Japan’s plummeting birth rate has prompted an adviser to Prime Minister Fumio Kishida to issue a stark warning.
Speaking to Bloomberg, Masako Mori said this week that the country will “disappear” if the falling birth rate is not slowed. “It’s not falling gradually, it’s heading straight down,” she said.
“A nosedive means children being born now will be thrown into a society that becomes distorted, shrinks and loses its ability to function.”
Her assessment came just days after Tokyo confirmed that the number of babies born last year had plunged to a record low.
The population crisis in Japan has a significant impact on the world’s third-largest economy.
It means there are fewer people of working age, which puts strain on the labor market, making it difficult for companies to find employees with the necessary skills and experience. The shrinking workforce also means there are fewer consumers to buy goods and services, which can slow down economic growth.
An aging population fuels demand for health-care services, which puts extra pressure on the government’s finances, as tax revenues are simultaneously decreasing. This puts a strain on the government’s ability to fund public services and invest in infrastructure, which can hamper long-term, sustainable growth.
In addition, consumer demand is likely to shift toward health care and other services that cater to older people. This can impact the types of businesses that are successful in Japan and could lead to a move away from traditional manufacturing industries.
While this remains a serious crisis for Japan, I believe that technology and digitization could play a crucial role in addressing the country’s population issues in five key ways.
One way technology can help is by enabling employees to work from home. Companies can tap into a wider pool of talent, including people who may not be able to commute because of caregiving responsibilities or living in a remote area, among other reasons.
Remote work can also help older workers to continue working beyond retirement age, which can help to mitigate the impact of an aging population on the labor market.
This can help plug the gaps of a shrinking workforce as companies can become more productive and reduce their reliance on human labor. This can help to offset the impact of a declining population on the economy.
Technology can also play a role in addressing the health-care needs of an aging population. For example, telemedicine can allow doctors to provide consultations and monitor patients remotely, reducing the need for in-person visits.
Wearable technology can also help to monitor patients’ health and provide early warnings of potential issues.
As the population ages, demand for online shopping and home delivery services is likely to increase. Tech and innovation can help to drive this shift toward e-commerce, making it easier for older people to access goods and services without leaving their homes.
AI-powered solutions can be used to address various issues related to Japan’s population crisis. For example, artificial intelligence can be used to develop personalized care plans for older patients, based on their individual needs and preferences.
AI can also be used to analyze data on population trends and make predictions about future demographic changes, helping government officials plan more effectively.
It’s clear to me that tech and digitization could be the answer to many of Japan’s societal problems that urgently need to be addressed. But to be implemented and be effective, it will take trillions of dollars of private money.
Global investors who are serious about building wealth should be looking at this crisis as an opportunity.
They should bear in mind that the problems of a declining population are real and growing, the government has less and less money to tackle the issues, and Japan often acts as an early adopter with its application of technology, meaning less social resistance for innovative solutions.
Tech can help solve the problems of Japan’s population crisis and potentially provide important, perhaps once-in-a-generation, opportunities for investors.
Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.