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The Age Boom in Japan is accelerating at an astounding rate. When World War II ended, the percentage of elderly Japanese in 1947 comprised only 5 percent of the populace, while the life expectancy that year was 50. Today, life expectancy has shot up to 82, and the grey haired population is slated to rise to 25 per cent of the populace by 2015.
Japanese total fertility rate was 4.54 in 1947, it dropped by nearly 50 per cent to 2.04 in 1957, briefly recovered and then slumped below the replacement level again in 1970, before dropping to a low of 1.32 in 2006. On October 1, 2006 the population was 127.8 million. While this number is actually more than the population on October 1, 2005 by 1,500, in reality it is the result of increase in the number of foreign nationals rather than indigenous Japanese (Smil). Experts claim the TFR will further drop to levels unheard of in any country during peacetime, resulting in a population of 90 million by 2055 and dropping further to 54 million by 2100 – a population figure present in Japan long back in 1930 just before the invasion of China.
The present retirement age is 60 for private organisations in Japan. A law passed not long ago provides the organisations with two alternatives: increase compulsory retirement age over time, or supply retraining and re-employment schemes to retain employees. A majority of organisations have chosen the second alternative. Among the few exceptions is the reputed Kawasaki Heavy Industries which chose to increase compulsory retirement age to 63 but cut pay at the same time.
The Age Boom has a decisive role in the future of the Japanese government. Before the July 29th parliamentary elections this year for 50 per cent of the Diet Upper House, there was wide speculation that the section of elder voters was capable of toppling the Shinzo Abe government by causing his Local Democratic Party to surrender its Upper House majority (Economist.com). Speculation turned into reality, and the LDP’s 12-seat superiority in the Upper House slipped to a 17-seat shortfall. The vote, which involved only national matters, reflected voter disenchantment with the failure of the LDP government to rectify the pension system that is on the brink of complete economic and political failure, and rein in unemployment (Teslik). Elderly Japanese are particularly disgruntled at the employment policy where a major of Japanese employers raise employee salaries in tandem with employee age. This causes younger employees to get lower salaries, which makes them more pleasing to employers as compared to their older counterparts who experience problems finding employment as their age rises.
Another reason why elderly Japanese are disgruntled is the negative response of the government to public infrastructure applications. It is a common sight to see long queues of applicants in front of the Transport and Infrastructure Ministry offices in Tokyo with applications for new infrastructure in rural areas . The government has not only stopped funding costly infrastructure projects, but it has also radically reduced provision of tax payments to rural areas. While the government defends its policy on the grounds of shrinking financial resources exacerbated by heavy drops in populace, elderly Japanese are becoming increasingly disenchanted with the government.
A third reason for elderly Japanese antagonism towards the LDP government is its constant efforts towards constitutional change regarding the present Japanese pacifist policy that prohibits it from engaging in open and observable military activities. Their antagonism is further exacerbated by the fact that the U.S. is energetically supporting the government’s efforts in that direction.
The July 29th election result showed that, for the first time in the history of democracy, older voters have developed into a formidable vote sector capable of influencing elections. Although the LDP continues to be in power by virtue of its alliance with the New Komeito in the Diet Lower House, the outcome of the July 29th election is a pointer to an uncertain future for the LDP (Economist.com). Given the unpopularity of the LDP regime and the fact that the opposition Democratic Party of Japan also does not offer attractive alternatives to LDP policies, the future is very likely to witness the country shifting to a two-party political scenario including the LDP and DPJ.
The Age Boom has crucial implications to the carers of the retirees in Japan. The two carers are the public pension system and the private pension systems.
The public pension system is pay-as-you-go with partial repayment. Its dual components are a basic flat rate and earnings-related benefit. The basic flat rate supplies 66,200 Yen per month to pensioners aged 65 and more. The earnings-related financial assistance supplies the pensioners 28.5 per cent of their typical professional life income in verifiable earnings. The public pension system is financed by employee/employer payments and government grants. After the 2004 reforms, contributions from employees and employers amount to 13.58 per cent of the employees’ yearly emoluments – this percentage would enlarge by.354 points annually until 2017 when they would stay stationary at 18.30 per cent. Government grants contribute 50 per cent of basic flat rate benefits. The 2004 reforms aimed at lowering the surplus debts of the legacy obligation by producing an excess from enlarged payments and lowered benefits, anticipating production of surplus assets of 420 trillion Yen which would counterbalance the surplus debts of the legacy obligation prevailing before the 2004 reforms.
To make matters worse, a high profile discrepancy committed by the government agency controlling pensions was unearthed in May this year. The agency, which used archaic accounting methods and equipment, could not come up with matches for 50 million computerised pension accounts of persons who have contributed into the public pension system. To exacerbate the situation, it was also found that an additional 14 million records were not even presented for computerised entry.
But from the point of view of elderly people, the reforms are detrimental as it lowers their financial help by.9 per cent for the coming two decades. For example, an average elderly couple which got social security benefits equal to 60 per cent of their retirement income in 2004 would get only 43 per cent in 2023. This reduction is massive, especially in view of the fact that social security benefits form 78 per cent of the total retirement income of elderly Japanese.
The private sector pension system is known as Kosei-Nenkin-Kikin . It has two tiers: an equivalent earnings-associated part and an additional benefit. Workers participating in it get a payroll tax concession of between 3.2 to 5.0 per cent. Private pensions have reduced considerably due to the radical reduction in number of KNKs – they numbered 1,833 in 1996 but fell to just 746 in August 2005. The rate of participation too declined sharply, falling from 40 per cent in 1996 to 18 per cent in 2004. Elderly Japanese blame the government for this unhappy state of affairs, citing its pervasive relaxation of KNK regulations as the main culprit.
Lastly, the Age Boom has strongly influenced the aged sector of Japanese society. Between 1947 and 1949 Japan experienced a baby boom caused as a result of 2.7 million child births per year as returning World War II soldiers married and procreated. The baby boom children have now become elder citizens aged 60 years and more importantly, retirees . The large number of former baby boom – and now elderly retired – people presents a formidable funding challenge for government as well as private business entities.
The most important problem facing retirees is to whom they could leave their talents and legacy. This grey power group, whose immense technological skills and managerial abilities brought about a dynamic uplift to the country’s economy during the 1970s and 1980s, is confronted with a rapidly decreasing newborn population that cannot properly and sufficiently assimilate their knowledge and legacy. At present, there are about 16 million Japanese in the 20 years age bracket. The number is expected to drop to 13 million by 2017.
The second problem facing retirees is the rising adverse reactions of the younger generation on the employment issue. This year, young Japanese were delighted to be able to choose from attractive job offers as employers are constrained to choose from a shrinking workforce. The younger generation is expected to support an increasing number of retired people. Experts estimate that by 2030, the ratio of working age persons to retirees will be two for every one retiree; by 2050 the ratio will climb to three for every two retired persons. The huge question is: “Are the number of working age people willing and capable of supporting the future retiree population?” By present indications, working age Japanese do not think so; in fact, they have already begun to reveal their displeasure and chagrin by refusing to contribute to their pension schemes. Even though the present contributions are meant to support current retirees, their opposition stance reveals their conviction that the scheme will not be practicable and worthwhile when they eventually retire. From an unbiased viewpoint, it does seem that their conjecture is correct.
The third problem is that retirees in rural areas are in a worse predicament than their urban counterparts. As a result of more and more working age villagers migrating to cities in search of a better life, the number of elderly Japanese is increasing in those areas. At present, people aged 65 and more comprise 40 per cent of the total rural population; worse, they form 60 per cent of farmers. As Japanese agriculture involves joint efforts of the farming community in tasks like irrigation and flood control, elderly people are ill-prepared to handle such tough jobs without the help of young community members. A glaring example was the situation in the village of Niigata on July 16, 2007 in the aftermath of a devastating earthquake: 3,000 elderly survivors were just not capable of looking after themselves in their destroyed houses, and were forced to take refuge in shelters – where they remain to this day. The present situation has raised grave doubts about the future of Japanese agriculture and the future of elderly Japanese in rural areas.
The fourth problem is the increasing fissure between elderly people and their adult children with regard to way of life. It is discovered that 32 per cent of the elderly preferred to live in separate houses either alone or with their spouses. An analysis of elderly people in nursing homes is more disturbing. The number rose from 75,000 in 1970 to 216,000 in 1987 (Wikipedia.org). The implication is that there is a growing trend of elderly parents being forcibly ejected to retirement homes by increasingly intolerant younger Japanese.
As a result of their problems, for which there seems to be no relief in the foreseeable future, elderly Japanese are becoming increasingly disillusioned. Two strong indicators of this trend are the steep rate of suicide among elderly Japanese, and the unhindered presence of temples in which people can invoke a swift demise.
The Japanese elderly people are alone in their predicament. Japan has a national holiday known as ‘Respect for the Aged Day’ on the third Monday of September each year . For nearly all Japanese the day has no meaning or relevance; it is just another pleasurable holiday to go for picnics or indulge in other enjoyable activities.
References
“Cloud or Silver Linings?” 2007.
“Elderly People in Japan.” 2007.
“Pension Issues in Japan.” 2006. Web.
Smil, Vaclav. “The Unprecedented Shift in Japan’s Population: Numbers, Age & Prospects.”
Teslik, Lee Hudson. “Japan’s Tidal Wave Vote.” 2007. Web.
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