"Koureika"

Unable or unwilling to plug my laptop into any of the palm trees near the sunny southern hemisphere beach where I was cavorting during the Christmas/New Year period, there was no option but to resort to a quaint media format vaguely remembered as printed matter. Dead Trees. The daily rag.

Opening up the broadsheet newspaper (it had a zillion pages and weighed a ton), one of the first articles to catch my eye was the one that mentioned how from 2006, for the first time in human history, more than half of the population of the planet would live in urban areas. Slickers. Okazaki is the fastest growing city in Japan, and from January 1st it "absorbed" a town called Nukata. Driving through Okazaki you seen modernity, fashion, consumerism at its best and worst. Driving through Nukata you see empty farmhouses, abandoned rice fields and forgotten forestry operations. The young people have left, for farming just can't provide the income levels they aspire to. Within 45 minutes drive of these sleepy farming villages are some of the richest companies in Japan, and the money talks louder than the fields.

I came back home to Japan just in time to head into the snow covered mountains of Nagano. Last weekend at an onsen ryokan (the somewhat swank Senjukaku) in a tiny village near the famous Jigokudani snow monkeys, I stepped out of a steaming outdoor onsen, strolled back to my room and picked up a copy of the local village newspaper (it had a total of 4 pages and weighed nothing), and found myself reading much the same thing. The local mayor had requested the help of soldiers from the local Jieitai base after record snowfalls. Not to clear roads or repair infrastructure, but to provide muscle. A large number of elderly residents needed snow cleared from the rooves and the entrances of their houses. They were alone. Their children and grandchildren had already returned to Tokyo, Nagoya, Osaka and other cities at the end of their New Year holidays.

Koureika is a word we are hearing and reading everyday. It literally translates as "the aging of society". Japan is getting old, and from 2006, the population is going to start shrinking. Comments made by Koizumi Junichiro (the current Prime Minister) that we should make the most of the "Year of the Dog" by adopting similar levels of fecundity to our canine friends were apparently not made in jest, though unlikely to be interpreted otherwise. 1999 was the "Year of the Rabbit". Whatever the then Prime Minister said didn't have much impact either. Alarm bells are going off, particularly in the sillier sections of the media, but anyone who has spent an uncomfortable 90 minutes in a packed Tokyo commuter train on a regular basis (my previous life) should be forgiven for thinking that maybe it isn't necessarily a bad thing. Birth rates in Japan fell below the natural replacement rate (about 2.1 children per woman) sometime in the 1970's, and just kept falling, reaching new records each year, last year at 1.26 (another record). In the major cities the rate is even lower, and in large portions of Tokyo, Nagoya, and Osaka, less than 1.

By Japanese standards, Okazaki is a fairly young city, with a large number of young people, large and growing school enrolments, and due to the science and engineering base of the town's economy, high employment levels for young people. Even so, during the past 20 years, the percentage of residents aged 65 or more has grown from 8.4% to 14.72% of the population, despite the population growing (largely from an influx of young people and families) from 285,000 to nearly 370,000 in the same period. The population pyramid for Okazaki City is an interesting one, nothing pyramidal about it at all. It looks almost like a Christmas tree...
Population Pyramid (opens new window)

Japan isn't alone. About 50 countries are expected to have smaller populations than now by 2050, but Japan's population will shrink a little earlier and faster than most. Economically Japan has done well, and the low fertility rate is the result of prosperity. Life expectancy continues to lengthen. 50 years ago, Japan was comparatively young when compared to France, Germany, the UK and USA. Only 5% of the population was aged 65 or older. Now it is 19%, and by 2025 it will be approaching 1 in 3. It is presenting all sorts of new business opportunities, and some seem to be getting a little too enthusiastic. When I went to get a haircut this morning, even my local barber was keen to dye any white hairs he gleefully pointed out to "a lovely chocolate brown". For only 3200 yen. As with Prime Minister Koizumi, he apparently wasn't joking. Your correspondent demurred.

So what is all the fuss about? Will living standards fall? Probably not. The working population will fall slightly slower than the overall population as Japan and its employers adjust to the changes. At the moment about 90% of all Japanese companies with over 30 workers still have a mandatory retirement age of 60, a legacy of the past, and one already being scrapped (the law changed in 2004). Other items likely to be scrapped over time will be pay scales linked to seniority instead of performance, and age discrimination in hiring practices (a lot of jobs in Japan are advertized with an age limit - it isn't illegal yet).

On the downside, childcare facilities and policies are still something of a joke, though the situation is changing fast. A major blot of the landscape is financial - the pension funds have been <cough>somewhat mismanaged</cough>. There are quite a few sacred cows hindering reform, social security funds are more or less unfunded, and corporate governance issues are still a major concern.

There should be some benefits too. There will be more university places available than local students able to fill them - providing a few more opportunities for foreign students, and hopefully, the opportunity to cull some of the poorer quality colleges. Japan is already increasingly dependent on foreign labor for a wide range of jobs - something that is only going to grow. Productivity growth will probably more than keep up with GDP per capita, especially as the techniques used in companies such as Toyota gradually spill out of manufacturing into the more important services sector. Less crowding, at least outside the center of major cities, can't be a bad thing. Nor can reducing the overall size of Japan's ecological footprint.

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