanese companies have already shipped more than 40 per cent of their production capacity overseas, according to Jesper Koll of Merrill Lynch, but they can't outsource everything.

Instead, the labour squeeze is forcing Japan to consider social changes that were once unthinkable. For example:

  • Hiring more female workers – Japan has one of the lowest rates of working women in the developed world at only 48 per cent. By matching the United State's 60 per cent rate, Japan could add more than 6 million jobs to the economy.

  • Retaining old-timers – Companies are trying to keep older workers on the payroll to help fend off labour shortages, but generous government pensions make keeping workers from retirement difficult.

  • More immigration – Foreign workers account for just 1 per cent of Japan's labour force versus about 15 per cent in the United States. Japan already relaxes visa requirements for specialised workers, but is reluctant to let less-skilled workers into the country.

    Yusuke Takeuchi, a Labour Ministry official, insists that Japan can solve its labour shortages without looking overseas. Put women and the elderly to work, he says.

    But Hidenori Sakanaka, retired head of the national immigration bureau office in Tokyo, says Japanese bureaucrats are in denial. "Look at the speed of the decline in population. It's unbelievable. Thirty million people will disappear," he says. "There are two ways to go: Shrunken Japan – and learning to live with it; and Big Japan – where we accept foreigners."

    Source: Paul Wiseman, Wave of retiring workers could force big changes, USA Today, May 2, 2006

    For text (subscription required): http://www.usatoday.com/money/world/2006-05-02-japan-econ-usat_x.htm

    For more on International: http://www.ncpa.org/pi/internat/intdex1.html

    FMF Policy Bulletin/ 09 May 2006
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