Japan is facing a crisis. The population is aging and by 2050, one in three people will be past retirement age. Meanwhile, the birth rate is currently at 1.25 babies per woman, much lower than the 2.1 needed to keep the population stable.
The result is a workforce too small to support the huge number of retirees. Who will do all the work? Will there be enough tax money to pay for pensions? What about the cost of health care?
How to solve Japan’s aging population problem
Plan A would be to increase the number of workers, and you could do that by:
1. Having more babies
Some companies are offering financial incentives to their employees to have more children. The government is also supposed to give a little financial support to parents, although I haven’t yet seen any evidence of this. Will this solve the problem? Not likely.
2. Upping the age of retirement
This might have already been put into action, and I’m sure everyone is thrilled about it (sarcasm). Still, adding an extra five years of labor and taxes to one’s life doesn’t look being the magic bullet.
3. Increasing the number of foreign workers
Easing immigration laws to allow hundreds of thousands of foreigners to live, work and apparently terrorize the natives is not likely to happen. I think most Japanese would rather forfeit their pensions or have robots do the work instead.
An alternative solution – decrease the number of elderly people!
I’m not suggesting genocide or anything quite that evil, but it’s interesting to consider ways the government could reduce the burden of an aging population without people suspecting a thing!
According to my students, a hundred years ago, elderly parents would ask their children to take them into the mountains and leave them there. While this is shocking to hear nowadays, it was considered honorable in the past. We can’t expect and wouldn’t wish to hear such a request from our current generation of pensioners, although putting them in a nursing home might be considered the modern equivalent!
Disclaimer: I’m not suggesting the following is a good idea. I’m just putting it forward as something the government might consider, and don’t give me that “They wouldn’t do that!” argument because that’s just opinion, not fact. Â
Plan B: If you wanted to secretly reduce the lifespan of millions of people in a few short years, the best way to do it would be to hit them in the wallet. If people don’t have enough money, they can’t take care of themselves. Necessities such as medicine, food, accomodation, heating, transportation, etc. could all be subject to price increases.
Before you know it, thousands of people aren’t making it through the winter. A few tax increases here and there and the threat of pension reductions because of the shrinking workforce will have the elderly population in a state of panic. As a final measure, scare them to death with news stories of crime against defenseless pensioners.
So what do you think? If Japan can’t manufacture babies, and robots won’t pay tax, is Plan B a likely alternative? Let me know in the comments.
Perhaps there really isn’t a pension problem after all!
To end on a lighter note, one of my students suggested that inheritance tax would cover everybody’s pension because there would be so much of it! Let’s hope he’s right, because that’s much easier to stomach than my alternative solution!
If you like, you can find me on Twitter at @nick_ramsay. I'd love to hear from you!
Interesting blog Nick and something that makes my blood boil. Mizuno-san (who you know) has told me many a time how he probably will not get much back in his pension when he retires yet is resigned to the fact that by law, he still has to pay it!!!
What makes me sick is that while the government loves to tell everyone how they simply do not have the money, they do have plenty to pay for the most ridiculous things. I could give a thousand examples but anyone reading this comment could easily check it out on the net.
This is a so-called wealthy country and if this serious issue is really so serious, why does the government not take steps now to rectify the situation???
They readily give billions in aid to other countries and while this maybe viewed as generous and kind, I know the the government is only hell-bent of protecting it’s image of being a wealthy country.
Anyone that has lived in this country for an extended period of time knows that image is everthing here and it is very important to people and companies alike to at least appear that they are flush with money and influence.
Many governments waste money and many governments are corrupt however, what sets this government apart from any other is the fact that while it is a loosly regarded democracy, a dictatorship is way more accurate and you can see with your own eyes on how they waste billions on infrastructure that is simply not needed.
Every year around November/December, road construction goes through the roof because local governments need to spend all the money grants that get each year from Tokyo. (If they don’t, then they will receive less the next year!)
Local governments will go as far as to rip up pipes that they laid the previous year (They are meant to last a minimum of 30 years) just to spend the money!! I actually asked one of these road workers “Why are you putting the same pipes in as last year?” (They were doing it right out the front of my office)
This very serious situation of pension funds has become quite the “Talking point” of recent times amongst regular Japanese and I’m hoping that they finally realise just how much their government is misusing their hard earn yen. Uptil now Japan has had so much money that accurate accounting has not really been needed.
Times have changed and God help Japan in the near future if people do not make a stand and realise that being treated like sheep has to stop, otherwise retirement will not be pleasant!!!
Keith
So I you think my alternative solution is likely? 😉
The feds will go with plan b. They’ve already started, too. Refer to your 25% price increase on cheese 😕
Seriously, though, the feds won’t do anything about it because there is enough money in the coffers to last the next 20 years. By then, the existing politicians will have retired and it will be a new generation’s problem. The very same thing can be seen in Canada and a few other “wealthy” countries around the world.
Unfortunately, government officials have a seperate pension system that is unaffected by a collapsing public pension fund.
We’re all living longer. The feds are misplacing billions in pension payments already. People are not having children because it’s viewed as inhibitively expensive. Aside from raising or killing the mandatory retirement age, the only way a government can give the appearance of rectifying this issue is to demand more money from the younger (under 50) crowd.
Yay.
I didn’t read the comments above, but I read somewhere that by 2100 it’s predicted that the population in Japan will be 50% of what it is now.
I think we just have to kill off everyone over 50. Geez this makes sense and everyone under that age can live happily ever after or at least to 50 that is. Oops that leaves me only 8 years aaaaah can we make 55 as the killing age pleeeeease???
The good thing about doing this is that there will not be one politician left alive haa haa haa!! Actually even if we made the killing at 70, 90% of politicians would be gone gone gone!!!
I come up with the best ideas early in the morning!!!
Keith
PS.Why don’t we make all people over 60 politicians??? Jason said that they are on a seperate pension fund so this would make sense wouldn’t it????
Wasn’t there a drama on Tv many years ago where people over a certain age were sliced from society?? Maybe “Logan’s Run” or something like that???
You have no other option, except to wait. In another 70 years the demography will be favaroble to Japan being cyclic in nature.
Two words. “Logan’s Run”
Problem solved.
Al
Interesting problem… Not only in Japan but many other countries like US and EU.
Following solutions I suggest :
1. Open the doors for immigrants and workers/Investors from other countries which have more population which they can hold (Like India, China).
2. Instead of using Robots it is better to be served by humans who can show emotions which is required a lot while caring for old people. That human touch would be pretty soothing and well appreciated.
3.Japanese Govts. should invest in healthcare instead of redigging the pipes and consuming the unused funds.
4. Look for news ways of engaging with old people so that they feel they are cared for.
5. Utilize the Knowledge of Old people to groom younger generation.
6. Joint Families will really help instead of old age homes. Money is not what every old person is looking for. Attention and care is what they want so provide them that.
7. If you can’t make people produce Kids then best is to ask them to adopt them from other countries.
8. Bring them out of their own Shell and show them the world around. This will impact on their way of old thinkings and help them appreciate the new ways.
9. Health is the primary need for old people. Cater to that.
Old people who are healthy can be happy by engaging more with younger generation and new ways of entertainment. As i understand old people work longer so they can contribute
Just a piece of thought :If you put water in a area it automatically flows to where it gets the space. The people trend is similar around the world. The countries who are having more population and less resources to cater for will see their people moving to other countries where they can get the space and resources. This also helps in economy factor.
I am sure everyone is already seeing these trends and people from growing economy countries investing in developed economies.
DM
DM, those are great suggestions which would no doubt make the world a better place. I’m sure my mother-in-law would agree with point 6 😉 .
This problem is a common problem with rich countries.The problem is ,this countries are not reach for nothing ,there is a strong social system that makes them so developed encouraging career women and excellent medical care so high ages among inhabitants and few children in there families is a result of this system.Immigrants adopt the system and in one generation they adopt the above.However they adopt the civilization not so easy, rather they bring their own social behavior and original inhabitants resent that.
I think the next generation will be more aware of the problem and have more children as government will support that.Also strict regulation will make immigrant life harder as they will select only those who “fit”.History teach us that the power of the social system prevails,rich countries have always been so,and today’s problems are tomorrow’s history.