"Japan Faces Shortage of 11 Million Workers by 2040... Growing Concerns Over National Disappearance"

Labor Force Shortage of 11 Million by 2040 Due to Low Birthrate and Aging
GDP Surpassed by India... 10% Filled by Foreigners

"By 2040, a shortage of 11 million workers will make regional delivery of parcels impossible. By 2060, India will surpass Japan's Gross Domestic Product (GDP). By 2070, the population will decrease to 87 million, with 10% being foreigners."

As Japan's Ministry of Health, Labour and Welfare released a population-related report the day before, Japanese media presented a population extinction scenario that could arise from labor shortages if the current low birthrate and aging trend continues. Ultimately, population decline will lead to negative growth, causing Japan to lose its GDP ranking to other countries and become structurally dependent on foreign labor.

On the 27th, Asahi Shimbun cited the future population projections announced the previous day by the National Institute of Population and Social Security Research under the Ministry of Health, Labour and Welfare, stating that due to low birthrates, Japan's total population will decrease to 87 million by 2070, with 10% of that being foreigners.

Asahi pointed out that this population decline trend is a serious issue directly linked to economic growth. Citing a report released last month by the Japanese think tank Recruit Works Institute, it emphasized that if the population decline continues, by 2040 the labor force will be short by 11 million people, causing labor shortages across all sectors. According to Recruit Works Institute, in the transportation industry, 4.13 million drivers will be needed by 2040, but the labor force will be short by 1 million, making regional parcel delivery impossible. Additionally, in the construction sector, with a labor demand of 2.99 million, there will be a shortage of 660,000 workers, raising concerns that infrastructure construction and repair work may be delayed.

Especially with the compounding effect of aging, the caregiving and nursing care fields are expected to suffer the greatest impact. The Ministry of Health, Labour and Welfare analyzed that compared to 2019, the number of workers in the nursing care industry must increase by 220,000 by 2023 and by 690,000 by 2040. However, the actual increase by 2021 was only 40,000 compared to the same period. To make matters worse, the COVID-19 pandemic has intensified the labor shortage. According to Tokyo Shoko Research, the number of bankruptcies in the nursing care industry in 2022 reached 143, the highest since 2000.

Labor shortages soon manifest as declines in economic indicators. According to a 2019 survey by the Japan Center for Economic Research, from 2030 Japan will experience continuous negative growth due to population decline, and by 2060, its GDP will be surpassed by India and Germany. The Japan Center for Economic Research predicted that Japan’s GDP ranking will fall from third to fifth, overtaken by India and Germany.

Because of this, the proportion of foreign workers replacing the insufficient labor force is expected to increase significantly. The Ministry of Health, Labour and Welfare predicted in its announcement the day before that approximately 164,000 foreigners will be added annually until 2040, and by 2070, 10.8% of the population will be foreigners.

However, Asahi pointed out that even this is uncertain due to Japan’s wages being low compared to prices and the weak yen. Asahi stated, “Wage levels greatly influence which countries foreign workers choose to work in,” and “In Japan, struggling with a deflationary economy, it is uncertain whether the inflow of foreigners will continue as expected.”

Nevertheless, experts have raised their voices urging active encouragement of foreign labor entering Japan. Takahide Kiuchi, Chief Economist at Nomura Research Institute, analyzed, “If foreign workers are accepted more actively, a virtuous cycle is expected to occur,” adding, “This will raise Japan’s potential growth rate, increase corporate medium- to long-term growth expectations, lead to expanded capital investment, improve labor productivity, and result in higher real wage growth rates.”

How Japanese society will accept the increasing number of foreigners is also expected to be a future challenge. Asahi added, “To lead a virtuous cycle, the government needs to make every effort to create an environment where foreigners can integrate into local communities and where surrounding Japanese people can live with peace of mind.”

This content was produced with the assistance of AI translation services.