Japan’s unemployment rate fell to a 25-year-low of 2.7 percent at the end of last year. That’s not far from the record low of 2.2 percent during the country’s economic boom.
But there is a dark side to the seemingly good news. The low jobless rate largely reflects the labor shortage in Japan due to a continued decline in the birth rate and the aging of its population.
There were 941,000 babies born last year in Japan, 36,000 less than in 2016. That’s a fresh record low.
Since about 1.3 million people died during the period, the population actually shrank by about 400,000.
In the 1980s, the labor force represented 70 percent of the population. It’s now down to below 60percent, and is expected to decline further to 50 percent by 2050. That means nearly 40 percent of the total population will be above 65 by then.
A lot of vacancies in labor-intensive jobs such as elderly care, cleaning, construction, frontline services, construction, etc. are waiting to be filled.
Meanwhile, the economy is still unable to find a new growth engine, similar to the automobile industry in the 1980s or the home appliances industry in the 1990s.
The young generation can find jobs to make ends meet, but often without clear career prospects.
Large Japanese corporates only offered a pay rise of 0.3 percent last year.
Unable to see a bright future, many young Japanese avoid or delay marriage and having babies. This only exacerbates the problems of a shrinking labor force and an aging population. A vicious cycle, indeed.
This article appeared in the Hong Kong Economic Journal on Jan 3
Translation by Julie Zhu
[Chinese version 中文版]
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