The Effect of Population Aging on the Japanese Economy and

Society: A Case of Vietnam

Huynh Tan Hoi

Department of Language, FPT University, Ho Chi Minh city, Vietnam

Keywords: Aging, Challenges, Population, Japan, Vietnam.

Abstract: Population aging is an urgent problem facing many countries globally. It is happening at different rates in

many regions. This process is happening more rapidly in developing countries, including countries with young

populations. This changing process constantly brings challenges and dynamic opportunities in many

economic, cultural, political, and social fields in life. The aging population is one of the most important trends

of the twenty-first century. Speaking of this issue, first of all, to mention Japan. Japan ranks 11th in the

topmost populous country in the world and is also one of the countries with the highest population life

expectancy in the world. Due to social and economic problems, many young Japanese currently tend not to

marry or have children, causing the fertility rate to drop sharply. With a low birth rate and high life expectancy,

population aging is quickly becoming a serious problem for Japan. This paper analyses the challenges that

Japan is facing and draws mention of some solutions for developed countries, including Vietnam. The results

of the article show that developed countries like Vietnam need to consider more about olicies and plans for

the long term in the future.

1 INTRODUCTION

The world's population is not only increasing but also

gradually aging. Our world is experiencing huge

demographic changes and no country is immune to

the consequences. Increasing life expectancy and

decreasing fertility are considered enormous

achievements in modern medical and scientific

development, especially when living conditions are

much better than before. However, at the same time,

population aging is also an inevitable result of the

reduction in the birth rate and the rate of the elderly

increasing faster than other age groups. Population

aging is still a difficult problem for the Japanese

government, it entails a lot of consequences for the

problems in Japan's socio-economy (Charvat et al.,

2015). The population structure has gradually shifted

to the aging trend, leading to a serious shortage of

young workers in most industries, leading to a

shortage of human resources. The health conditions

of the elderly cannot be guaranteed nor are young

workers enough to meet the labor market.

https://orcid.org/0000-0003-3505-5290

2 LITERATURE REVIEW

According to the classification of Cowgill and

Holmes (1970), when the population aged 65 and

over is between 7% and 9.9% of the total population,

the population is considered "aging". Similarly, 10%

-19.9% is called the "old" population; 20% -29.9%

call the "very old" population and 30% or more are

called "super old" population, many reports from the

United Nations and international organizations use

this classification. And in recent years, Japan has

been one of the countries with a fast rate of aging

population, while the fertility rate has dropped

sharply (Charvat et al., 2015). Population experts

warn that the trend of having few or no families and

having children is becoming a common phenomenon

in Japan (Hagihara et al., 2013).

The impact of human resource quality on socio-

economic growth is at the heart of policy debates and

related research. Consequently, the relationship

between population and economic growth has

traditionally been emphasized (Goh & McNown.

2020). Since the 1980s, changes in the age structure

of the population towards economic growth have

Huynh, T.

The Effect of Population Aging on the Japanese Economy and Society: A Case of Vietnam.

DOI: 10.5220/0010590903750380

In Proceedings of the International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 375-380

ISBN: 978-989-758-519-7

375

attracted the attention of researchers (Maison, 1997;

Bloom and Williamson, 1998). Besides, according to

estimates of the National Institute of Population and

Social Security (2007, 2008), the number of people

over 65 years old was 25.76 million (20.2%) in 2005;

36.67 million (31.8%) in 2030 and the number of

elderly living alone (excluding the elderly living in

social welfare facilities) increased from 3.87 million

to 7.17 million. Due to the rapid decline in the birth

rate, Japan will soon be a super old society unlike any

other in the world.

3 METHODOLOGY

The paper analyzes in-depth influences in two key

economic and social areas in Japan. In addition to

applying statistical methods, analyzing and

synthesizing data, the article also has comparative

statements that have been referenced from the

literature of many previous research scholars.

Materials used for synthesis and analysis are mainly

statistics of relevant ministries published.

4 RESULTS

Japan's current population was 126,429,826 as of

August 6, 2020 according to the latest data from the

United Nations. The population density is 347 people

/ km2. The average age is 48.4 years old. Japan

population is currently 1.68% of the world

population. The Japanese Ministry of the Interior and

Communications has released the results of the

survey, showing that the country's population has

decreased for the 11th consecutive year, and recorded

the largest number and rate of decline in the history

of population statistics (Ihori et al., 2006). Over the

past six years, the Japanese population has decreased

continuously, reflecting the trend of rapid aging and

a low birth rate (Sakai et al., 2000).

As of early 2017, it is estimated that Japan has the

following age distribution: under 15 years old, from

15 to 64 years old, and population 65 years and over.

Population data by age (estimated): 16,585,533

adolescents under 15 years old, 80,886,544 people

aged 15 to 64, 28,913,148 people over 64 years old.

Below is a simplified model of the population

pyramid divided into three main age groups (Figure

1).The aging of the Japanese population begins later

than the developed countries in Europe and America,

and the rate of aging is very fast. Since 1990, when

the period of population growth peaked, working-age

Figure 1: Age structure in Japan (estimate as of early 2017)

people are getting older, at the same time, the number

of young workers aged 15 to 19 is decreasing (Goh

and McNown, 2020). Population aging is already

happening and the total workforce is starting to

decline. If the fertility rate continues to decline, the

aging rate will increase rapidly in the future. Below

are future population estimates based on hypothetical

calculations by the Ministry of Home Affairs and

Communications Census 2010, National Population

and Social Security Research Institute 2015 Japan

(Figure 2).

Figure 2: Estimated future population of Japan (2015)

Not only in Japan, but aging is becoming one of

the topics of worldwide concern. Without careful

preparation, the government will have to spend huge

amounts of money and these expenditures will have a

negative impact on the state budget as well as the

long-term financial sustainability of the entire

economy (Takaki et al., 2014). Although it has been

adjusted and supplemented, there are still many

13,10%

64%

22,90%

Under 15 years old 15 -64 years old

Over 64 years old

Year

2030

Year

2040

Year

2050

Year

2060

0-14 years old

12,039 10,732 9,387 7,912

15 - 59 years

old

59,498 50,079 43,924 38,479

60-64 years old

8,231 7,787 6,089 5,704

Over 65 years

old

36,85 38,679 37,675 34,641

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376

shortcomings that cannot meet and adapt to the

current situation of the elderly life as well as the

consequences of changing the population age

structure towards aging. Without proper strategies

and policies, Japan will face more challenges both

now and in the future.

5 DISCUSSION

5.1 The Effects of Population Aging on

Japan's Economy

The primary impact is sluggish economic growth due

to a shortage of young workers, and the aging

population is causing many industries in Japan to

scale down their operations or move production

locations to other countries. Some companies

working in other fields, even though they do not have

difficulties in production capital or compete at home

and abroad, have to narrow their production because

they cannot find a source of labor, especially young

workers. good force. Facing alarming population

aging situation, the Government of Japan issued a

warning, by 2060 nearly 40% of the population of this

country is elderly. This is a big obstacle to the

recovery of Japan's economic growth as the young

workforce is less and less. If there are too few young

people in the workforce, it will be difficult to have

enough taxpayers - the main source of income - to

operate and develop the economy. At the same time,

the scarcity of young workers causes the rate of

economic growth and technical innovation to decline

(Charvat et al., 2015).

Next is the decrease in consumer demand,

threatening economic growth. Elderly people tend to

save more than young people, but spending on

consumer goods is less, so the consumer market is

also adversely affected, the revenue of businesses

also declines. Depending on the age at which this

change takes place, a country with an aging

population may experience low interest rates and low

inflation rates. Also because older people consume

less, countries with a high proportion of the elderly

often experience low inflation (Goh and McNown,

2020). In addition, a decrease in population also

means that production decreases and consumption

demand also goes down, directly affecting GDP

growth of the world's third largest economy.

Meanwhile, the ratio of public debt to GDP of the

country is 237.6%. Public debt in Japan is mainly paid

off through people's savings at banks or buying

government bonds. That makes the third world

economy have to increase the speed of borrowing to

pay debts in the coming time (Hagihara et al., 2013).

Population aging causes the burden of social

security benefits to put pressure on young people's

shoulders. For the elderly, pensions are the main

source of income. The aging population brings a

burden on social security benefits as the number of

pensioners is increasing. Data from the National

Institute of Population and Social Security of Japan

shows that in 2001, Japan spent 81,400 billion yen on

social security expenses, accounting for 22.0% of

national income; pension accounts for 11.50% of

social security costs, an increase of 130% compared

to 1995. The broad social security policy based on

progressive income tax, although there are many

advantages in implementing social justice, also makes

a part of business owners dissatisfied, leading to a lot

of investment capital being moved to other countries,

reduce the growth motivation in the country, etc. This

has created great pressure on society on the Japanese

Government in the process of reforming and

upgrading the social security system (Goh and

McNown. 2020).

Besides, the "gap between generations" is

increasing. As many elderly are influential in the

political sphere, national policy will pay more

attention to social welfare programs such as

increasing health budgets, expanding healthcare

facilities and pensions. This would provoke a wave of

protests from young people that threaten the unity

inherent in Japanese society (Hagihara et al, 2013).

Japan's health spending, for example, increased from

6.1% (16 trillion yen) in 1985 to 8.6% (31.5 trillion

yen) in 2003, and is expected to grow to 12, 2% by

2025. At the same time, the proportion of health

spending for the elderly in the total health budget of

Japan continues to increase steadily each year (from

25.4% in 1985 to 36.9% in 2003 ). It has led to a huge

financial burden on Japan's healthcare. Since 2000,

Japan has built and implemented a project called

Healthy Japan. This is a 10 year project to improve

the nation's health. The project's biggest goal is to

stop people from lifestyle-related diseases that have

killed about 60% of Japanese people, including

cancer, cardiovascular disease and stroke, and

prolong the amount of time they have. healthy life

(Ohtake and Saito, 1998).

5.2 Comparison of the Population

Aging of Japanese Society and the

Population Aging of Vietnam

In Vietnam, due to the change in the age structure of

the population following the decreasing trend of the

The Effect of Population Aging on the Japanese Economy and Society: A Case of Vietnam

377

proportion of children under 15 years old and the

increase in the proportion of the population aged 60

and over, the aging index tends to increase. up rapidly

over the past two decades. This is both an

achievement but also a challenge, we need a strategy

to capture and adapt, turn challenges into

opportunities. After the population aging period

begins in 2011 with 9.9% of the population aged 60

and over, Vietnam will go through the aging

population from 2026 - 2054 when the proportion of

people aged 65 and over. accounting for 10-19.9%.

Vietnam is not rich yet, but the population is already

aging. And from 2054 - 2069, Vietnam will go

through a very old population stage, when people

aged 65 and over account for 20 - 29.9%. Vietnam is

also considered a country that has time to move from

"population aging" to "aging population" into the fast

group in the world, the forecast is 20 years, while

Japan and China are 26 years, the UK and Spain 45

years.

According to the Population and Housing Census

at the year of 2019, the average life expectancy of

Vietnamese people is 73.6 years; of which, life

expectancy for men is 71 years and for women is 76.3

years. From 1989 to now, the average life expectancy

in Vietnam has continuously increased, from 65.2

years in 1989 to 73.6 years in 2019. The difference in

life expectancy between men and women over the

two recent Censuses almost unchanged, maintaining

at about 5.4 years.

In 1960, the average life expectancy of the world

population was 48.0 years and that of the Vietnamese

population was 40.0 years old, which is 8 years lower

than the average life expectancy of the world

population, that is, it takes about 80 years for the life

expectancy of Vietnam to increase to the level of the

world (Giang et al.,2020). In 2019, the average life

expectancy of the world population is 72.0 years and

that of the Vietnamese population is 73.6 years old,

1.6 years higher than the average life expectancy of

the world. If we also calculate the highest average life

expectancy growth rate of 0.1 years / year, the

population of Vietnam is about 16 years older than

the world population. Thus, the total time the

population of Vietnam is aging rapidly compared to

the world average is about 96 years.

The total number of households nationwide is

26,870,079 households, an increase of 4.4 million

households compared to the same period of the 2009

census. On average, each household has 3.6 people /

household, 0.2 lower than person / household

compared with 2009. In the period 2009 - 2019, the

average growth rate of the number of households is

1.8% / year, 1.2 percentage points lower than the

period 1999 - 2009 and the period the section with the

lowest rate of increase in the number of households

in the past 40 years. Small household size will be one

of the major challenges for the family and community

based aged care model.

Although there are policies in place to increase

fertility in areas with low fertility below replacement

fertility while reducing fertility in areas with high

fertility, the most recently reported fertility rate in Ho

Chi Minh City is above 1, 3 children / mother is still

the lowest fertility rate in the country and tends to

decrease further (Goh & McNown. 2020). Experience

in Korea and many countries shows that if the fertility

level is already low, it will be difficult to increase

fertility again. When fertility is low, the population

ages at a faster rate. In addition, the elderly

characteristic in Vietnam is that over 70% have to

work by themselves with support from their children,

only 25.5% live on pensions and social allowances

(Ihori et al., 2006).

Regarding social insurance, in 2020, Hanoi City

will only have about 40% of employees participating

in social insurance and by 2021, 45% of workers

nationwide will participate in social insurance.

festival. As the population ages, the increase in the

number of old people and the increase in the

proportion of the elderly without pensions / benefits

will become a burden on social security.

According to 2019 data, the sex ratio at birth

stands at 111.5 boys per 100 girls. In which, this rate

in the poorest quintile is 108.2 boys per 100 girls and

the richest quintile is 112.9 boys per 100 girls, while

the ratio is if true. must be 105 boys / 100 girls. As a

result of this situation, it is forecasted that by 2034,

Vietnam will have a surplus of 1.5 million men of

married age and this number will increase to 2.5

million young men by 2059. So far, the intervention

has not been effective. Currently, very few provinces

have any form of support for families giving birth to

a baby girl, the level of support is not much. From

mid-2020, the Government has also issued guidance

on adjusting fertility to suit the region / region, in

which localities with low fert

6 SOME RECOMMENDATIONS

Adapting to population aging should be considered a

priority issue, requiring timely and comprehensive

solutions to target all population groups to prepare for

the aging society in the near future, not just practice.

focuses on solving problems of the elderly group.

Therefore, it is necessary to implement some

effective solutions. One of the policies to limit the

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rate of population aging is to maintain replacement

fertility. Viet Nam has maintained a replacement

fertility rate, keeping the total fertility rate around 2

children per mother from 2006 to the present.

However, the policies to further support are very few,

even not yet available. We need more schools,

kindergartens, and support for young couples to

improve the aging of the population.

Firstly, it is important to raise awareness and

understanding of managers, policymakers as well as

the entire community about the challenges of

population aging with the lives of the elderly in

particular and the whole society in general. That

means that we need to have more awareness and

responsibility of each citizen, family and the entire

society in promoting the role and experience of the

elderly, taking care of the elderly, building a friendly

environment for the elderly (Giang et al.,2020). The

effects of population aging need to be integrated into

socio-economic development strategies, plans and

projects.

Second, the social subsidy for vulnerable elderly

groups needs to be expanded and reach a universal

system for all elderly, with special emphasis on

supporting the rural elderly and elderly women

(Korinek et al., 2019). The rate and method of

payment should be considered to suit the living

conditions and health of the elderly. The object

identification needs to be reformed to avoid errors in

the acceptance or exclusion of the object.

Third, strengthening health care, building and

expanding aged care services with active and

proactive participation of all social sectors and

strengthening national capacity in care for the elderly

should also be taken into consideration (Korinek et

al., 2019). Attention should be paid to the

management and control of chronic diseases

(especially cardiovascular disease, hypertension,

osteoarthritis, diabetes, and cancer, etc.) along with

the application of new technologies in early diagnosis

and treatment, long-term treatment of chronic

diseases. It is necessary to build a system of hospitals

and geriatric research organizations nationwide. In

the long term, with abundant and qualified human

resources, Vietnam can provide human resources for

geriatric nursing both regionally and internationally

(Ihori et al., 2006).

Fourth, we need to strengthen the role of political,

social and professional organizations in formulating,

advocating and implementing policies for the aging

of the population and the elderly (Shiode et al., 2014).

Activities to mobilize families, communities and the

whole society to take care of the elderly need to be

promoted and replicated (Korinek et al., 2019). It is

necessary to coordinate with specialized agencies in

research and propose diversification of ways and

models of organizing life for the elderly such as living

with children, living in nursing homes or in care

facilities. the elderly in the community. We also

organize community activities for the elderly on a

regular basis to improve understanding and contribute

ideas of the elderly to the State's policies as well as

the community's life (Giang et al., 2020).

Fifth, the young population will have to be better

prepared to enter old age in a healthier and more

secure state, which will facilitate solving the

problems that arise as the population ages in future. It

is necessary to raise awareness of the society about

the increasing life expectancy, the younger generation

will live longer than the previous generation (Korinek

et al., 2019). We also need to encourage people to

seek out tips on maintaining a healthy lifestyle and

how to change their habits with age; carrying out

advocacy activities to raise awareness about changes

in old age and eliminate negative emotions and fear

of old age. Young people are encouraged to

participate in volunteer work to help the elderly,

thereby it helps the young generation experience the

life of the elderly.

7 CONCLUSION

Population aging is a scenario that will happen in

most countries. Population aging in the context of

economic recession and crisis is a huge challenge for

Japan and Vietnam as the aging population requires

more spending on health care, retirement, and

benefits. It makes the economic and social burden

more serious if there is no strategic planning and

proper implementation of adaptation policies and

plans. Applying more comprehensive approaches to

population aging, the country might solve current

problems resulting from the impact of population

aging on both the elderly and the young and in line

with economic development plans.

CONFLICT OF INTEREST

There is no conflict of interest in the paper.

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