Tokyo Drift

How Japan Can Turn Its Aging Workforce into an Advantage

A Daikin Industries Ltd employee inspects indoor air conditioning units at the production line at the company's Kusatsu factory in Shiga prefecture, western Japan March 20, 2015. Yuya Shino / Reuters

Global fertility rates are dropping across North America, Western Europe, and East Asia, altering economic projections as workforces begin to age. No nation is as experienced with this phenomenon as Japan. As of 2013, a quarter of the nation’s population was age 65 or older. This demographic is projected to expand to 36 percent by 2040, and will reach 40 percent by 2060. The aging Japanese workforce has led to a sense of anxiety and pessimism in Japan—though economic decline is not inevitable. It is, however, a wake-up call. The nation that invented the lean business model has seen its productivity growth stalled below two percent for years. Unless this trend is swiftly reversed, Japan is on a trajectory toward another decade of anemic growth and intensifying fiscal pressures. With its workforce shrinking, Japan must simultaneously boost productivity and labor force participation through creative adaptations for older workers and an increased focus on robotics

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