The Basic Policy Committee of the Industrial Structure Council (Chair: Motoshige Ito, professor at the Graduate School of Economics, the University of Tokyo), which is discussing ways to create a vibrant economy and society in the face of an aging population and declining birthrate, compiled and issued an interim report.

It is expected that Japan will experience a drastic demographic change and shift to an aging society with fewer children where a smaller working generation will have to support a larger older population.

Japan’s economic and social systems, including social security, have been designed on the precondition that a large working generation supports a small number of older people. If Japan continues the current systems in the face of an aging population and declining birthrate, burdens on current and future working generations will grow excessively, causing investments in the future to reduce. This may eventually cause Japan to become unable to maintain its economic vitality and social security.

Reform to create a virtuous circle of economic growth and sustainable social security is an imminent challenge and Japan cannot afford any more delays.

The Basic Policy Committee of the Industrial Structure Council has been discussing specific measures needed for the establishment of a virtuous circle of economic growth and sustainable social security, with a view to creating a vibrant economy and society in the face of an aging population and declining birthrate. Its interim report has just been compiled.

• (1) To establish a virtuous circle of economic growth and sustainable social security, Japan should simultaneously pursue ensured sustainability of social security and a growth strategy aimed at capitalizing on an aging society with fewer children as a new source of growth.
• (2) Ensured sustainability of social security
  • - To provide services for only those in real need amid the difficult fiscal conditions, the government should prioritize and screen social security benefits.
  • - The funds for necessary social security benefits should be impartially borne by all generations according to their financial capability.
• (3) Growth strategy aimed at capitalizing on an aging society with fewer children as a means to create new demand and employment
  
  • - A society where the elderly, women and young people can work with a feeling of fulfillment should be built.
  • - Life innovation should be promoted in the fields related to medical care, nursing care and health.
  • - New industries suited to an aging society should be created by stimulating consumption among the elderly.

• Main Points of the Interim Report (PDF:72KB) Updated on July 26, 2011
• Overview of the Interim Report (PDF:2,266KB) Updated on July 26, 2011

July 1, 2011

Industrial Structure Policy Division, Economic and Industrial Policy Bureau