That Japan’s population is aging is well documented. The country has the world’s highest life expectancy and one of the lowest birth rates, making it a test case for other countries that are also expected to see population declines and increasing proportions of elderly citizens in the coming decades. This includes not only developed economies, but also countries such as China, which potentially faces enormous challenges caring for its increasingly graying population.
The solutions that Japan develops to handle population decline and aging will provide a template for many other nations, especially in Western Europe and East Asia; it’s clear there will have to be significant cultural change, but it’s equally clear that where there are challenges there is opportunity.
What challenges are expected? Among them are increasing medical costs to society as a whole, and the question of where to find the means to pay them. Public pension payments will also increase, as a greater portion of society retires from the workforce. Again, there is the question of where to find funds. Also, the retirement of older workers presents the danger of reduced overall economic output, as fewer workers are available to meet the demand for labor.
Most of these problems can be addressed through economic growth and increased productivity. The question of how to make these things happen with a smaller workforce is one Japan is currently addressing.
Sustainability/livability
The foundations of “sustainability” are the choices an organization/community makes about how it operates, comprising the vision, policy and practice that enable it to adapt to continuous challenges and to thrive.
Good planning helps create communities that attract and keep residents, and the “livability” of a community is a major attraction for the economic investment that provides jobs and wages. Planning helps community members envision the direction in which their community should grow and helps them strike the right balance among economic development, essential services, environmental protection, and development and support of a social infrastructure that nurtures community cohesion.
Development strategy provides a road map to initiatives that will obtain the best returns for the community, returns which can and should be measured on the basis of the economic, environmental and social benefits they bring to community members. Development strategy must take into account the needs and goals of community members, and should reflect analysis of data that points to opportunities.
Reshaping the living environment
One important challenge presented by an aging society is the need to provide a living environment that not only supports the requirements of the elderly, but also nurtures the working and leisure lifestyles of younger generations. Aging populations want the same things other segments of society want, like access to shopping, green space, restaurants, and more walkability.
In addition, health care and health promotion are prime concerns, and by providing the opportunity for older people to exercise, society can significantly reduce health care costs. This means creating outdoor living spaces that permit walking, and building recreational facilities (e.g. swimming pools) that support activities that can be easily enjoyed by senior citizens.
The World Health Organization developed the Age-Friendly Cities project several years ago to get planners thinking about the elements needed in a community to support healthy aging. For some aging citizens, providing safer roadways and smoother sturdier sidewalks were essential considerations. For others, it was about seeing more public washrooms in popular spots so that people of all ages can enjoy them comfortably.
By recognizing the diversity among older people – by promoting inclusion in all areas of community life, and by anticipating and responding to people’s needs – cities can capitalize on the significant resource that older people provide. Through the economy, community life, volunteering and civic participation, we can foster a socially-engaged, active older population which will be positive for everyone living in our cities.
Challenge-driven innovation
In 1993 Toyota Motor Company shifted gears in its development of what it thought of as the car of the future. The deadline was the start of the 21st century. In America at that time car designers were sketching gas-guzzlers or sport-utility vehicles. But the Toyota team, mostly in their early 30s, wanted to create something that would “do the Earth good”.
Within two years they had come up with Toyota’s hybrid technology, in which a battery powers the car for short distances and a petrol engine kicks in at higher speeds, recharging the battery. Within four years they had their first Prius on the road.
Since then Toyota has sold five million hybrid vehicles, and is working on other new environmentally friendly automotive technologies.
This is the kind of thing you would expect from Japanese manufacturing, with its focus on craftsmanship, or monozukuri. The Toyota project exemplifies some of the strongest traits: teamwork, in-house development and a desire to earn glory for the company.
The tradition of in-house innovation runs deep in Japan, and some of the resulting products may help the country to adapt to an aging society. Products that are already available, or will be soon, include: the Toto intelligent toilet that can detect the level of sugar in urine; Panasonic’s robotic bed that turns into a wheelchair; and Toyota’s battery-powered individual three-wheeler, with built-in sensors to avoid collisions.
Already in Japan, in aggregate terms, older generations are contributing a more important share of consumer spending every year – not least because they are getting to be so numerous. Products such as health supplements, pharmaceuticals, skin creams, mobility aids, cruises, personal development classes, etc. are in for a sustained boom for years to come.
Entrepreneurship is not as developed in Japan as it is in some other countries, but more and more young people – as well as some retirees – are launching their own businesses, identifying market demands and filling industry niches.
It is well-known that start-up companies – if they get off the ground – can move more quickly than larger, more established companies. The challenges presented by Japan’s aging society are unquestionably creating market opportunities for companies of all sizes, and if Japan’s established firms can work with the country’s new entrepreneur class to develop innovative ideas and bring them to market, first in Japan and then globally, one result will be considerable economic growth.
Public policy
Government policy, especially in the health care sector, will play a critical role in how Japan handles the challenges of its aging society.
While it’s true that older people use three to four times more medical care than younger people, differences in the average age of the population among nations does not predict health care spending at all. For example, in 2000 Japan spent 7.8 percent of GDP on health care and the United States 13 percent, although 17.2 percent of the Japanese population was 65 and older, compared to 12.3 percent in the U.S. Other factors – particularly, how health care systems are organized – are far more important.
In addition to health care, the Japanese government has taken steps to permit older workers to continue in their jobs beyond previously mandated retirement ages. Until the 1970s, the retirement age in many large companies was 55; at that point, the government encouraged a change to 60. In the 1980s, discussions began about raising the retirement age further, and 25 percent of baby boomers say they would like to continue working until 70.
A gradual “crisis”
A key point about the aging “crisis” is that it is a rather gradual crisis. Improved productivity, increased use of labor-saving technologies, and a shift in town planning and social welfare infrastructures will mitigate the economic effects of the demographic shift, and provide government officials and businesspeople around the world with a template for handling the challenges that many nations will eventually face.
Roberto De Vido is a communications consultant who has lived and worked in Asia for 25 years. He is the editor of Aidpreneur.com and producer of the Terms of Reference podcast.
