Japan and Sweden Population Decline

Changes in demography have a notable effect on the country’s economy. Since the production and consumption patterns are affected, the government is forced to reconsider its national budget and development strategies to adjust to the new changes. Sweden provides a profound cast study in regards to the population changes due to the length of its recorded history of population dynamics. The statistics about the population in Sweden are available since 1749 and reveal changes from stage one to stage four in the process of demographic transition. Various industrialized countries and some few less developed countries repeated Sweden’s experience as it moved from each stage of demographic transition. This unique long term trend in population statistics with fewer births, deaths and growth rates have provided a strong basis for observing other countries.

Japan’s population has continued to decline in 2014 at a faster rate than before. Since the end of the Second World War, the Dankai Generation has shaped the trends in major sectors of the Japanese economy, concerning savings and consumption, housing acquisition and employment, but regardless of the population size. Slightly over a million births have been recorded in the country and, thus, people over 65 years old are estimated to comprise 40% of the total population by 2015. The impact of this prediction is that the government has to seek alternative workforce to support the increasing number of pensioners. The decline of this baby boomer generation will introduce many changes in regards to the economic condition and the corporate sector and the households, thus influencing employment opportunities and retirement benefits.

These social problems are important for these two countries because they are the main points of consideration in setting decision-making strategies by any government. The main reason for focusing on Japan is that the change in population was not caused by major economic achievements like in Sweden, but rather was a result of economic and social problems. Thus, the importance of Sweden’s population trend and collected data is to provide a concrete foundation to which Japan can be compared. This essay will seek to compare the extent and magnitude of the problem and the steps each country shall take to address them.

Extent and Magnitude of the Population Problem in Sweden and Japan

A declining birth rate and the presence of an aging population have substantial impact on the economic and social systems of a country. By contrast, the population size does not affect economic development, when the country’s economic system is stable. For example, rich countries like Sweden and Switzerland have less than 10 million people but the process of population decline has less effect on the country because it is accompanied by a significant change in the age structure. However, the presence of an aging population is more serious issue in Japan than in any given OECD country. First, the aging speed has been more rapid and this reflects a speedy economic development in the past similar to other Asian countries.  Secondly, the Japanese social system is strictly controlled by the rules of the seniority based on the past pyramid, like age structure.  Third, Japan’s process of human resource allocation is constrained by the traditional social roles of men and women both at work and homes unlike Sweden where both men and women have equal access to resources.

The main difference between the two population stucture is that while Sweden has an evenly distributed population based on age, Japan has more adults than children. This is a major concern for the government because in a few years, a number of senior citizens receiving pension and in need of social seciurity services will exceed the working class. Thus, the government will be forced to import labor or reduce the pension for their aging population.

What Matters in Demographic Changes?

According to Bengtsson and Scott, demographic change was not considered very important or influential. Changes in the social security systems mattered the most, which disrupted the economy through constrained tax collection and increased provision of benefits. Concerning the issue of the decline of the birth rate, Katsumata argued that the theoretical explanation is that households have realized the need of substituting quantity with the quality of children who will become useful to the industrial countries including the postwar baby boom period in Japan.  However, after experiencing a sense of economic stability, the 2.1 population replacement after 1950s declined to 1.35 in the year 2000. The main factor that led to this declining trend in birth rate can be associated with the decline in the marriage rates in the 1970s.

However, the increased participation of Japanese women in labor force has been cited as the single most influential contributor on the decline in fertility rate. The increased number of women working reflected an expansion of the service industry, which provided better opportunities for women, increased enrollment in colleges and improvement in the quality of labor. Although higher workforce participation does not reduce the fertility rate for women, it does curtail the opportunity for women to access maternity leave at the expense of their job.

Structural Factors That Account for the Population Decline and Social Problems

There are various reasons that have contributed to the decline in population growth in both Japan and Sweden. They include globalization and industrialization, religious and cultural beliefs, state policies, efforts to reduce or eliminate social problems, improving healthcare provision in Japan, foreign immigrant workers, employment of the elderly.

Globalization and Industrialization

The development of innovation techniques in Japan has contributed to the change in the working strategies of the companies. Complex farm and industrial machines replaced the workforce, thus let organizations to adopt a cost reduction strategy in place of quality labor. Japan service and agriculture sectors come under great assault from globalization and new technology, which tends to make old skills obsolete in an increasing pace. If the economy does not rapidly increase the skills of its workforce to match with the global standards, it may become outdated and unemployable in a short time.

On the other hand, Sweden attained a developed nation status long before Japan did and, thus, economic and social problems changed significantly. Gender equity and equality was achieved early enough to allow both males and female acquire education and jobs. The economic independence reduced the level of countries’ involvement in family affairs, thus, lowered the fertility rate. In addition, the healthcare systems are relatively stable contributing to lower mortality rates and improved quality of life.

Religious and Cultural Beliefs

Japanese people normally are conscious about the social classes and in in some occasions such factor lies behind the reason for marrying late or remaining single. Japanese women are highly inclined to reject potential marriage partner from lower social class or with lower level of education.  As women continue advancing higher the academic ladder, they risk not finding a suitable marriage partner, thus, ending up as a single parent. In addition, the law permits abortion for economic reasons under a medical sanction. The same trend had happened in Sweden earlier then in Japan.  

State Policies

Japan had maintained a very strict policy on international relations before the World War II. There was very little interaction between the country and its neighbors, thus, reducing the flow of immigrants in and out of Japan. This strategy reduced the level of social interaction between the locals and the foreigners and in a way contributed towards the decline of population. In addition, the country’s involvement in war and subsequent bombing resulted in death of many people.

When Sweden realized that the demographic content is declining, the government introduced various measures to reverse the trend. The state adopted favorable policies in order to match the country’s stance with the global benchmarks in terms of technology, globalization, social welfare, communication, freedom of choice and the attitude towards the environment. These privileges affected the nation’s priority towards population growth resulting in the most devastating trend in the country’s future.

Efforts to Reduce or Eliminate the Social Problem

If the optimistic view of population shortage becomes a reality, Japan will experience a shortage in labor, and the imbalance between labor demand and supply is likely to occur in the future. For example, the imbalanced labor supply and demand amongst the first, second and third industries may negatively affect the labor market for fresh graduates. According to Yashiro, this fact can be facilitated by the projection of low fertility rates reducing the size of the population.

Improving Healthcare Provision in Japan

Among the measures proposed and adopted to reserve the decline in the number of children in Japan, one is increasing the allowances for parents during childbirth and childcare as well as improving childcare centers. The government also pledges to provide support to married couples in order to encourage young people to develop a positive attitude towards the institution of marriage.

Foreign Immigrant Workers

In early 1990s, labor shortage in the production and manufacturing industries in Japan became a reality. Japan government amended the Immigration Laws in 1990, which allowed immigrant workers of South American origin to apply for work in Japan. The industries began to establish the on-the-job training programs in order to incorporate the foreign workers. However, the influx of foreign workers generated hotly contested debates with different enterprises holding diverse opinions. In 1999, foreign immigrant workers became more active and various legal regulations were introduced to allow foreign immigrant workers to cope with the increasing hostility from the locals.

Employment of the Elderly

Until 2000, Japan maintained the lowest unemployment rate among the OECD countries, as people were less concerned with issue of employment. The employment of the elderly became a major concern and the government reviewed the public pension regulations to accommodate the old in the workforce, as Bengtsson and Scott mentioned. The pensionable age was reviewed from the age of 60 to 65 years old based on the financial forecast of the aging society. In 1986, the law that enhanced the stabilization and promotion of the elderly employment opportunities was approved unanimously.

In addition, the NGOs have been on the forefront in assisting the available population in maximizing the existing resources in order to match the labor market. JANCA has been one of those organizations that seek to promote healthy living for the people by encouraging them to eat healthy and engage in sports in order to maintain strong mental and physical health despite their advancing age. Thus, the NGOs helped the government in sustaining a healthy workforce, which would otherwise increase the productivity of the economy.

Sweden

Since the increase in fertility had little effect on the population as well as the impact of immigration policies, Sweden developed various ways to solve the problem.  The government decided to increase the number of working hours per person in order to increase the individual tax base. High potential exists towards the increment of the tax base through increasing the number of hours worked per individual. On average, the number of working hours in a week by European worker is less than a normal Swedish worker performs. In 2009, the Swedes worked in average 40.6 weeks while the Americans worked 44.2 weeks. This difference in the number of weeks worked is due to the high number of vacations involved since the aging workforce in Sweden requires more time to relax than the agile and young workforce in America.  In Sweden, there were more cases of sick leaves and other non-vacation related absenteeism more than the rest of the European averages.

Some of the proposed ways to solve the problem in order to increase the tax income for Sweden include the following. The ministry of education proposed to have a more rapid education completion system in order to have the youth join the workforce earlier.  The department of labor seeks to have an amendment in labor laws in order to have a regulation and reduction of the informal employment. This will provide a shift from the cottage work to market work, thus, this strategy will enhance the reduction of the unemployment rate.

In addition, more reforms on the social security system are being implemented to enhance the health insurance systems. This tactic will help reduce the rate of absenteeism due to sickness and increase the retirement age from the current 60 to 65 years of age.  Although the healthcare costs for old people may appear particularly daunting, the pension system has become an important issue towards increasing the share of the population enjoying a long period of retirement. All these incentives are geared towards providing a possibility to achieve the required results.

Extent to Which These Efforts Have Been Successful

The intervention strategies in Japan begun soon after the World War II and they achieved a notable degree of success. The presence of a sustainable healthcare provision structured in the context of expanding the younger population in the growing economy has helped sustain the economic needs of the rapidly ageing society. The idea of increasing mental, economic and psychological support to the ageing population has enabled Japan workforce in maintaining a steady flow of labor in the economy. The old people can now manage to stay for a longer period in the labor market, thus contributing more to the production process and reducing the amount payable in pension. The government has taken such approach to nurture the lifelong employability of workers rather than targeting the senior citizens as a specific group.

However, the strategy of importing labor from neighboring Asian countries and other parts of the world was never successful. Although most immigrants have secured work permits in Japan, the legal applicability of the policy has remained a highly debated issue in the country.  The advisory group to the Prime minister, Economic Strategy Council, submitted a report in 1999 to the national leaders devising the best way of reviving the Japanese economy other than going outbound.

In Sweden, the direct impact of the government policies has corresponded to an increase of labor force of approximately 0.3% per annum since the interventions. However, a simple production system did not fully solve the Swedish problems. These improvements in labor productivity have had a dire effect on the consumption level, which promptly increased while the production has reduced. Therefore, Sweden should not be expecting to have an improvement on productivity by challenging the age, more efforts should be put toward attracting robust workforce in the country.

In the effort to expand the tax income by increasing the number of average hours worked, the results shows that the plan was able to increase the retirement age by 5 years to maintain the consumption level in the twentieth century. Even though it was possible to increase the labor supply, one last problem remains. As Bengtsson and Scott illustrate, this problem is whether the Swedish economy will manage to absorb the substantial increase in the labor force and whether it will be sufficient to offset the ageing population.

Future Social Problems in Both Countries

The National Institute of Population Research estimates that Japan will have a notable decline in population by 2040. As expected, the most significant effect to emerge is the unprecedented rapid population decline, which will have detrimental effect on the country’s social, economic and political conditions. Since 2010, the population was dropping three years in a row.  When predicting the impact of the demographic shift in Japan, it is important to note that the projections are unlikely to provide adequate recovery to the population growth.  Thus, the intervening economic, political and social changes will generate increased immigration and a more robust fertility rate.

Indeed, the increase in the number of foreigners in Japan will more likely increase the population of immigrants at the expense of the native Japanese.  Economically, many towns will transform into international centers, developing and enhancing opportunities for the interaction between the foreigners and local residents. Socially, the local culture and religious beliefs will be dissolved in each other and, thus, a hybrid culture and religion will develop in order to accommodate different customs and faiths depending on the residents. Politically, people will gain equal access to power and resources regardless of race, religion or background unless the law intervenes to curtail the freedom of the people.

On the other hand, the open borders in Sweden have provided a free market think tank since 1989. With financial assistance from Stockholm government, immigrants from neighboring countries are able to attend schools and participate in social and economic development in Sweden. Over the years, immigrants from countries like Iraq, Bosnia and Somalia have taken advantage of Swedish asylum policies and as a result, the originally homogenous Nordic country has attained a new social, political and economic image. Today, the population of foreigners born in Sweden is 17% higher than any other country in Europe.

The country has become more and more hospitable to foreigners. In 2013, Sweden became the first EU country to provide a permanent residency to any Syrian refugee who manages to arrive in Sweden. Permanent residency is a designation that extends to next of kin and immediate family members. Since then Sweden has been allowing Syrians to come to the country at the rate of 2000 per month because of the ongoing Syrian crisis. However, Syria is facing a dark future where a whole generation of kids with immigrant background may face a social and political alienation by the native Swedish society. The immigration minister admitted in 2013 that the big integration challenge could be solved by providing more reforms in the immigration sector to fill the gaps in the labor market.

Conclusion

There are various things to learn from the comparison of the demographic trends of Sweden and Japan. Despite different locations, these two countries have experienced the same problem at different times. Most of the reasons that led to a population decline in Sweden more than a century ago are the same that affected Japan in the 20^th century, although the case of Japan may have been highly catalyzed by its involvement in the World War II.  It can be concluded that demographic changes do not influence the economic condition or the society in particular; however, there is an underlying structural problem. With rapid economic development, the economy changes while employment rate and family units and structure mostly remain the same. Declining fertility is one of the indicators of the mismatch between the social economic systems available in both Sweden and Japan. In response, the government has tried its best to improve the social and economic systems as a major target in order to remove unnecessary tension. However, different results were obtained.

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