Poor old Japan: Low unemployment, less crowded, cheaper housing

By Leith van Onselen

For more than a decade, the Productivity Commission has debunked the common myth that immigration can overcome population ageing. For example:

  • PC (2005): Despite popular thinking to the contrary, immigration policy is also not a feasible countermeasure [to an ageing population]. It affects population numbers more than the age structure”.
  • PC (2010): “Realistic changes in migration levels also make little difference to the age structure of the population in the future, with any effect being temporary“…
  • PC (2011): “…substantial increases in the level of net overseas migration would have only modest effects on population ageing and the impacts would be temporary, since immigrants themselves age… It follows that, rather than seeking to mitigate the ageing of the population, policy should seek to influence the potential economic and other impacts”…
  • PC (2016): “[Immigration] delays rather than eliminates population ageing. In the long term, underlying trends in life expectancy mean that permanent immigrants (as they age) will themselves add to the proportion of the population aged 65 and over”.

In a nutshell, trying to overcome an ageing population through higher immigration is a Ponzi scheme.  It requires ever more immigration, with the associated negative impacts on economic and social infrastructure, congestion, housing affordability, and the environment.

The obvious question that follows is, if immigration is not the solution to the ‘problem’ of population ageing, then what is? Enter Japan, whose population is both shrinking and ageing quickly:

And whose labour market is tight, with Japan’s unemployment rate recently hitting a 22-year low of just 2.8% (if only Australia was so lucky!):

Rather than open the immigration spigots for a short-term fix, and in the process crush-load infrastructure and housing, Japan has instead taken the high tech route of engaging in automation.

Population boosters in Australia often label Japan an ‘economic basket case’ due to its ageing population. But the facts do not back this assertion up. In addition to having an unemployment rate that Australian workers could only dream of, as well as a relatively affordable housing market, Japan’s GDP growth in per capita terms has been highly respectable, as it has been for most other nation’s with declining populations:

ScreenHunter_15564 Oct. 18 16.58
ScreenHunter_15566 Oct. 18 16.59

These facts have not been lost on the Center for Economic and Policy Research (CEPR), which has penned the following rebuke to the clam that Japan is facing a ‘dismal’ future due to population ageing:

The NYT featured yet another piece on a country, in this case Japan, facing a future with a lower population. The piece warns that it will be difficult to maintain economic growth with a declining population and that Japan’s labor shortage would get more severe.

This doesn’t sound like too bad of a story to people familiar with economics. Thus far the labor shortage has not been serious enough to cause wages to rise in Japan. If it eventually does get more severe and wages do rise then it just would mean that some of the least productive jobs would go unfilled. For example, perhaps Tokyo would no longer pay workers to shove people into overcrowded subway cars.

As far as GDP growth, economists usually care about GDP per capita as a measure of living standards, not total GDP. This is why Denmark is a richer country than India, even though India has a much larger GDP…

It is worth reminding readers that growth in productivity swamps the impact of demographics. If Japan can sustain a 1.5 percent pace of productivity growth, then output per worker hour would be 80 percent higher in forty years. Even in a very extreme demographic change, say going from three workers per retiree to 1.8 workers per retiree, this would still allow for a 17 percent rise in average living standards over this period… And this does not account for the benefits from less strain on the infrastructure and the natural environment. Nor does it take account of the lower ratio of dependent children to workers…

Presumably the folks who are concerned about the job-killing robots expect that productivity growth will be considerably more rapid.

We also shouldn’t forget that economists at MIT recently found that there is absolutely no relationship between population ageing and economic decline. To the contrary, population aging seems to have been associated with improvements in GDP per capita, thanks to increased automation:

ScreenHunter_18202 Mar. 26 13.24

If anything, countries experiencing more rapid aging have grown more in recent decades… we show that since the early 1990s or 2000s, the periods commonly viewed as the beginning of the adverse effects of aging in much of the advanced world, there is no negative association between aging and lower GDP per capita… on the contrary, the relationship is significantly positive in many specifications.

If Australia was truly a ‘clever’ country like Japan, it would manage population ageing by: 1) better utilising existing workers, given there is significant spare capacity in the labour market; and 2) where required resort to technological solutions.

The last thing that Australia should be doing is running a mass immigration program which, as noted many times by the PC, cannot provide a long-term solution to ageing, lowers wages, and places increasing strains on infrastructure, housing and the natural environment.

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Comments

      • Nice point. Another one of the downsides of immigration, at least of people of a certain type, is terrorist attacks. H n H is still too beholden to certain P.C. orthodoxies to include that in his case against immigration. Poland is apparently another case of “sensibly tough on immigration policy, no terrorism to date” and Switzerland is also not doing too bad.

        I differ from H n H in that I think the quality of immigrants and their desire to integrate, is almost everything (the other factor is doing growth properly, like we used to and southern USA still does); then the numbers are almost immaterial.

      • Terror Australis

        I would point out that one of the most horrific terrorism incidents of the last few decades was carried out by Japanese domestic terrorists – the 1995 Sarin Gas subway attack.

        Earlier generations also had the Japanese “Red Army” terror network.

        So its not like Japan is some kind of utopia where these things NEVER happen.

        fyi there is a growing foreign population in Tokyo. One satellite town, Waribi, is jokingly referred to as “Waribi-stan” by the locals.

  1. robert2013MEMBER

    and don’t forget the effect of increased diversity on social cohesion.

    • I assume you are pointing out the obvious; that it reduces it. The point can be lost on P.C. multi-culti droids like H n H.

      • The best way to win the immigration debate is to focus on the numbers, not where immigrants are from. Arguing along this line mitigates attacks of ‘racism’ and ‘xenophobia’.

        As soon as race/culture is mentioned, you have lost the argument. The sheer quantity of migrants and where they settle (Sydney/Melbourne/Auckland) is the most important issue.

      • drsmithyMEMBER

        Indeed. I mean, look at America. A history of diverse immigration made it one of the most fractured and polarised societies on the planet.

        “Give me your tired, your poor, your huddled masses yearning to breathe free. The wretched refuse of your teeming shore.
        Send these, the homeless, tempest-tossed to me,
        I lift my lamp beside the golden door!”

  2. ResearchtimeMEMBER

    Fast forward 50 years, and… and it will be wiped out economically, as it cannot sustain its aged population. It will deindustrialise, and probably slip out of the developed nation status.

    • Its basically a protectorate of the US, forward OB, about the same as Korea, as such its fate has more to do with the U.S. than your religious ideological views would suggest.

      disheveled…. noone has a clue what 50 years into the future will look like, I’m still waiting on the flying car and less hours of work a week…..

      • In 15 years, robots will have killed 40% of the jobs. Thus Japan and Norway are doing the right thing by saying no to mass immigration.

      • Jacob….

        I would put the onus more on concentration of Mfg and offshoring labour at this junction, as well, as the trend to off load labour as it increases in age for lower age labour. This suppresses wages as well it does all attendant risks, longer term labour builds up and helps keep the human relationship dilemma tamped down, so management does not have to contend with knowledgeable and experienced friction in implementing policy.

    • Got any evidence or credible “Research” to back that silly assertion up? Using your logic, India should be highly developed given its huge population increase and relatively favourable demographics.

    • are you taking automation/robotics into your equation? in 50 there will be hardly any jobs for humans to do.

      • I think there’s limits to this.

        The whole idea of replacing the humans with robots is is the faster, more efficient output of goods and services for people to consume.

        Except that people whose jobs have been taken by robots and not replaced with anything can’t afford to consume the output of the robots that replaced them.

    • fitzroyMEMBER

      RT the Japanese are over the cult of growth. One look at Tokyo and you will see why. Old people are working longer and are valued; it is an harmonious civil society. It is not perfect, but I think they would wish for less development.

    • Ronin8317MEMBER

      I think you’ll find the opposite. Countries with huge population growth will become ‘undeveloped’ in 50 years, while those with a stable and or declining population will thrift.

  3. In 2008 in AUS it was finally starting to get easier to get a job and newspaper articles were saying “the unemployment rate will be lower in 2009” and I thought “you beauty, I will try to get another job in 2009”.

    But then Lehman Brothers happened and Rudd give out $900 cheques in 2009.

    And that is when low-wage immigration into AUS should have been slashed. But instead, the utterly stupid ALP gave heaps of 457 visas to KFC!

    And they still love low-wage immigration today.

    Treasonous bastards.

  4. Considering they have few domestic energy sources and rely on imports, it is always possible that they don’t see having a large population as being very helpful. Particularly as the production of industrial and manufactured goods are increasingly mechanised.

    https://en.m.wikipedia.org/wiki/Demography_of_Japan

    1940 – 73 million

    2017 – 126 million

    Considering what they were able to ‘achieve’ in 1940 with 50 million less people I doubt they will be sweating the loss of about 1.5 million from the peak in 2010.

    And if they do start to worry they can always offer Japanese youngsters baby bonuses and more family friendly policies.

    As Australia knows those policies actually work when the ‘austerity’ hard heads let them.

    • AUS is an oil importer. USA was an oil and gas importer till recently – still importing oil.

      So, AUS and USA should not have had mass immigration of unskilled people from 3rd world slums. At least USA did not dumb down their degrees for foreign “students” like AUS did.

      As for war, there is a thing called cruise missile.

      • Jacob,

        Not sure I understand your point?

        Perhaps you misunderstood mine?

        The Japanese population could shrink by 50 million to approx 70 million and remain completely Japanese and I doubt the Japanese would ‘suffer’ any inconvenience.

        Not sure what that has to do with either the US or Australia beyond that they both could lift their domestic sources of population growth with policies that were less antagonistic towards having kids.

        That might mean they could achieve their goals with less immigration but not sure what that has to do with 3rd world slums.

        It might mean less immigrants from the U.K.

    • An interesting point about the 1940 comparison is that in 1940 they still had about double the number of babies born every year compared to now, just as they did throughout the 1930s, and the number of 20 year olds in Japan in 2017 is about 30-40% smaller than the number of 20 year olds in Japan in 1940.
      If, in several decades time, Japan’s population again falls below 73 million, the population will be completely different to the way it was in 1940, so there is only very limited basis of comparison.

      • Statsailor,

        That assumes that no policies are undertaken to encourage higher birth rates amongst various cohorts.

        20 years.

        1 million shrinkage per year combined with a higher birth rate by the young and the profile may not be the same as 1940 but it may not be that problematic either.

        That would be a population of a bit over 100 million.

        By then batteries, solar, nuke and other renewables might mean that the remaining 100 million do not need to work so hard to pay for energy imports.

      • The main point was that the difference in age distributions meant that comparison between 73 million in 1940 and what Japan would be like at some time in future if it hit that number again was almost impossible. In that context, the idea that robotics might take off, or renewable energy sources become more widely available are points of further difference, making the comparison more difficult, not less.

        At this stage, the number of adults of child bearing age is guaranteed to fall for at least a generation, so further falls in the number of births are guaranteed without fertility getting back above 2.1 virtually overnight, and in fact the only scenario that provides a similar age pyramid to 1940 is a sharp decline in life expectancy with a simultaneous very sharp increase in fertility. A country with 6% of its population over 65 is a massively different beast from one where the over 65s are more than 25% of the population.

        In the mean time many policies to increase fertility have already been tried in Japan- some have been successful at causing at least a temporary increase in a localised area, but none have succeeded at getting fertility back close to 2.

    • I’m sure that Di Carlo just did a woolies shop for his mate interstate once and now he mate was paying him back.

      Said Mate probably lives rural and so doesn’t have Internet/netbank – so cash it was!

    • If they are really going to investigate the Ipswich ALP mafia then a whole lot of corruption over the last 30 years will come out. It will be a bigger deal than the end of Joh.

    • drsmithyMEMBER

      Someone I know who lives down in the area was telling me Pisasale owns quite a lot of real estate in places likely to be resumed should a bridge ever be put over the river to replace the Moggil Ferry.

  5. I lived in Japan from 2002 – 2007. The ageing demographic and implications were often discussed with a level of concern but no drive to do something rash such as open the immigration flood gates. Looking at the major industrial companies (Honda, Toyota etc), they were busy developing the country’s robotics capabilities … which were in play for at least 15 years before I got there. My conclusion is that they were taking a long-term view at addressing this demographic trend along with developing the next wave of Japanese electronic / economic dominance. They will create an export industry that maintains their CAS and their ability to fund their lifestyle and culture.

    I still never worked out how they were going to overcome the growing military power of China … other than placing greater reliance on the US, but that was done by the US to create a battle ground between China and US to prevent the US having a mainland front line.

    • Their old people are pretty healthy, I would love to see stats on workforce participation. An obvious solution is raising the age of public pensions to some kind of fiscal formula, do they talk about this?

    • The nature of future warfare between advanced nations is quite opaque to me however I think defence still has very different requirements to offence. Ordnance will be automated, you should just take care not to have agents take control of your command centres.

  6. verzijlMEMBER

    Lets not forget MB Article that Immigration is “ageing australia (19 April) more quickly due to immigrant median age of 45 and lets not forget Australia probably already has all the cultures and nationalities know to mankind – 25% of population is born overseas and 50% have parents born overseas. I would say in terms of cultures and nationalities “Noah’s Ark” is complete and Australia reduce the intake of immigrants to match the number of people leaving Australia and give us time to get our house in order!

  7. Sometimes I wonder if there are two different Australia’s: The one that I live in, and the one that you live in.
    In my mind they can’t possibly be the same Australia, take the following

    If Australia was truly a ‘clever’ country like Japan, it would manage population ageing by: 1) better utilising existing workers

    No actually if Australia was a “clever” country than our PISA rankings in Science and Math wouldn’t be dropping like a lead balloon. A Clever country needs an educated and technically capable workforce yet in NSW HSC 2016 only 3251 students even attempted the top level math course that was offered. (That’s about 5% of the 70K students doing their HSC) Maybe they’re all in the Math level below this? No ‘fraid not there were only 8671 students in that course.
    Well what about important STEM courses like Physics, 9156 students attempted that subject. Well surely than they’re all doing Chemistry, no again 10554, hey but that’s almost 15 % right wow we are well placed to become the Clever country. Yeah …Nah!
    I’ll save everyone the embarrassment of any direct comparisons with Japan’s High school graduation results, suffice to say there are good solid reasons why Japan is a Technology powerhouse and Australia is well Australia, what was it again that the Chinese students say about Australia, oh yeah TuAo ’bout says it all.

    • HadronCollision

      Interesting insight. My year 12 classes (Vic, grad 2000) were
      Specialist Maths
      Maths Methods
      Systems and Tech (Electronics)
      English
      Physics

      Dropped French and Chem in Year 11.

      Whilst I enjoyed Specialist Maths (which made sense) but not Maths Methods (Which often didn’t), if I sit and ponder how they affected what I do now, I think the answer is, not much. Perhaps they affected brain development, critical thinking and problem solving (Simple Harmonic Motion!).

      If I extend this line of though to uni – Fourier Maths, Stats, Electronic Eng, Software and Hardware development (god I hated C+), some Physics, RF comms, Sat comms, Broadband comms – it’s probably those that have most relevance to not only what I do today, but more importantly, how I think. (Which is largely about problem solving/systems engineering in dynamic complex multi factor environments.)

      My question therefore is: what subjects in Year 11/12 are predictors of future success in the workforce. Are they necessarily STEM (the skills they teach undeniably in important foundationally), or is it the ability to problem solve and think creatively, take the initiative, act in teams and autonomously (with confidence) and the ability to learn from mistakes.

      Sometimes I think I could have taken Biology and Chem and French focus in Yr 12 and I’d still think the same, but who knows.

      • Brain development is such that what an individual does at the age of 16-20 is inherently a poor predictor of what that individual is capable of during the rest of their adult life.

      • Not wanting to wander completely off topic but with the list of subjects including things like Satellite communications. I’d imagine a higher level High school math beginning would help enormously . I can’t imagine what those without even HSC math skills make of Veterbi encoding/decoding and that’s trivial stuff compared with modern FEC methods combined with DIDO Communication channels. Maybe the end product is dumbed down to the point where the user simply doesn’t need to know any of this but the developers definitely need to know there stuff.
        Which Australia do you want to live in? The Australia of the 1990’s that invented WiFi or the Australia of 2020 that can’t even understand how it works.

      • HadronCollision

        BF: we touched (and this is over 17 years ago) upon some codecs but not super deep. It was more link calcs etc if I remember correctly. Same for RF comms (Fresnel zones and the like). In practice I used that theory/learning once in 2003 or so planning an NEC link from Coot-tha to somewhere else.

        You are right on the maths – I still remember in Year 8 asking my poor maths teach what possible practical application Pythagorean theory would have on my everyday life.

        Not much is the answer, but I suppose it was more about learning to think and problem solve.

        I note that some schools in FNQ appear to be dipping their toes into the iOS development environment (I don’t know if they’re using Swift or what) so at least some schools are getting technical (at an early age – year 7) with robotics and programming which is good.

        I agree with you though.

        RN had an interesting thing about Box Hill TAFE doing a cyber security course which was driven a lot by the needs of corporates (Banks) who have a dire skills shortage and I thought that was interesting in building our capability there. Those kids (some of) could end up in DSD or wherever.

    • Ironic for some Chinese to say 土澳 or TuAo because a lot of Chinese cheat on exams to come here! And a lot of Chinese buy Aussie real estate illegally. Or do they say it because the ALP was stupid enough to give 457 visas to KFC?

      Nevertheless, where does illegal apartment cladding into AUS come from?

      Where are the ghost shopping malls?

      As for studying STEM in high schools, a lot of job ads in Hong Kong actually care about what school the candidates went to and what subjects they studied! Nice. In AUS, jobs are given to exam cheats with 3rd world “qualifications” and jobs ads in AUS never demand that the candidates did certain subjects in school.

    • 土奥 or 吐奥? I’ve not heard the term as I don’t know Chinese in Australia yet, but I’m curious. Or is it a different character?

  8. FeknameMEMBER

    Japan has a different set of conditions to Australia.
    For one thing, they can’t suffer from outsourcing because there is no ready pool of Japanese speakers available offshore.

    Japan’s unemployment rate is low, but they use labour incredibly inefficiently. Visit for a few weeks and you’ll see examples of it everywhere. Humans used where robots or signs would suffice. 5 guys to help a small car reverse (for example).

    The wage prospects are also awful. You can have lots of employment when wages are cheap.

    I’d gladly swap their problems (minus the long hours) for ours, but to hold Japan up as a shining example seems like an apples/oranges moment.

    • “Japan’s unemployment rate is low, but they use labour incredibly inefficiently”

      That is what you would need to do to keep the headline unemployment numbers down.

    • A sample size of one is too small to draw much of a conclusion, and Japan is one of the richer countries in the world, and was such before its workforce began to shrink.

      Thailand will be the next Asian country to begin to shrink purely due to low fertility, with population projected to peak in around 5-7 years. Also interesting to see how the number of Thai born people in Australia changes as the number of Thai born people on the planet begins to decrease.

    • McPaddyMEMBER

      Yes, Fekname, this is true. I worked in Japan for 4 years. Loved living there. Must say I hated working there. Some of the things that make it so lovely to live in Japan (service culture to die for) make it terrible to work there (profitless over-servicing; no concept of the 80/20 rule). I prefer to visit (often) now and work in Hong Kong.

      But I do chuckle to myself every time Japan is held up as a cautionary tale. World beating technology. Social harmony. Best food in the world. Gorgeous natural beauty that they have a genuine reverence for (though in a way that often strikes the westerner as odd, for sure). Deep understanding of the need to add value in order to prosper.

      There is much for Australia to learn from Japan.

    • Schools in the 3rd world would teach the Japanese language if Japan was open to mass low-wage immigration.

      A lot of white men can speak Mandarin, even though the wages in China are not really higher than in AUS.

    • kiwikarynMEMBER

      It cracked me up in Japan when I discovered that people were employed to stand in driveways of office buildings to warn pedestrians of cars coming and going.

  9. This is what I have been stating. People somehow assume that the Japanese so called “lost decades” are bad, but it is as good as it can get after a giant bust in the early 1990s. Its low and sustainable growth rates match well with its aging demographics.

    Can Australia pull this off? No chance!!!

  10. UE, there are plenty of young Japanese students here and they, for the most part, LOVE our lifestyle and don’t want to go home. They hate their 14 hour work culture, 2 hour commutes and all the bullshit. Even shitty jobs here are better, they say.

    • fitzroyMEMBER

      Wages can be better here. (I work 14 hours not infrequently). Appearances matter in Japan more than here. Not just Japanese kids, also the German Referendar had lots of tears before they went home. There are a lot of things that are much better in Australia, much of which is due to our comparatively low population. Japanese girls like the relatively unconstrained society. That said, I think older people there are far more valued and work constructively. Their society as I have said above is far more civil, our civility is breaking down. Homogeneity has given the Japanese resilience and a sense of group achievement and a relatively high work ethic and pride in work that can be awesome.

  11. Japan let in just 28 refugees in 2016. Not 28,000 but just 28!

    Yet the globalists have the gall to call Britons, Americans, and Aussies “racist”.

    As for doubling the refugee intake into AUS – it is an option to wedge the young and Green voters:

    Halve the 457 visa intake, double the refugee intake, and shut the inhumane offshore detention gulags.

    Or keep printing 457 visas like mad and keep running inhumane offshore detention gulags.

    • It’s not all that stealthy – the increasing numbers of ‘guest’ workers in Japan are very widely reported. They brought in 200k additional last year – that’s the same size as Australia’s PR program.
      On top of these is a growing army of foreign students, partly to be future guest workers, but probably also to justify keeping Japan’s unis open now that the number of people in their early twenties is in free fall. They’ll want to avoid unis going down the same path as schools.
      http://www.nippon.com/en/features/h00095/
      http://www.nippon.com/en/column/l00018/

  12. I believe as well in Japan they have this newfangled technology service called ‘the internet’.