Japan is facing a unique demographic challenge: a rapidly aging and shrinking population. The numbers are stark. Did you know that for every three Japanese people who die, only 1.3 babies are born? This means Japan's population is shrinking by about 1.7 people every minute! At this rate, by 2050, Japan could lose a population equivalent to the current population of Australia.
For two decades, the Financial Times' Tokyo bureau chief, Leo Lewis, has covered this issue. He's seen firsthand the low birth rates and the government's attempts to address them. But what exactly is the problem, and what can the world learn from Japan's experience?
The 2025 Problem: A Perfect Storm
The "2025 problem" centers around Japan's baby boomer generation (born between 1947 and 1949). By 2025, they'll all be in their mid to late 70s. This is when medical and care costs typically skyrocket. The big worry? That the current and future working population might be too small to support the social, health, and welfare systems that Japan relies on.
Japan's total fertility rate (the average number of children a woman has) has been low for about 70 years. It's currently around 1.2. To maintain a stable population, you need a rate of 2.1. South Korea's rate is even lower, but Japan's long-term struggle makes it a key case study.
For over 30 years, Japan has dealt with both demographic crisis and economic stagnation. Yet, it continues to produce world-class companies and maintain social stability. So, what lessons can other countries learn from Tokyo and Japan's journey?
The Fuwaku Rugby Club: Defying Age
Japan's aging population isn't just about numbers. It's also about people living longer, healthier lives. Take the Fuwaku Rugby Club, for example. They organize teams by age. Players in their 70s wear yellow shorts, while those in their 80s wear purple. They play full-contact rugby, showing that age is just a number. Mr. Mararyama, one of the players, still has surprising speed on the field.
These baby boomers drove Japan's economic miracle in the 70s and 80s. Now, as they enter extreme old age, the strain on welfare, pensions, and care systems is increasing. The challenge is that there isn't a large enough younger population to support them.
Coming of Age: A Sign of the Times
Every year, Japan celebrates Seijin-no Hi (Coming of Age Day) on the second Monday in January. Thousands of 20-year-olds visit shrines like Meiji Jingu in Tokyo. This tradition marks their transition into adulthood.
But for two decades, this day has become bittersweet. It's a moment to see just how small the new adult cohort has become. In 2024, only 720,000 babies were born in Japan. That's a 5% decline from 2023 and the lowest number since 1899.
Many people assume that more couples choosing not to have kids is to blame, but the reality is that there are fewer couples than ever before.
The Marriage Conundrum: It's About More Than Just Desire
Looking at couples taking pictures in front of Tokyo station, you might think marriage is thriving. However, many are tourists. In 2024, only 500,000 couples married in Japan. This is critical because nearly all Japanese babies are born to married parents.
The fertility rate for married Japanese women is actually 1.9, higher than the overall rate in the US! So, it's not a collapse in the desire for marriage. The problem? Japan's 30-year struggle with stagnant wages has created a surplus of men who are seen as "economically unattractive".
Young people entering the job market face diminished economic prospects due to wage stagnation. Research shows a strong link between socioeconomic status and whether people form relationships and have children.
Policy Shifts: Dating Apps and Beyond
Japan started worrying about its low birth rate in the 1980s. But policies that prioritize long-term threats over short-term concerns are hard to sell. Historically, policies focused on encouraging married couples to have more children.
Recently, there's been a shift. The Tokyo Metropolitan Government now allows its staff to work four days a week to encourage dating. They've even launched a marriage app to promote romance. But these measures will only go so far.
Immigration: A Necessary Solution?
Many believe the only real solution to the 2025 problem is greater immigration. Vidia, an Indian woman who moved to Kirigoka with her husband, volunteers at a local café. She's one of about 800 Indians in the area.
Outwardly, the government seems hesitant to loosen immigration policies. But in reality, Japan has quietly started accepting more immigrants, including unskilled workers. At the current rate, foreign nationals could make up 10% of Japan's population within 20 years. This is a significant shift for Japan.
Sachi Mousashi set up the Kiricafe to ease relations between the new Indian community and local Japanese. The café offers cheap lunches, language classes, and cooking lessons. The South Asian community is slowly integrating, but will the rest of the country be as welcoming? Especially to lower-skilled workers in construction and care homes?
Compared to the West, immigration levels in Japan are still low. Fewer than 5% of people in Japan were born overseas, compared to over 15% in countries like the UK, US, and Germany. If immigration remains low and birth rates don't recover, Japan faces a potentially difficult future.
Adapting to a Graying Nation: Business Opportunities
Japan's infrastructure is facing unprecedented strain. Extreme old age means more nursing homes, hospitals, carers, and financial support are needed. The government's spending on pensions and elderly support has already risen to about 10% of GDP.
The number of patents granted to Japanese researchers has fallen, reflecting the decline in the working-age population. However, businesses are finding ways to adapt.
UniM, a nappy company, has shifted its focus from babies to the elderly. Everywhere in the world, aging is a big business opportunity. Ito En, Japan's biggest tea maker, is marketing a thicker version of its Oocha tea for the elderly.
The funeral industry is also adapting. House Boat Club offers funerals by proxy, scattering ashes at sea for people with no friends or family.
Lessons from Tokyo: A Global Challenge
China is facing a similar demographic path due to its one-child policy. Many countries worldwide are experiencing similar challenges. In France and Germany, the working-age population has already peaked. The UK and US could soon follow.
Japan's experience is a warning. Despite understanding the 2025 problem for decades, efforts to reverse it have failed. Yet, Japan has maintained social stability, good health, and a competitive economy.
Even with its economic problems, Japan's experience might be a form of success. As the rest of the world catches up, they may realize that Japan's journey offers valuable lessons in navigating demographic decline. Japan's ability to adapt and maintain stability in the face of these challenges may be a new definition of success.
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