Atlas of Aging: Spotlight on Japan
The world’s economies are entering unknown and potentially hazardous terrain as populations age at unprecedented rates. What will happen to economic growth and markets as younger populations shrink? Can governments and pension systems shoulder the burden of escalating numbers of retirees? Will health care systems be ready? Can companies innovate to meet the needs of older customers, and survive or even thrive in a new demographic order?
As the world begins to cross into these uncertain terrains, Japan is the brave pioneer foraging ahead of us all. Due to a powerful mix of extraordinarily high life expectancy and collapsing birth rates, Japan is the oldest nation in the world. In 2010, Japan’s population began to decline. Today, a quarter of its population is age 65+, and by the year 2040, one out of three Japanese will be over age 65. When other aging nations look at Japan, they have a glimpse of what might eventually be their own demographic destiny.
What they see may not be very encouraging. Japan’s economic struggles are legendary. Its annual economic growth has averaged just 0.5% over the past decade. Japan now has the world's highest ratio of public debt to GDP. Although there are many contributing factors to the nation’s problems, its shrinking working age populations and rising numbers of elders are significant barriers to economic growth.
Yet in the midst of difficulty, Japanese are apt to cite a common proverb: “Keizoku wa chikara nari.” Roughly translated: “Perseverance is power.” In its economic struggles, Japan is not just persevering, it is also leading the way in innovating business and government policy solutions. Nations which are preparing for their own impending aging can learn important lessons by watching Japan’s experiments, successes, and mistakes in the coming years. While some of these experiments (such as the government-sponsored “konkatsu” singles parties designed to increase birth rates) have either met with limited success or are still a work-in-process, other initiatives are making headway in reshaping Japan’s society and economy to accommodate a new era of aging.
Prime Minister Shinzo Abe's four-year old “Abenomics” program is engineered to jolt Japan out its flatlining economy and counter some of the negative economic consequences of population aging and a shrinking workforce. Elements include an aggressive “womenomics” initiative to empower women in the workforce, a "robotic revolution" to offset the shrinking workforce population, and initiatives to catalyze medical innovations and technologies. This last element includes the creation of an “advanced medical highway” to provide fast access to the latest medical treatments, promotion of regenerative medicine, and advancing the use of information and communication technologies in the health and medical sector.
Japan’s government has also pioneered a highly generous national long-term care insurance initiative, implemented in 2000, and ramped up in 2011 to better integrate health care, prevention strategies, and long-term care. Prior to the creation of the long-term care insurance initiative, Japan was burdened by rampant “social hospitalization” as older Japanese, with no other options available, resorted to long-term hospital stays. Recently, co-payments have been raised to offset the unanticipated high costs of the long-term care insurance program. But Japan is clearly doing something right with its health and health care. Japan now spends 10% of GDP on health care, slightly more than half of what is spent in the U.S. despite the extraordinarily advanced age of the Japanese population.
Meanwhile, the private sector is switching its marketing focus from dwindling youthful markets to burgeoning opportunities among older customers. Although the age 60+ population accounts for less than a third of Japan’s households, they now account for half of all consumer spending. The Aeon Group, a leading retail group in Japan, is redesigning malls and retail outlets to appeal to older customers, including the introduction of senior-focused products, creation of “concept zones” in malls with activities which appeal to seniors, increasing the size and visibility of signs, and the introduction of concierge robots. Lawson, with over 12,000 convenience stores in Japan, recently introduced “seniors’ salons” with special health services and products for older adults and their caregivers.
U.S. companies attuned to the opportunities in Japan’s aging marketplace are also flourishing. The US fitness chain Curves International entered the Japanese market ten years ago, and now has 1,625 gyms with 710,000 members. The average age of their members is 61. In 2015, IBM and Apple announced a partnership with Japan Post Group to introduce new products and services to monitor the health and wellness of older Japanese customers, leveraging the mail company’s 24,000 post offices and 400,000 employees. This program includes a “watch” service where mail carriers monitor and communicate the status of older customers through customized iPads.
Japan also boasts high productivity and labor force participation rates among older workers, thanks in part to a 2013 law that requires employers to either create flexible or “phased retirement” career paths for older workers, raise retirement age, or remove age limits for jobs. While growth in phased retirement programs in the U.S. have been anemic due to tax and anti-discrimination laws, Japan is leading the way in developing creative ways to retain and empower older talent.
According to aging expert and author Hiroyuki Murata, Japan’s success will depend on understanding and embracing the opportunities that accompany population aging, and switching its focus from “anti-aging” to “smart aging.” Part of this will mean re-defining what later life means. This month, the Japanese Gerontological Society proposed moving the definition of “elderly” back a decade, from age 65+ to age 75+, reflecting rising life expectancy and health and productivity among Japan’s older populations. Japan is re-writing the rules of aging, and the world should take note.