In 2025, Japanese Businesses face Labor Shortages as Japan’s portion of elderly people has continued and is still expected to continue rising to about 34.8% in 2040, according to the National Institute of Population and Social Security Research.
Japanese Businesses face Labor Shortages
The data also showed that a record 9.14 million elderly people were employed last year, accounting for one in seven employees.
Causes of the Labor Shortage
- Welfare costs for the elderly are very expensive
- Japan just like Korea, has one of the lowest birth rates in the world
- Working-age people face being saddled with mounting healthcare
Japan’s population keeps falling, which has led to a labor shortage due to its aging population. Data shows that over 9.14 million elderly people are still employed in the labour market, accounting for one in seven employees.
Image: shigeru ishiba
Japanese Prime Minister
Credit: Japan’s Ministry of Internal Affairs and Communications
Effect on Labor Shortage
Robert Feldman of Morgan Stanley MUFG Securities explained that this recent data raises concerns about the country’s demographic situation and labor shortage.
A survey in 2024 showed that over 50 percent of Japanese companies experience a shortage of full-time employees. The labor shortage is more felt in labor-competitive industries such as food services.
Statistics Bureau data showed that a record 9.14 million workers over 65 years of age remained in active capacity, and this has remained so for a 20th consecutive year. The problem even continues after these elderly workers retire from different important sectors, as the number of young workers to step up to replace them does not exist.
Solutions to the problem of Labor Shortage in Japan
Governments in and outside of Tokyo have begun to consider the subject of migration more seriously. This has led to the welcoming of over 2 million foreign workers in 2024 and more are expected over the next five years.
Measures like rolling out the provision of more funds for child support have also been aimed at reversing the country’s declining birth rates in the country.
Carlos Casanova, a senior economist told CNBC’s “Squawk Box Asia,” that AI technology might be the solution to Japan’s demographic crisis.
Godwin Uche Fafemi, the C.E.O of HighJobLink Limited in his opinion said that though AI is a solution, other factors like immigration should also remain on the table as options.
