Japan's population crisis reaches tipping point | FT Film

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Japan is having fewer babies than ever before. Meanwhile, the number of very elderly people is at a record high. This year brings the country to a tipping point, known as the 2025 problem, with Japan's huge postwar baby boom generation now all in their mid to late 70s.

When it comes to living with a shrinking and ageing population, the data clearly shows that Japan is ahead of other countries, but also that its path isn't unique, and neither are the potential solutions. So the rest of the world is watching to find out; can a country shrink and grow old gracefully without losing its economic power and making success much harder to come by for the young?

In the minute since this film started, an average of three Japanese have died. 1.3 babies have been born. That means the population has shrunk by 1.7 people - every minute, every day, every year. Keep going at the same rate, and according to the government's own projections, by 2050 Japan will have shrunk by a number equivalent to the current population of Australia.

For 20 years I've been covering Japan. And the most consistent story through that time has been demographics; the low birth rate, the shrinking population, and what the government has been trying to do to address all of that. The 2025 problem is that everyone born in Japan's baby boom years between 1947 and 1949 is now in their mid to late 70s, the point in the average person's life when medical and care costs start to soar. The worry is that Japan's current and future working population is too small to bear the financial burden of the social, health, and welfare system that Japan has come to expect.

So what exactly has gone wrong, and is it even right to think of the problem in these terms?

Japan's total fertility rate, that's the average number of children that a woman would have over her reproductive years, has been among the world's lowest for about 70 years now. Most recently, it's been at around 1.2, where 2.1 is what you need to maintain a stable population. Now South Korea's birthrate has gone even lower in the last few years, down to around 0.7, but that's happened much more recently. What makes Japan interesting is that it takes several decades for a low birth rate to start having these big societal impacts. So the fact that Japan started that journey so long ago means it is the place to watch to see what this means for society.

Japan has been bracing for full-blown demographic crisis for more than 30 economically stagnant years. But during that time the country has continued to produce world-class companies and maintain admirable social stability. So what, if anything, should the rest of the world learn from Japan's experience? Japanese people have been able to live to extreme old age en masse because of the country's economic success, a generous public health care system, and a healthy lifestyle.

The Fuwaku Rugby Club organises its teams by age. The players wearing yellow shorts are in their 70s, spring chickens compared to those in purple, who are in their 80s.

Today, they're just training, but these boys are too tough for walking or touch rugby. They play the game full-contact with no holds barred. And some of the players, including Mr Maruyama, still have a surprising turn of speed.

Mr Maruyama and his friends may be fighting fit, but in official terms they define Japan's crisis. The baby boomers were born just after the Second World War. And as young adults they drove the country's economic miracle through the '70s and '80s.

In 2025, the last of this huge generation turns 75 and officially enters the state of extreme old age, with all that implies for welfare, pensions, and the burden of care. That might have been manageable if there was a large, younger population to support them. The 2025 problem is that unless something radical changes, there isn't.

On the second Monday in January every year, tens of thousands of 20-year-olds head to shrines like Meiji Jingu in Tokyo for a coming-of-age ceremony. It's a tradition that goes back over 1,300 years and marks the official transition into adulthood in Japanese society. For many it represents a clear step into their future. Thoughts of career, marriage, and families are all wrapped up in the day's celebrations.

But for two decades the day has been increasingly bittersweet, a moment for Japan to assess just how small its cohort of new adults has become. In 2024, Only 720,000 babies were born in Japan. That's a 5 per cent decline from 2023, and the ninth year of decline in a row. It's also the lowest since modern record-keeping began in 1899.

Looking at the queues of couples lining up to have their picture taken in front of Tokyo Station as the sun goes down, and you'd think that marriage must be booming here. But look closer, and about half of the couples are visiting from elsewhere in Asia. Also in 2024, only 500,000 couples got married. For Japan, that's critical. All but 3 per cent of Japanese babies are born to parents who are married.

So for all the talk about a dual income, no kids relationships, what we actually see across all sorts of countries, Japan just being one, is not a rise in the number of people who are happily married or cohabiting, choosing not to have kids. It's a reduction in the number of people coupling up at all. But the simple number of couples out there who even could have kids if they want has fallen a lot.

Kanako and Takeshi got married on paper in 2024, but have come to the 2,000-year-old Okunitama Shrine in the Fuchu District of Tokyo to make a proper show of it. Their baby is five months old and is the only guest.

To save money, they're just having their pictures taken rather than a big ceremony.

Statistically, Kanako and Takeshi are likely to have a second child. The overall fertility rate in Japan, the average number of children born to a woman in her lifetime, is a stubbornly low 1.2. But when only looking at married Japanese women, the rate goes right up to 1.9, which is actually higher than the overall rate in the US. The sad reality for Japan, and in particular for Japanese men, is that we're not looking at a collapse in the desire for wedded bliss.

The problem is that Japan's 30-year tussle with stagnant wages means that there's now a surplus of what some, perhaps cruelly, describe as economically unattractive men, who are seen or see themselves as poor marriage material.

We talk a lot about wage stagnation in the west. But in Japan, it's not just one decade that wages have barely grown. It's more than three. And this matters particularly for young people who are getting out there into the labour market. Their economic and financial prospects are greatly diminished if wages in general aren't growing. That's really important in this birth rate conversation because research is consistently finding now that there's a strong relationship between people's socioeconomic status and whether or not they get into a relationship and have kids.

Japan first started to fret about its low birth rate towards the end of its boom years in the 1980s. But as with climate change, policies that require voters to prioritise long-term threat over short-term concerns are a tough sell.

Historically, policymaking has focused on getting already-married couples to have larger families. But recently, there's been a shift. The Tokyo Metropolitan Government, which sees itself as a pioneer of unorthodox policy on this front, has said that its own staff only need to work four days a week to encourage dating. It's also launched a marriage app to help promote romance between the young and the fertile.

But the truth, and everyone knows this at heart, is that measures like this will only go so far. The only way for Japan to make it past the 2025 problem, in comfort and without social collapse, is by allowing greater levels of immigration. Vidya is from Mumbai. She's one of about 800 Indians who've moved to Kirigaoka, a suburb between Tokyo and Yokohama, where she volunteers at a local cafe.

I came with my husband as he's working in an IT company. And I've been here from last seven years.

Vidya's children go to an Indian school nearby. And while the kids all play together in this local park, the Indian community have so far mostly kept to themselves. Outwardly, the government gives the sense that it has no plans for a big loosening of immigration. In reality, Japan has quietly pivoted to accepting more immigrants, including unskilled workers.

One projection suggests that at the current rate of increase, foreign nationals could represent about 10 per cent of all residents in Japan within 20 years. For Japan, that's as big a psychological shift as it is a practical one. Sachie Musashi set up the Kiricafe two years ago, initially as a project to ease relations between the new Indian community and local Japanese.

Kiricafe is now something of a community centre, offering cheap lunches, language classes, and the chance to cook Japanese food.

I have seen the food is only ramen and noodles, the Japanese food that comes in mind first thing. But when I come here, I come to, oh, there is different home-cooked style food is also there.

Here in Kirigaoka, the South Asian community is slowly starting to integrate with its Japanese neighbours. But will the rest of the country be as welcoming as Mrs Musashi, especially when the immigrants are not highly educated IT specialists, but lower skilled workers in construction, care homes, and retail?

Japan has opened up on immigration in recent years, but levels are still much lower than what we're used to in the west. If we look at the most recent data, fewer than 5 per cent of people in Japan were born overseas, compared to figures above 15 per cent in countries like the UK, US, and Germany.

If immigration does remain comparatively low and marriage and childbirth never recover, Japan is staring into a long and potentially painful old age. The country's infrastructure is about to feel an unprecedented strain. Extreme old age means Japan needs more nursing homes, better hospitals, more carers, and more money to support all this simply to keep living standards where they are. It's a massive headache, even after all these years of knowing that the 2025 problem was rumbling over the horizon.

Over the last 45 years the amount of money that the Japanese government spends on pensions and other support for the elderly has rocketed, and is now equivalent to about 10 per cent of GDP. That's gone from significantly below the average for high-income countries to significantly higher. But there are other ways of measuring the cost of an elderly population, too, such as the rate of innovation. The number of patents granted to Japanese researchers has fallen significantly in line with the decline in the working age population.

And while Japan has coped with the consequences as a nation, businesses must work out how to make some money out of it. As any parent knows, nappies are an important product in the first few years of a child's life.

The company sells its products all over the world. But in its home market, Unicharm has shifted its focus from babies to the elderly.

Everywhere in the world ageing is a big business opportunity. But here in Japan, where the population is 30 per cent above retirement age, it's a massive opportunity. Ito En is Japan's biggest tea maker and producer of the bottled Oi Ocha brand that ranks as the country's number one favourite. But here at Asia's biggest trade show for elderly care, they're marketing a new version of Oi Ocha with a thicker, slightly gelatinous texture.

But the business of elder care isn't just about adapting things for the old. Although nobody likes to talk about it much, Japan has to work out how to cope with what will, for the next 10 years at least, be a steadily rising number of dead.

Tokyo Bay, with Haneda Airport in the background, is the perfect place to say goodbye to a loved one and scatter their ashes in the sea. But today it's just us and the crew on board this boat. This is funerals by proxy, and we're scattering the ashes of 28 people with no friends or family present.

House Boat Club is currently benefiting from Japan's skewed demographics. But in the long term, Japan's funeral business, like so many of the country's service industries, will ultimately start to shrink.

The tale of Japan's economy over the past 35 years has been about matching anaemic growth with the certainty of a declining population. But in China, the same period has been dominated by a different story, one of unparalleled economic growth.

China is coming to the end of a three to four-decade boom. And one of the reasons that it's starting to slow down in the domestic economy is the demographic headwind from the slowing growth in the population.

45 years ago, the Chinese Communist party introduced its now infamous one-child policy that has artificially accelerated China's demographics onto a similar path to the one taken, willingly or unwillingly, by Japan.

The reason the Communist party introduced the one-child policy back in 1980 was because they were worried about a booming population at that time, and they thought they didn't have the resources to feed, and clothe, and house that population. As China developed the population growth naturally declined on its own anyway. So you had this dual effect of the one-child policy and a natural decline in the fertility rate.

While countries like China, and also Japan and Korea, are experiencing particularly acute versions of this demographic crunch, some kind of story like this is playing out almost everywhere. In France and Germany the working age population has already peaked and started to decline, and countries like the UK and the US could soon be heading the same way. For more than two decades, we've understood the shape of the 2025 problem and the role that Japan's baby boomers would play in it, but all efforts to reverse it have failed.

Japan's experience is a warning to the rest of the world. Demographic decline is on many national horizons. And yet, in spite of the mounting economic problems Japan has done an excellent job of maintaining social stability, good health, and a globally competitive economy, even as its demographic time bomb has detonated. When the rest of the world catches up, it may come to realise that despite all of its failures, Japan's experience is actually what success looks like.