This is a case study showing that the impacts of ageing population in Japan are mainly economic . It outlines the effects on work force, pension and health care costs

1. ‘The main impact of an ageing population on a country is economic.’
With the aid of examples, how far do you agree with this statement? [15]
Japan’s population is ageing. As a result, an increasing proportion of Japan’s population
is over 65- they now account for more than 28% of the population. Additionally, the birth
rates remain very low. Japanese women have an average of 1.3 children during their
lifetime, well below the 2.1 needed to maintain the current population.
Burdens of an ageing population:
• Shrinking of the working population: Fewer children born, more people entire
retirement age. The farming population is shrinking dramatically (from 5.42 million in
1985 agriculture census to 2.09 million in 2015) and some rural municipalities are at
risk of disappearance , while the agricultural sector now faces a severe labour shortage)
• Dwindling workforce detracts from economic growth and impacts financial
markets via reduced savings + investment levels. The workforce is expected to fall by
15% over the next 20 years and halve in the next 50 years.
• Remaining working population must bear the brunt of caring for the ageing
population (10% of income taken up by tax for old age which is 2* 2020)
• Labour force shortages are associated with ageing. It is estimated that Japan’s
workforce will be short by 11 million in 2040.
• Healthcare cost containment with a high amount of GDP: Wrapped in health
spending (10.7% in 2017 + sixth highest share among all countries) . Social security
takes up 33.3% Japan in FY 2017 + nearly double FY 1990 share of 17.5%.
• According to The Financial Statistics of Social Security in Japan, the total amount
of social security payments was JPY 132 trillion in FY2020, of which JPY 43 trillion was
for medical care, JPY 11 trillion for long-term care, and JPY 56 trillion for pensions ,
together accounting for 83% of the total. According to Summary of National Medical
Care Expensiture3 compiled by the Ministry of Health, Labour and Welfare, annual
medical costs in FY2020 were JPY 340000 per capita, and were JPY 1 million per elderly
person. By age group in five-year increments, the 65-69 age group cost JPY 490000 per
capita, while the 85+ group cost more than JPY 1 million per capita. Since the cost of
medical care increases with age, national medical costs will likely increase as the
number of elderly people increases.
Benefits payments grow at a faster rate :

2. • Expanding gap between insurance cost + revenue
• Makes it harder for government to meet pension obligations to elderly
Health care and nursing home costs in 2025 are expected to be $ 1 trillion, about 12% of
GDP. Falling work population means that it will be impossible to maintain 3rd largest
world economy. An ageing society results in challenging budget consequences. Japan’s
health expenditure reached 10.9% of the gross domestic product in 2018 accounting to
the IMF is projected to reach 12.1% by 2030.
The workforce is expected to fall by 15% over the next 20 years and halve in 50 years.
As seen according to the facts given above, most of the impacts of ageing population on
Japan are largely economical.