Leading Regional Economist Gives Timely Insight into Aging & the Economy

1

Aging and its Impact on Economy

--- What is going on in Japan and what Korea faces to

April 26, 2013

Kosuke MotaniChief Senior Economist, Economist DepartmentJapan Research Institute, Limited

[email protected]

2

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12

Population in Million, including Foreign Residents Source: National Census

Structural Change of Japan's Population: as of 1940

Silver Tsunami, or Aging Baby Boomers, in Japan

Age15-64 43.0 MillionAge65&Over 3.4 Million

3

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



Many Were Born under Political Encouragement

Many Were Born with Survivors’ Joys for Peace



4

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



Angry Youth Protested to Conservative Government, with Unconscious Fear that

Many of Them Would not Get Jobs.



5

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



Baby Boomers Joined Labor Market, Contributed to Export Boom, and Brought Japan’s “Rapid Growth.”



6

Baby B

oom

ers' Ju

nio

rs

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



Baby Boomers Forming Young Families Enlarged Domestic

Demands, Giving Japan “Steady Growth. “



7

Baby B

oom

ers' Ju

nio

rs

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



Baby Boomers, Being Twice More than Their Parents, Eagerly Bought New Houses

and Brought House-Construction Boom.



8

Baby B

oom

ers' Ju

nio

rs

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



BB Juniors Entered Labor Market under

Recession, Increasing

Employment and Unemployment at the Same Time.



Reached Maximum.

9

Baby B

oom

ers' Ju

nio

rs

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



Aging Baby Boomers Started Consuming Less.



Started Decreasing

10

Baby B

oom

ers' Ju

nio

rs

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12



Rapid Increase of Late-Seniors Makes Social

Welfare System Malfunctioning

Retiring Baby Boomers Consume

Even Less.Rapid Decrease of Working Age

Population Brings Inevitable Shrink of Domestic Demand

Many BB Juniors’ Suffering from Low Wages of Unstable Jobs Makes Their

Consumption Weak.



11

Not Ye

t Born

Baby B

oom

ers' Ju

nio

rs

Baby B

oom

ers

Born

durin

g th

e W

ar

↑B

orn

befo

re 1

94

0A

ge 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12

Population in Million, including Foreign ResidentsSource: Prospects of NRI-SWP


Dramatic Decrease of Working Age Population, Even Though

the Prospects Assumes Record-high Inflow of Foreign

Immigration.

Aging BB Juniors Will Start Consuming

Less.

Ultra Rise of the Late-Seniors



12

Not Ye

t Born

Baby B

oom

ers' Ju

nio

rs

Baby B

oom

ers

Born

befo

re 1

945

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12





13

Not Ye

t Born

Baby B

oom

ers' Ju

nio

rs

Born

befo

re 1

955

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12





14

Not Ye

t Born

Born

befo

re 1

96

5

Bab

y B

oom

ers' Ju

nio

rs

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12





15

Not Ye

t Born

Born

befo

re 1

97

5

Ag

e 0

-4

5-9

10

-14

15

-19

20

-24

25

-29

30

-34

35

-39

40

-44

45

-49

50

-54

55

-59

60

-64

65

-69

70

-74

75

-79

80

-84

85

& O

ver0

2

4

6

8

10

12





16

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5

Population in Million, excluding Foreign Residents

Born Before WWIIBorn before Korean WarBorn after Korean War

Source: Statistics Korea

Korea Rep. Population Structure as of 1970

Silver Tsunami is also Hitting Korea

Age15-64 17.2 Million

Age65&Over 1.0 Million

17

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5

Population in Thousand, excluding Foreign Residents







18

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5








19

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

1

2

3

4

5








20

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5








21

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

1

2

3

4

5


Born Before WWIIBorn before Korean WarBorn after Korean WarBorn after 2011






22

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5


Born Before WWIIBorn before Korean WarBorn after Korean WarBorn after 2011






23

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5


Born before Korean WarBorn after Korean WarBorn after 2011






24

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5


Born before Korean WarBorn after Korean WarBorn after 2011






25

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over

0

1

2

3

4

5


Born after Korean WarBorn after 2011






26

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500

Population in Thousand, including Foreign Residents

Born Before WWIIBorn Before IndependenceBorn in 20th Century

Source: World Population Prospects: The 2008 Revision, United Nations

Singapore Population Structure as of 1970


Migration does not Count in Aging Singapore

27

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500







28

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500







29

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500







30

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500


Born Before WWIIBorn Before IndependenceBorn in 20th CenturyBorn in 21th Century





31

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500







32

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500







33

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500


Born Before IndependenceBorn in 20th CenturyBorn in 21th Century





34

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500


Born Before IndependenceBorn in 20th CenturyBorn in 21th Century





35

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500

Population in Thousand, including Foreign ResidentsSource: World Population Prospects: The 2008 Revision, United Nations


Foreign Immigrants Can be a Solution?

Population level as if those had lived in Singapore in 1990 have got older for

next 20 years, without going out of

the country nor becoming dead

Increase due to foreigners’ inflow

36

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

100

200

300

400

500

Population in Thousand, including Foreign ResidentsSource: World Population Prospects: The 2008 Revision, United Nations


Increase due to foreigners’ inflow

Foreign Immigrants Ends in more Seniors

Population level as if those had lived in Singapore in 1990 have

got older for next 50 years, without going out of the country

nor becoming dead

37

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150

Population in Million, including Foreign Residents

Born Before WWIIBorn before SCP


China Population Structure as of 1970

China: Dynamic Emerging and Maturing

Age15-64 457 MillionAge65&Over

35 Million

38

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150


Born Before WWIIBorn before SCP





47 Million

39

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150


Born Before WWIIBorn before SCPBorn after SCP





63 Million

40

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150


Born Before WWIIBorn before SCPBorn after SCP





86 Million

41

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150


Born Before WWIIBorn before SCPBorn after SCPBorn in 21th Century




Age15-64 973 MillionAge65&Over 111 Million

42

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150







43

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150







44

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150


Born before SCPBorn after SCPBorn in 21th Century





45

Age 0

-4

5-9

10-1

4

15-1

9

20-2

4

25-2

9

30-3

4

35-3

9

40-4

4

45-4

9

50-5

4

55-5

9

60-6

4

65-6

9

70-7

4

75-7

9

80-8

4

85 &

Over0

50

100

150


Born before SCPBorn after SCPBorn in 21th Century





46

14% 15% 17%21%

26%31%

36%

44%49%

51%54%

59%

3.7 4.7 6.0 7.2 9.0 12 14 16 19 22 23 22

11 12 1518

2226

2934 36 36 37 37

7983

86 87 86 8481

7774 71

6763

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 20350

20

40

60

80

100

百万人

0%

20%

40%

60%

80%Source: Prospects of NRI-SWP

Demographic Change of the Residents in Japan (1980-2035)

Age15～64

ProjectionPast

AgeOver65

AgeOver65Devided byAge 15 64～

AgeOver75

Japan: Already Aged and Still Aging

47

6% 7% 7% 8% 10%13%

16%

22%

27%

36%

47%

60%

0.4 0.5 0.7 0.8 1.1 1.4 2.04.2 5.4 6.5

8.010

1.4 1.7 2.2 2.6 3.4 4.4 5.48.1

1013

1618

2327

3032

33 34 3537 37

3533

31

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 20350

10

20

30

40

million

0%

20%

40%

60%

80%Source: Statistics Korea

Demographic Change of the Residents in Korea (1980-2035)

Age15～64

ProjectionPast

AgeOver65

Age over 65 devided byAge 15 64～

AgeOver75

Korea: Not Yet Aged but Will Age Rapidly

48

10% 10% 11%14%

18%

27%

39%

64%

84%

21 27 37 61106

160236

401

575

45 61 82120

176

272

379

591

730

457

586

755

855

973 996 983916

870

1970 1980 1990 2000 2010 2020 2030 2040 20500

200

400

600

800

1000

1200

million

0%

20%

40%

60%

80%

100%Source: World Population Prospects: The 2008 Revision, United Nations

Demographic Change of the Residents in China (1970-2050)

Age15～64

ProjectionPast

AgeOver65

Age over 65 devided by Age

15 64～

AgeOver75

China: Not Yet Aged but Will Age Rapidly

49

6% 7% 8% 10%14%

26%

46%

59% 58%

0.0 0.0 0.1 0.1 0.2 0.3

0.6

1.0 1.1

0.1 0.1 0.2 0.30.5

0.9

1.51.8 1.7

1.2

1.6

2.2

2.9

3.6 3.7

3.33.0 2.9

1970 1980 1990 2000 2010 2020 2030 2040 20500

1

2

3

4

million

0%

20%

40%

60%

80%

100%Source: World Population Prospects: The 2008 Revision, United Nations

Demographic Change of the Residents in Singapore (1970-2050)

Age15～64

ProjectionPast

AgeOver65

Age over 65 devided by Age

15 64～

AgeOver75

Singapore: Not Yet Aged but Will Age Rapidly

50

0% 10% 20% 30% 40% 50% 60% 70% 80%Senior Age Population ÷ Working Age Population

0%

20%

40%

60%

80%

Junior Age Population ÷ Working Age Population

ChinaSouth KoreaJapan

Junior age: 0-14yrs old / Working age: 15-64yrs old / Senior age: 65yrs old and overSource: World Population Prospects: The 2008 Revision, United Nations

Figures include foreign residents数字には在留外国人を含む

Decrease of Children and Increase of Senior Citizens 1970-1980-1990-2000-2010-2020-2030-2040-2050年

1970

1980

1980

1970

1990

2000

2000

1990

2010

2020

2020

20502040

2050

1970

1980

1990

20002030

2050204020302020

2010

20402030

2010

Korea, China and Japan: Time Difference

51Americans Also Aging But Dying Earlier

0% 10% 20% 30% 40% 50% 60% 70%Senior Age Population ÷ Working Age Population

0%

20%

40%

60%

80%

Junior Age Population ÷ Working Age Population

SingaporeUSA

South KoreaEurope

Japan

Junior age: 0-14yrs old / Working age: 15-64yrs old / Senior age: 65yrs old and overSource: World Population Prospects: The 2008 Revision, United Nations

Figures include foreign residents

Decrease of Children and Increase of Senior Citizens 1970-1980-1990-2000-2010-2020-2030-2040-2050年

204020302020

20502040

203020202010

2000

1990

1980

1970

20502050

2050

1970

1980

1990

1970

2010

204020302020

1980

1990

2010

1990

1970

2050

2020

52

14% 15% 17%21%

26%31%

36%

44%49%

51%54%

59%

3.7 4.7 6.0 7.2 9.0 12 14 16 19 22 23 22

11 12 1518

2226

2934 36 36 37 37

7983

86 87 86 8481

7774 71

6763

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 20350

20

40

60

80

100

百万人

0%

20%

40%

60%

80%Source: Prospects of NRI-SWP

Demographic Change of the Residents in Japan (1980-2035)

Age15～64

ProjectionPast

AgeOver65

AgeOver65Devided byAge 15 64～

AgeOver75

Japan’s Working Age Population Peaked in 1995

53

50-55年60-65年

65-70年

70-75年

75-80年90-95年

95-00年00-05年

-4 -2 0 2 4 6 8 10

at the beginning of each five years (million)# 10-14 years old minus # 60-64years old

-3

-2

-1

0

1

2

3

4

5

Change in #

Em

plo

yed in F

ive Y

ears

mill

ion

（）

Source: National Census

# of Employment Decided by Demography

05-10年 R Squared 0.84＝

80-85年

85-90年

55-60年

50-5

5年

55-6

0年

60-6

5年

65-7

0年

70-7

5年

75-8

0年

80-8

5年

85-9

0年

90-9

5年

95-0

0年

00-0

5年

05-1

0年

10-1

5年

15-2

0年

20-2

5年

25-3

0年

30-3

5年

35-4

0年

40-4

5年

45-5

0年

50-5

5年

55-6

0年

-6

-4

-2

0

2

4

6

8

10

millionSource: National Census, NRI-SWD

Projected Employment Decrease

# 10-14 years old minus # 60-64years old at the beginning of each five years (million)

Change in # of Those Employed

Projected Change in # of Those Employed, assuming Employment Ratio of Each Age Staying the Same as of 2010

In Japan, Change in Working Age Population Decides Change in # of

Those Employed

54

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

120

10

20

30

40

50

60

70

million

Source: Government Bureau of Statistics

# of Those Employed in Japan

19

68

19

70

19

72

19

74

19

76

19

78

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

120

4

8

12

16

million

Source: Government Bureau of Statistics

Age if Those Employed in Japan

Those15 44～

Those 15 64～

Total

Over 65

55 64～

35 44～ 45 54～

25 34～

15 24～

Decreasing Employment in Japan

55

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

11

年度

0

50

100

150

200

250

300

Trillion Yen

Wage and Retail Sales in Japan

Gross WagePaid

Change in Calculation System

19

80

19

82

19

84

19

86

19

88

19

90

19

92

19

94

19

96

19

98

20

00

20

02

20

04

20

06

20

08

20

10

20

11

年度

40

50

60

70

80

90

100

110

FY1

99

7=

10

0

Economy and Working Age Population

Working Age Population

Gross Retail Sales

Gross Retail SalesNominal GDP

Gross Wage Paid# of ThoseEmployed

Working Age Population affects Economy

56Disparity between Income and Consumption

4.0 4.1 4.0

3.4

132121 122 121

138146 143 146 143

132 134 135

157

188 183

196

184176

190

41 41 42 39 39 40 4450 49 46 50 47 49 52

58 6372

80

90

91

92

93

94

95

96

97

98

99

00

01

02

03

04

05

06

07

0

50

100

150

200

US

$ in

million

(U

S$

1=

JPY1

00

)

0

1

2

3

4

5

6

7

8

# o

f C

ars

Reg

iste

red

in

Million

Gross Personal Income and Gross Retail Sales in Japan

Gross Personal Income

Year

Gross Retail Sales

Gross Retail Salesexcluding Fuel Sales

# of Cars Newly Registered

Gross Exports

Increasing Exports Ended inIncrease of Personal Income of Senior & Rich Investors.

Increasing Retirement of Senior Workers Enhanced Factories’ Productivity and Ended in Export Increase .

Under Decreasing Working Age Population and Increasing Retirement, Increased Personal Income Did Not Trickle Down to Domestic Retail Sales.

57

☆ Modern Machineries with IT substitute human labor in factories, increase labor productivity and keep production level.

★ Decreasing working age population ends in decreasing # of workers and less amount of gross wages, reducing the amount of commodities needed.

☆ Stable production and decreasing needs result in price drop and less demand.

★ Seniors who own 83% of $14 trillion personal financial assets do not consume as much materials as youths do, but just enjoy saving.

Declining Working Age Population Decreases Demand,

not SupplyNot a General Theory, but a “Inconvenient Reality” in

Japan

58Social Security Expense and AgingTotal Expense: Exact Correlation to Late Senior Age Population

Government Spending: Rapid Rise due to Working Age Pop. Decline1

99

0

19

93

19

96

19

99

20

02

20

05

20

10

20

150

500

1,000

1,500

$U

S in

bill

ion (

$1=

\100)

0

3

6

9

12

15

18

Pop

ula

tion

in

mill

ion

Population ofAge Over 75

Social SecurityExpense

Social Security Expense - TotalJAPAN 1990-2005

19

90

19

93

19

96

19

99

20

02

20

050

100

200

300

400

500

$U

S in

bill

ion (

$1=

\100)

Individual Payment

Employer Payment

Government Payment - Net

Social Security Expense - BearersJAPAN 1990-2005

Equivalent to Annual Tax Income

of National Government

59Medical and Care for Aged ExpenseTotal Expense: Exact Correlation to Late Senior Age PopulationGovernment Spending: Rise due to Working Age Pop. Decline

19

90

19

93

19

96

19

99

20

02

20

05

20

10

20

150

100

200

300

400

500

$U

S in

bill

ion (

$1=

\100)

0

3

6

9

12

15

18

Pop

ula

tion

in

mill

ion

Population of AgeOver 75

SSE - Medical &Care for Aged

SSE - Medical & Care for AgedJAPAN 1990-2005

19

90

19

93

19

96

19

99

20

02

20

050

50

100

150

200

$U

S in

bill

ion (

$1=

\100)

Individual Payment

Employer Payment


SSE Beares - Medical & Care for AgedJAPAN 1990-2005

60Medical and Care for Aged ExpenseTotal Expense: Increasing Faster than Late Senior Age Population

Government Spending: Rocket Rise due to Wrkng Age Pop. Decline

19

90

19

93

19

96

19

99

20

02

20

050

50

100

150

200

$U

S in

bill

ion (

$1=

\100)

Individual Payment

Employer Payment


SSE Beares - PensionJAPAN 1990-2005

19

90

19

93

19

96

19

99

20

02

20

05

20

10

20

150

100

200

300

400

500

600

700

$U

S in

bill

ion (

$1=

\100)

0

3

6

9

12

15

18

Pop

ula

tion

in

mill

ion

Population of AgeOver 75

SSE - Pension

SSE - PensionJAPAN 1990-2005

Equivalent to Half of Annual Tax Income of National Government

61Unemployed Female would Save UsSenior Citizens in Japan Do Not Consume as They Did When Young

3,409

827

1,682

855

1,655

869

Full-time Worker

Part-time Worke

Unemployed

House Workers

Students

Others

0 1000 2000 3000 4000 5000

FemaleMale

Source: National Census

# of Labors in Japan2005, Including Foreingers

Ten Tousands→

62

☆ Let younger generation get the financial assets; through accelerated inheritance with tax incentives, promoting consumption of rich seniors by innovative product development, and raising wages by cutting off dividends.

★ Let more women work, while raising their wages.

☆ Let more foreigners come to Japan, not to work as cheap labor but to travel around, stay in, live on and consume.

★ Reforms of the systems of pension, medical and care for senior citizens look urgent. Do not blame neither economy nor government, since the initial cause is the aging of all of us. Blaming without facing the fact delays our actions.

Four Suggestions I wrote in my Book

Leading Regional Economist Gives Timely Insight into Aging & the Economy

Education

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