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Workforce continues to grow despite population decline

  • December 31, 2017
  • , Nikkei , p. 1
  • JMH Translation

The number of working people is expected to hit a record high in 2018. This is because the labor participation rate of women and seniors is increasing, so the number of the employed is expected to continue growing for the time being. However, some experts anticipate an eventual tipping point where the rising curve will reach an upper limit in the early 2020s. In order for the Japanese economy to continue growing, the government needs to create labor practices that will help everyone work with comfort and it will become more important to make the best use of artificial intelligence (AI) to increase productivity.


The current “working-age population,” the primary workforce between ages 15 and 64, is about 76.0 million. The number dropped by about 10% in the last 20 years as the low birthrate and aging of the population continued. The pace of decline is the fastest among major powers.


Nevertheless, the number of working people continues to increase. As of November 2017, 65.28 million people on average were working, which is a 1% increase from the previous year. It is for certain that the average number of working people for all 2017 will exceed 65.14 million, the second highest number marked in 1998. If the trend continues at the same pace as for the past five years, it is highly likely that the average number of working people will break the record of 65.57 million marked in 1997.


Among people who intend to work, the number of working people rapidly increased in the last five years, thanks to the economic recovery that has continued from the end of 2012. The current economic expansion is longer than the “Izanagi boom” observed during the high economic growth period [from 1965 to 1970]. The number of working people for the first time exceeded 80% of the working-age population in 2013 and the latest figure is more than 85%.


The driving forces behind this trend are women and seniors. The rate of working women aged 15 and 64 was 68.2% in November last year, 6.7 points higher compared with five years ago and equaling the past highest record. According to the Organization for Economic Co-operation and Development, the rate of employment of women in the working-age population exceeded that of the U.S. in 2013, reaching the level of the world’s leading industrialized nations.


The ratio of working seniors aged 65 and older is also the highest since 1998, including those physically fit and working at nursing facilities. The phenomenon is nearly at the level of full employment in which almost all seniors who intend to work can be employed.


The question is how many more people can be added to the labor force. SMBC Nikko Securities Inc., estimates that in the most optimistic case based on the current demographic data, the maximum number of working people will be about 69.5 million. (Abridged)

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