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Rapidly Ageing Workforce: A Perennial Concern in Japan

February 7, 2017

Japan might have placed themselves as the third-largest economy in the world, with the country’s GDP going strong after America and China. However, here’s a bigger situation that can pose challenges to business growth in Japan, which needs to be addressed soon by Japanese leaders: the perennial concern of a rapidly ageing workforce.

While ageing residents is a global phenomenon, World Economic Forum notes that Japan’s shrinking population is the worst among other countries. Rapidly ageing workforce in Japan has been grabbing a lot of global attention since the population is falling in 2004.

According to statistics released by the Japanese government in 2014, more than 25 percent population in Japan are those aged 65 years and above. This means that nearly one-third of the Japanese population are ready to retire or have entered the retirement phase. Unfortunately, the worsening outlook does not stop here. In 2060, it is expected that the number is set to increase to 40 percent.

Hyper-ageing society in Japan could eventually lead to significant changes in the workforce availability, skills upgradation and talent shortage.The labour market is currently seeing highest demand for talented professionals in Japan.

In May 2016, Ministry of Health, Labour and Welfare released that the ratio of job-openings to applicants is 1.34, which means that for every 134 jobs, there are only 100 people available in the talent pool to fill positions. As a matter of no surprise, Japan’s talent crunch is amongst the most severe in the world, according to Manpower’s survey on talent shortage.

Additionally, declining talent crunch also causes companies to implement new regulations by raising the mandatory retirement age. Usually, people can retire between the ages of 55-70. However, nowadays 60 is seen as ‘too young’ to retire. Even people in their 70s can still contribute to the society, with the increase in life expectancy rate.

Combined with falling birth rate, it is no wonder that employers in Japan continue to allow veterans/retired professionals to work even after their official retirement. In order to prevent such issues created out of a rapidly ageing population, here are some alternatives Japanese government should consider to tackle the problem:

See: Digital Leadership in Japan: The Perils and Pitfalls

Send more women to work

Japan’s Prime Minister, Shinzo Abe, advocates a set of economic policies called as Abenomics. The revival program includes promotion to send women back to work. Encouraging women, especially housewives, to return back to the workforce could be one of the practical solutions to overcome talent crunch in Japan.

For years, women in Japan do not have the chance to get a decent place in the professional world. The fact is, working women is not ordinary and common in Japan. Confucian teachings emphasise on male dominance prevalent in Japan, which has forced women to abandon their dreams of pursuing a career even after child-birth.

With a strong patriarchal culture at the roots, men are responsible and entrusted with the productive role financially, while women are portrayed in a reproductive light. Hence, mothers are required to stay back at home and care for their children, with only 26.8 percent mothers going back to work after childbirth.

Nonetheless, while sending more women to work could help overcome talent shortage in Japan, the effects it may cause cannot be ruled out. Considering the long working hours and high job demands, if women are sent to work, they would only have little time to take care of the family. This can be further exacerbated by the growing trend among Japanese youth, who choose delaying marriages and sometimes even commit to staying unmarried because they want to pursue a progressive career path.

Also corporate culture in Japan is not supportive of married women and working mothers to pursue higher careers. When women employees bear child or are going through stages of maternity, they usually tend to miss out on opportunities to get promotions or scale higher ranks in their career, owing to a common belief system ingrained in people’s minds that they cannot devote full attention to their work.

While sending women back to work post childbirth sounds like a good alternative, Japanese government will have to undergo a cultural breakthrough to reduce the impact of traditional attitudes on women’s career progression and make the program work.

Emphasis on technology

Labour shortage has made Japanese leaders avert their eyes to the machine. Known for its highly sophisticated robotic technology, Japan is now starting to use robots to replace human labour. Quoted from Wall Street Journal Blogs, based on a report by Nomura Research Institute, 49 percent jobs in Japanese companies can be handled by robots and artificial intelligence.

From robot assigned to do daily house chores, greet guests at the hotel, to the robot as a tour guide in a museum, Japan keeps innovating to create robot prototypes to resemble human appearance with enhanced capabilities of real human beings. Also, Japan’s Ministry of Manpower supports these efforts by bankrolling giant robotics experimental programs in the country to support innovation.

While this sounds quite promising, there are several drawbacks of using technology to replace humans. One of them is robot’s lack of creative ability to handle certain job roles or participate in creative decision-making. Therefore, currently robots are only used to handle tasks associated with data collection. Despite advancements in technology, it seems that genuine human touch and undisputed power of critical decision making remains crucial for businesses, to be lest entrusted to the AI world.

Further, robots are not something that can be easily purchased, it’s a pricey investment decision for businesses across the globe. While many new prototypes are created, the commercialisation of robots is difficult to realise. The Globe wrote that sensors in humanoid hands alone can be worth $ 215,000, which means Japan will need huge amounts of capital funding to bring about this robotic transformation.

Work-life balance

Japan is known to have long working hours as well as high social demands. This often causes Japanese youth to avoid marriage, not to mention the high cost of childcare each year. Hence, to improve fertility rates, Japanese government has initiated work-life balance program called the Child Care and Family Care Leave Law, which has been effective since 2010.

One of the outline of this law is to provide maternal protection during pregnancy and after child-birth. Employees have the right to apply for maternal leave 6 weeks before and 8 weeks after child-birth, shift to light duty, as well as set limitations on overtime work. Not just mothers, but also fathers can get up to eight weeks paid leave after the child birth. Additionally, they also get a chance to take up to five days leave for their children school events or sickness.

Mass immigration

Bringing in foreign workers through massive immigration to Japan could be the next immediate alternative to respond to the rapidly ageing workforce problem, growing talent shortage for skilled job roles and the social concerns of lowering fertility rates among youths.

To balance the worker-to-retiree ratio, Japanese government needs to immediately open the immigration gates and welcome foreign workers. However, many obstacles lie ahead of us and this should be addressed promptly to make the strategy work.

Based on data from the Ministry of Justice, the population of foreign residents in Japan was roughly 2 percent of the total population. Foreigners in Japan are usually dominated by Korean and Chinese expats, who relatively share the same cultural roots with Japan. This number is quite low as in comparison to other countries, that embrace open immigration policy such as the United States and Canada.

One of the main reasons why immigration is less favoured as the first resort for talent crunch is due to deep down prejudices against immigrants. There are still many people who believe that the arrival of immigrants will change harmonious social patterns and consensus of the nation which has been conducted for centuries.

Since the country is widely known to be complying to traditional cultures, immigrant workers or foreign labour have always been regarded as a threat to racial and ethnic homogeneity in Japan.

The perennial concern of a rapidly ageing workforce in Japan is an issue, that will not just cease to exist without any real efforts made by the Japanese government and business leaders.

To implement a successful strategy, there needs to be a major cultural revolution comprehensive of all the elements needed to bring about change. This could include change in social stigma about male dominance, encouraging more women to join back the workforce or prejudices strongly held against immigrants.

Read more: Japanese company replaces office workers with artificial intelligence

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