Japan is getting greyer. Almost a third of its population is over 65; there are 2.3 billion people in their 70s. And there are more people than ever blowing out 100 birthday candles.

The country has the oldest population in the world – with significantly more people over the age of 65 than Italy, the next oldest country.

These five countries have the largest ageing populations.
Image: World Bank

The global shift towards a more elderly demographic is a transformation that is already shaping government policies and affecting societies and economies around the world. Here’s where the wrinkles are already showing in Japan.

1. Economy

Japan was one of the slowest growing of the G7 economies last year and has consistently had one of the lowest GDP growth rates among the group. Pro-growth policies under Prime Minister Shinzo Abe – so-called Abenomics – have yielded some important results, the IMF notes in its latest country report, but it needs strengthened policies to tackle the challenges of its rapidly ageing and shrinking population.

Image: IMF

Japan’s population fell by about 1 million between 2012 and 2017. “This will depress growth and productivity due to a shrinking and ageing labour force and a shift toward consumption, while fiscal challenges will magnify with rising age-related government spending and a shrinking tax base,” the IMF says.

Demographic projections plus associated age-related health and pension cost projections could lead to further significant declines in real GDP and an increase in the public debt-to-GDP ratio.

2. Productivity

Japan is already facing a labour shortage, and its workforce will fall by a further 8 million by 2030 unless changes are made, the Organisation for Economic Co-operation and Development (OECD) estimates.

The Abe administration is introducing policies that support foreign workers and incentivize female participation in the workforce, which is particularly low. Reintroducing older workers has also been an initiative that is starting to bear some fruit.

Image: World Bank

3. Society

Japan has the highest old-age dependency ratio of all OECD countries – there is one person over 65 for every two people between the ages of 20 and 64. And this ratio is rising. Added to this, societal trends such as women marrying later and having fewer children or no children at all have caused the overall birth rate to decline in recent decades.

This is a ticking time bomb for Japan’s social security system, which is struggling to meet the costs of a retired population with fewer workers paying taxes.

4. Health

Health and long-term care spending in Japan are projected to rise sharply as a proportion of GDP over the coming years: more people are going to need more care for longer.

Add to this the shrinking workforce and there is a real risk that the country may have too few healthcare professionals to deliver the care needed.

Promoting a move from hospitals to home is one way the government is looking to tackle the problem, promoting patient-requested care, self-medication and remote monitoring of patients in their homes.

It has introduced an additional monthly insurance premium payable by the over-40s to cover the costs of care into later life.


And carebots – robots to assist the elderly – are likely to become a reality in the not-too-distant future.