Japan’s labour force population will inevitably shrink
Japan’s labor force is facing a decline despite recent growth. Explore the challenges and potential solutions in our detailed report.
We project that Japan’s labour force population will soon start shrinking despite rising labour participation and foreign worker inflows, as these won’t offset the decline in the working-age population.
Given labour participation among young and middle-aged citizens is already stretched, room for a further rise in participation is limited. Indeed, the size of the potential labour pool – the non-labour force population who wish to work – has halved over the past decade.
We also believe that the recent sharp increase in foreign workers will prove unsustainable. The surge in foreign workers is causing public tensions, and the government is moving to tighten visa regulations.
If the government successfully encourages further participation among Japanese citizens, particularly the elderly, or continues increasing foreign workers at a rapid pace, the pace of labour force shrinkage could be moderated. Still, we think a decline is inevitable, while these measures will come with costs.
Download the report for more detailed insights.
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