By Rongjie Fang
On May 11, 2021, the results of China’s seventh census were released. As people are already aware, China’s population is aging. Both China and Japan, their neighbor, have been working to address the challenges that come with an aging society. A comparative analysis of these challenges, and the ensuing policies that each country has implemented, provides insight into the correlation between population growth and economic stability. For the sake of Chinese and Japanese economies, it is urgent that we find more effective approaches to stabilizing the size of the working population. This article will examine the four main ways both countries have sought to combat the economic effects of a shrinking workforce: by increasing fertility rates, lowering barriers for women to join and remain in the workforce, raising the retirement age, and by altering immigration policy. Specifically, this article will consider the three main contributing factors of fertility rates and examine each country’s approach to encouraging higher birth rates.
Background: Slowing Population Growth and a Decreasing Workforce
From 1980 onward, the average annual growth rate of the population in the two countries has gradually leveled off, and in some instances even declined. In 2020, Japan’s average annual population growth rate was ‑0.18 percent, and in China it was 0.54 percent, both reaching a record low (Figure 1 and 2). Moreover, in 2019, Japan’s population of ages 65 and above, of the total population, is the largest among the major Organisation for Economic Co-operation and Development (OECD) countries (Figure 3). Meanwhile, China’s portion of 65-year-old or older individuals is growing rapidly when looking into the annual percentage change (Figure 4).
(Figure 1: Total Population and Average Annual Growth of Population in Japan by Census, 1950–2020)
(Source: Statistics Bureau of Japan, Statista）
(Figure 2: Total Population and Average Annual Growth of Population in China by Census, 1953–2020)
(Source: National Bureau of Statistics of China)
(Figure 3: Population Ages 65 and Above in Major Economics, 1990–2019)
(Figure 4: Percentage Change in the Share of Population Ages 65 and Above in Major Economics, 1990–2019)
One reason for a decreasing population size is an aging society. In the past 20 years, the proportion of people aged 15 to 64 years old in Japan has decreased from 67.9 percent to 59.3 percent (Figure 5). China’s figures also declined from 70.2 percent to 68.6 percent (Figure 6). Further, it is predicted that over the next 30 years, the working-age population will fall by 7 percent in Japan and 11 percent in China. With stagnant populations, encouraging more people to work is crucial for both countries.
(Figure 5: Number of People in Each Age Group in Japan by Census, 1950–2020)
(Source: Statistics Bureau of Japan)
(Figure 6: Number of People in Each Age Group in China by Census, 1953–2020)
(Source: CSMAR, National Bureau of Statistics of China)
A decreasing fertility rate is another fundamental reason for a decreasing population rate. In 2019, Japan and China’s fertility rates are astonishingly low, with 1.36 and 1.70 births per woman (Figure 7), respectively. China’s seventh census shows that its latest fertility rate is 1.30, a record low. By comparison, the projected global fertility rate from 2015 to 2020 is 2.47. Notably, when the rate falls below 1.5, a country is considered to be in a “low fertility rate trap,” an indication that there are self-reinforcing mechanisms which, if left unchecked, will result in a continued decrease in the number of births in countries affected. To combat the economic effects of a shrinking workforce, both China and Japan have focused on three major areas: increasing fertility rates, encouraging more women to join the workforce, and raising the retirement age. Japan also pursues a fourth area: altering immigration policy.
(Figure 7: Fertility Rate of Japan and China, 1960–2019)
(Source: The World Bank)
I. Addressing Low Fertility Rates
There are several contributing factors to decreasing birth rates — most importantly the cost of childcare and marriage rates. Each country has sought to address these issues differently, with varying levels of success.
Issue 1: Rising Childcare Cost
The rising cost of raising children has deterred many would-be Chinese parents from having their first or second baby. Meanwhile, a total of 61.1 percent of Japanese find it financially hard to raise children.
Both countries are taking measures to improve the economic conditions of families planning to have a child. Japan’s lump-sum childbirth allowance to women when they give birth is 420,000 yen ($3,785 USD). Some Chinese parents could also have a subsidy from the government when they have a new baby. Yet, there are problems with the small coverage of maternity insurance, inadequate payment of benefits, irregular payment of allowances, and weak management services. In China, the cost of education turns out to be the most expensive. According to China Central Television (CCTV), education and training has become the number one in China’s 2020 consumption ranking, accounting for 32.44 percent of the total.
Issue 2: Decreasing Marriage Rates
In both Japan and China, with mainstream societies rooted in the belief of marriage before children, a decreasing marriage rate has negatively impacted the country’s fertility rate. From 2010 to 2019, in general, there was a decline in the number of registered marriages in both countries (Figures 8 and 9).
In Japan, a 2016 survey shows that Japanese men and women in their 20s who want to marry have decreased to 38.7 percent and 59 percent, respectively. Further, the spread of COVID-19 may be making things worse. In 2021, nearly 73.8 percent of Japanese said they either wanted to get married soon or at some point in the future. This is a 5 percent decrease from 2020 that is in itself a drop from the formerly lowest rate of 74.3 percent in 2016.
(Figure 8: Number of Registered Marriages in Japan, in thousands, 2010–2019)
(Source: Statistics Bureau Japan）
(Figure 9: Number of Registered Marriages in China, in Millions, 2010–2019)
(Source: National Bureau of Statistics of China）
Across both countries, people provide similar answers for avoiding marriage. The pursuit of independence and personal freedom, as well as the high cost of housing and child-rearing, are two main concerns. Also, the traditional focus on family and the belief that marriage and childbearing will bring happiness are becoming outdated, replaced instead with the modern focus on the single individual.
There may also be a structural reason. In China, the gender imbalance in the late ’90s and ’00s was so severe that the gender ratio at birth once exceeded 120. In 2015, the number of unmarried men aged 30 and above exceeded 20 million and is expected to exceed 40 million by 2040. In contrast, Japan’s number of females is obviously larger than males (Figure 8).
(Figure 8: Male to Female Ratio of the Total Population (Males Per 100 Females, 1980–2020))
In some parts of China, where there has been a patriarchal mindset that “male is better than female,” promoting gender equality would be beneficial to the balance of gender ratio. In addition, China’s efforts to remedy the custom that the groom must give a great amount of money to the bride’s family (the “Caili”) may theoretically help reduce the cost of marriage and increase the marriage rate, but the actual effect is pending.
II. Encouraging Women to Remain in the Workforce without Foregoing Family
Gender equality in the workplace has a dual effect: On the one hand, women forgo pregnancy for fear of discriminatory retribution in the workplace. On the other hand, women who decide to have children tend to quit their jobs to do so, which contributes to the country’s declining workforce population.
In Japan, some pregnant women, who have been denied maternity leave, found out that their promotion opportunities were lost after returning from maternity leave, or pregnant women have been dismissed. Some companies ask candidates if they are married and if they have plans to prepare for pregnancy when hiring because if a woman becomes pregnant while working, the company is required to provide maternity leave. As a result, these women even choose not to have children or get married in order to ensure that their careers go smoothly, which indirectly leads to a decrease in the fertility rate of the population. These situations are common in China as well.
In 2014, the Supreme Court of Japan issued a landmark decision, which states, “In principle, demotion due to pregnancy is prohibited by law and is unlawful unless women agree to it without compulsion or there are special circumstances necessitating it.” Following this decision, the labor ministry has made it unlawful to demote, reassign, or treat female employees unfavorably during one year following their return from childcare leave. China has implemented comprehensive regulations to protect pregnant females against anything from job securing to discrimination in promotion.[a]
However, in today’s Japan, pregnant and post-pregnant women may still suffer mental and physical abuse from their colleagues and leaders, and 20.9 percent of Japanese women have experienced such harassment. Similarly, 58.25 percent of Chinese women experienced being asked about their marital and childbearing status during the job application process, and 63.98 percent of women believe that childbirth is a burden that they cannot get rid of.
According to the World Economic Forum (WEF), in the Global Gender Gap Index 2020 rankings (by Economic Participation and Opportunity),[b] Japan and China rank as the 117th and 69th, respectively, out of 156 countries (Figure 11). The working environment in the two countries remains relatively unfriendly to women.
(Figure 11: The Global Gender Gap Index, Ranking by Economic Participation and Opportunity, 2016–2021)[c]
(Source: World Economic Forum)
In fact, the Womenomics policy, which tries to take better advantage of the talents and skills of women to solve Japan’s worker shortage problem, was implemented in 2013. Yet, various harmful factors, such as “dependent exemption” (the husbands can pay fewer taxes if their wives earn less than a specific amount), the culture that women should leave the workplace for children, and working norms that reward people for their overtime work, are still rooted in the society.
III. Raising Statutory Retirement Age
Both Japanese and Chinese have a higher life expectancy than the world average. In specific, Japan performs better than other high-income countries (on average), and China outperforms its upper-middle-income counterparts (on average) (Figure 12). Moreover, both Japan and China‘s citizens have a relatively high healthy life expectancy (HALE), with 74 (75 for female and 73 for male) and 69 years old (70 for female and 67 for male) respectively.
(Figure 12: Life Expectancy at Birth for Both Sexes Combined, 1980–2045)
(Source: United Nations)
Nevertheless, the two countries have a relatively lower statutory retirement age. To date, Japan’s retirement age is 65. China has remained unchanged for over 40 years: 60 for men and 55 for women, but women in blue-collar jobs could retire at 50 (Table 1).
(Table 1: Statutory Retirement Age in Major OECD Countries, 2021)
(Source: Trading Economics.com)
Hence, both countries are making efforts to raise the retirement age. Japan is planning to raise the benchmark to 70. China intends to apply a “progressive delay retirement scheme,” which indicates that the retirement age is extended by only a few months each year, with a considerable transition period before reaching the new statutory retirement age. The new statutory retirement age may be 65 for both males and females until 2045. Yet, some potential problems remain.
First, different people have various attitudes toward delaying retirement. For example, in China, delayed retirement is popular among civil servants, who do not want to retire too early because of their relatively comfortable work and good benefits, but ordinary company workers often complain that their working years should be shorter.
Second, as more and more older people take positions in institutions, there is less room for young people to get promotions or find ideal jobs. It is worth considering how to reshape the incentive structure in the public and private sectors so that, while the retirement age is raised, new employees are given hope of promotion and are thus willing to work hard.
Third, in China, many children are raised by their grandparents, since the parents need to work to support the family. In this case, if the elderly are asked to continue to work, there will be a problem as to who can come and look after the children. The nursery home may be an option, yet it will be a considerable expense, thus increasing the burden on the families.
IV. Introducing More Foreign Workers
In April 2019, Japan revised its immigration control law and introduced the specified skills visa system. Foreign people can work in Japan for up to five years in 14 industries, such as construction, nursing care, and agriculture. Two ways, including passing an official exam or completing the three-year Technical Intern Training Program, can make foreigners qualified to obtain the specified skills visa. This system plays a vital role to fulfill Japan’s target to absorb up to 345,000 foreign workers to Japan by 2025.
Yet, some Japanese language schools often keep the passports and graduation certificates of foreign workers to restrict their demands, silence protests against misconduct, and prevent them from quitting. A Japanese lawyer said, “The government, as well as the parties in power, did not listen to my opinion, and most politicians are not interested in this issue” (Denyer, 2020). If these issues remain unsolved and Japan’s working conditions are getting more unfavorable to foreign workers, the working immigration policy may be less effective.
Rongjie Fang is a M2 Student, Master of Public Policy at The University of Tokyo. Mr. Fang has earned his LL.B. from Shenzhen University and is pursuing a master’s degree in public policy (Economic Policy, Finance, and Development, the EPFD) at the Graduate School of Public Policy, the University of Tokyo. His main interests are in corporate governance, securities regulation, economic analysis of law, and law and public policy.
The views expressed in this article do not necessarily represent those of the Berkeley Public Policy Journal, the Goldman School of Public Policy, or UC Berkeley.
[a] There are various Chinese regulations on protecting pregnant women in the workplace, such as Labor Law of the People’s Republic of China (2018 Amendment) (《中华人民共和国劳动法》), Article 29: “The employer shall not revoke labor contracts in accordance with stipulations in Article 26 and Article 27 of this Law should any one of the following cases occur with its laborers: … (3) Women employees during pregnancy, puerperium, and nursing periods …” Special Rules on the Labor Protection of Female Employees (女职工特别保护规定), Article 5:” No employer shall reduce the wages of, dismiss, or rescind the labor or employment contract with a female employee due to pregnancy, childbirth or breast feeding.” Law of the People’s Republic of China on the Protection of Women’s Rights and Interests (2018 Amendment)(《中华人民共和国妇女权益保障法（2018修正）》), Article 23 Section 2: “When an entity employs a woman, it shall sign a labor (employment) contract or service agreement with her. The labor (employment) contract or service agreement shall not contain restrictions on her matrimony and child-bearing.”
[b] The sub-index called “Economic Participation and Opportunity” contains three concepts: the participation gap, the remuneration gap, and the advancement gap. The participation gap is captured using the difference between women and men in labor force participation rates. The remuneration gap is captured through a hard data indicator (ratio of estimated female-to-male earned income) and a qualitative indicator gathered through the World Economic Forum’s annual Executive Opinion Survey (wage equality for similar work). Finally, the gap between the advancement of women and men is captured through two hard data statistics (the ratio of women to men among legislators, senior officials, and managers, and the ratio of women to men among technical and professional workers). See World Economic Forum, Global Gender Gap Report 2021.
[c] The World Economic Forum does not issue the 2019 report, so the related data is missing.
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