Explained: How falling birthrate is a ticking time bomb for this giant economy

Tokyo, Japan

Faced with the twin problems of a low birth rate and an ageing population, Japan has sounded the alarm. Japanese Prime Minister Fumio Kishida on Monday said that the twin problems pose an urgent risk to society and said that the issue "cannot wait and cannot be postponed." He also pledged to address the issue by establishing a new government agency.

What did the PM say?

Addressing lawmakers during a policy address marking the start of a new parliament session, Kishida said that according to estimates the number of births in the country dropped below 800,000 last year.

"Japan is standing on the verge of whether we can continue to function as a society," he warned, adding that "focusing attention on policies regarding children and child-rearing is an issue that cannot wait and cannot be postponed."

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"We must build a child-first social economy to reverse the (low) birth rate," said Kishida.

How serious is the situation?

Japan has a population of around 125 million people, and in 2022, as the PM mentioned in his address, the population for the first time recorded only 80,000 births. Forecasts had predicted this would happen, but unfortunately, it happened eight years too soon.

For the last eleven years, the country has been breaking its yearly record for the lowest-ever births. In 2020, it reported 840,832 births and in 2021; it reported a 3.5 per cent fall to 811,604. This year, it has apparently fallen even more to a new low of 80,000. 

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Japan is the world's second-oldest country with a median age of 49. About, 28 per cent of its population is aged 65 years or older. The tiny city-state of Monaco with a measly population of 36,686 is the oldest, with around 36 per cent of its citizens over the age of 65.

The nation's fertility rate, which is the number of children a Japanese woman will have in her lifetime too took a hit. In 2021, it fell by 0.30 points to 1.30 children per woman.

What steps have Japan taken to deal with the so-called "ticking time bomb"?

To deal with the falling birthrate, Kishida's government, as per the leader, has launched multiple policies, including the new Children and Families Agency in April.

The policies have been designed to support parents and ensure the "sustainability" of the world's third-largest economy.

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As per the UN, since the early 1990s, "the Japanese Government has expanded family policies and programmes in three areas: (1) childcare services; (2) parental leave schemes; and (3) monetary assistance in the form of child allowances."

In October 2022, the government also proposed extending parental leave from 14 weeks to 26 weeks for mothers and from eight weeks to 12 weeks for fathers.

What is behind this population decline?

Japan is dealing with two problems: a shrinking workforce and an ageing population.

While the rate of decline has slowed in recent years, thanks to an increase in foreign employees arriving under a more liberal visa system, coronavirus has had a detrimental impact, preventing firms facing labour shortages from hiring foreign workers.

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Japan is not alone in facing this population decline. Its closest neighbours have also reported the problem. As per AFP, this could be chalked up to factors like rising living costs, more women entering the workforce and people choosing to have children later or not have them. Recently China too reported that for the first time in six decades, its population has declined.

What does a declining population do to a country?

A community with a higher proportion of senior citizens can be less appealing to businesses. Business owners face a shortage of qualified workers, while the country's economy suffers without foreign businesses.

Twitter CEO Elon Musk too had voiced concern about Japan's falling birth rate. In May 2022, the billionaire had warned that the nation may soon "cease to exist", which he remarked would be a great loss for the world.

(With inputs from agencies)

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