Japan’s population problems going to get worse. 7 out of 47 prefectures are seeing net positive migration.

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Demographically speaking it is no surprise that Japan is witnessing a decline in population. Birth rates (despite a mild rise in 2015) are looking to set the first sub 1mn number ever this year. The chart above shows how little child bearing is going on. Delving into the 2017 Japan Statistics Handbook and we discover the long term trend of net migration out of the regions into the big cities. Only Tokyo, Kanagawa (Yokohama), Chiba, Aichi (Nagoya), Fukuoka,  Miyagi (Sendai) and Saitama are seeing net migration inflows. Japan’s second largest city Osaka saw its population decline in 2014, the first time in 5 years.

The alarming prospect here is simple. Regional Japan is bleeding people it can’t afford to lose. Shimane Prefecture on the Japan Sea coast has seen its population sink below the level it was in 1920. What hope for a sustainable career has a kid got in the regional areas? Why would companies look to actively invest in an area which relies on other businesses to keep on the ground to make sure there isn’t a drain on employment resources that will drive up wage costs given scarcity. This is exactly what happened in Germany when it reunified. Those in the former East fled to the more prosperous West for employment opportunities. Business in the East either folded, had to relocate or had to drive up wages to keep the flood of people leaving. It is no surprise that unemployment rates remain higher than the national average in the brain drain areas because often the people that remain are not qualified to do the tasks required.

Another alarming statistic is the rise of single person households in Japan. More people live alone than any other demographic. In 1990 single person households numbered 8mn. Today that number is over 16.8mn. Of that those over 65 years old in single households has soared from 2mn to 5.6mn respectively. That is right, since Japan introduced the law that allowed housewives to claim 50% of a husband’s pension, more women are pulling the trigger on divorce after the kids leave home. Divorce rates for those above 55yo has risen from about 17% of the total in 1990 to around 35% today. 1/3rd of divorces!

Society in Japan is decaying rapidly. 25% of all marriages in Japan are now the result of shotgun (unplanned pregnancy before marriage). Domestic violence is up sharply and spousal related incidents (involving police investigation) has quadrupled in the last decade. Child abuse cases have risen 22x in the last 20 years to around 90,000 cases. Single parent households have risen from 15% in 1990 to 25% of all households with children today.

Which points back to how the government is going to arrest falling population rates. How can it encourage child rearing, looking to encourage more activity in the regions with large tax breaks into specialized economic zones to avoid the brain drain or eliminate tax rates for pensioners working beyond 65? The elderly still need to work but the companies use the labour law to boot them out at mandatory retirement. They are forced into doing roles (e.g. convenience stores, taxis) which allow them to scrape by. If the government wants to turn the workforce situation around it needs to invest in retraining the elderly, not just hope new daycare center openings will get mothers back in the workforce. The elderly are the keenest participants but the labour laws aren’t exactly helping them.

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