Sat, Dec 30, 2017 page8

• Japan’s relevant population lessons

  • By Lee Wo-chiang 李沃牆
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  Japanese writer Masashi Kawai’s book Future Timeline, which is a bestseller in Japan, has also been translated into Chinese and published in Taiwan. Kawai’s book talks about the effects of Japan’s falling birthrate and aging population, and suggests possible policy responses.

  Probably because this issue affects every family, society and nation, and will shape all our futures, it has attracted a lot of attention.

  Taiwan and Japan face very similar structural changes in terms of population, society and economy. Today’s Japan will be tomorrow’s Taiwan, so the government and everyone else in Taiwan should sit up and take notice.

  The book lists key years in which it says various things will happen to Japan.

  Starting from next year, state-run universities will face a crisis that will force some of them to close. In 2020, half of all Japanese women will be over 50, and with fewer women of childbearing age, the birthrate will continue to fall.

  By 2027, Japan’s blood banks will suffer a serious shortage of blood that will cause many important surgical operations to be canceled. In 2030, banks, hospitals and retirement and nursing homes will start to disappear from local areas.

  By 2033, one in three Japanese homes will lie empty. By 2050, there might be a worldwide shortage of food.

  Fast forward to the year 3000, and Japan’s population might have fallen to only 2,000 people, causing it to disappear as a nation.

  As these forecasts show, it is no exaggeration to call the falling birthrate a crisis of national security.

  Worryingly, Taiwan is set to follow in Japan’s footsteps.

  Taiwan’s birthrate keeps falling. According to population statistics published by the Ministry of the Interior, in the 1950s, Taiwan had a very high birthrate of 50 births per 1,000 people, but by the 1980s it fell to less than half that figure. Only because the total population more than doubled over the same period did the total number of births not fall. In the 1990s the birthrate fell further, to less than 10 births per 1,000 people.

  Eight years from now, Taiwan’s crude mortality rate will overtake the crude birthrate, taking the natural population growth rate into the negative. A shrinking population will have many repercussions, such as a big drop in the number of school-going children. Universities already face such a shortage of students that they will soon start having to close.

  Meanwhile, Taiwan’s population is aging faster than Japan’s. In the 1950s, less than 3 percent of Taiwan’s population was over 65, but by the 1993 that figure climbed to more than 7 percent, making Taiwan an aging society.

  In a few days’ time we will enter a new year in which the proportion of people over the age of 65 is forecast to exceed 14 percent, turning Taiwan from an aging society into an aged one. In 2026, a mere eight years from now, it is projected to become a super-aged society with more than 20 percent of the population over 65.

  Even Japan’s population has not aged so fast.

  Taiwan has five to six working people to support each elderly person, but in 50 years that ratio will be one to one. At the same time, the proportion of working-age people, meaning those between 15 and 64, will fall from 70 to 50 percent, which will place a heavier burden on working people.

  In response to Japan’s twin crises of a rapidly aging population and falling birthrate, Japanese Prime Minister Shinzo Abe’s government is giving policy priority to education and childcare, with plans to allocate a huge budget of ￥1.25 trillion (US$11.09 billion) to provide free preschool care and teaching.

  This policy will kill two birds with one stone by cutting the financial burden on families so that they can stimulate the economy by spending more on goods and services.

  Political parties in Taiwan are embroiled in a pattern of give and take, and tit-for-tat. They have so far failed to come up with effective policies to deal with the falling birthrate, while the aging population will make it necessary to spend more and more money on social welfare and long-term care, putting a squeeze on budgets for economic construction.

  As the demographic dividend shrivels and the threat of pension funds going bankrupt grows, there will clearly be effects on consumption and investment and, eventually, on economic growth.

  As these effects take hold, Taiwan will sink into “five lows” — low birthrate, low wages, low growth, low interest rates and low inflation, and its national vigor will gradually fade away.

  Faced with these worrying prospects, we must all think long and hard about the challenges that lie ahead.

  Lee Wo-chiang is a professor in Tamkang University’s Department of Banking and Finance.

  Translated by Julian Clegg
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