As the aging of Japan’s population accelerates, the number of working-age people will continue to be on a long-term trend of decline. Last year, the working-age population or the number of people between 15 and 64 years old fell below 80 million for the first time in 32 years.
Labor shortages did not emerge as a problem when the Japanese economy was under deflationary pressures from the 1990s on. It is now coming to the fore as the economy picks up under the Abe administration’s policies. The business model that relies on low-cost labor is not going to be sustainable if Japan is to emerge from its state of deflation. While seeking to increase Japanese companies’ productivity, the government and businesses also need to explore ways to make better use of the nation’s female and elderly workforce.