Japan’s Birth Rate Has Been Steadily Dropping. The Country Is Preparing for Its Biggest Consequence: The ‘2025 Problem’

Japan faces a significant demographic challenge in the years ahead. The country’s declining birth rate has reached historic lows. An increasing life expectancy and a growing elderly population also contribute to the issue. While this situation isn’t new, Japanese economists and politicians have become increasingly concerned about a pivotal year: when the effects of aging will start to impact the country.

That year has arrived.

The “2025 Problem.” It’s hard to predict whether Japan’s birth rate will continue to decline until the end of the year, as it has over the last decade. However, experts in demographics expect some difficulties. 2025 marks the point when individuals born during the Baby Boom of the late 1940s (from 1947 to 1949) will reach the age of 75. This demographic shift, known as the “2025 Problem,” presents real challenges for the nation.

More than just a symbol. Japan isn’t the only nation facing the challenges of a demographic winter. However, these issues are especially pronounced in the Asian country. In Japan, old age is often viewed differently from other nations. Many people over 65 are classified as “genki,” meaning they’re healthy and active. According to The Economist, more than 50% of individuals ages 65 to 69 and over a third of those ages 70 to 74 are still in the workforce.

Moreover, only 3% of Japanese people between 65 to 74 require nursing care. Their lives remain so active that the country’s Gerontological Society has even suggested creating a new category called “pre-old age” for this age group. The situation changes significantly after the age of 75.

Once this age milestone is reached, only 12% of Japanese individuals are still working, and the percentage of the population requiring care dramatically increases. The “old age” group represents a growing segment of society, particularly the millions of Japanese born during the Baby Boom of the late 1940s. This poses challenges for the entire country.

Why is this problematic? Experts have been warning that this demographic shift will put additional strain on Japan’s pension system and healthcare services. This comes at a time when Japan is already experiencing record low birth rates annually and a steady decline in the working-age population since the turn of the century.

The outcome is what experts refer to as the “2025 Problem,” a multifaceted crisis that affects both society and the economy.

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“A striking pace of growth.” One primary issue is the likely strain on geriatric care services. According to a recent report by the Institute for International Policy Studies, it’s “a near certainty” that beginning this year, doctors and nurses will face “a striking pace of growth” in patients requiring care. This influx is expected to mean that the “burden on the labor force will become significantly greater.”

Consequences. The report predicts a staffing shortfall and increased pressure on social welfare systems. In 2018, the Japanese government projected that between 2025 and 2040, the overall costs of social security, including pensions, would surge by nearly 60%. Worryingly, this could happen while the population over 65 continues to grow.

The report also emphasizes the additional challenges this trend will pose for large urban areas, where the highest concentrations of elderly individuals reside. The government has already begun to address these issues, but the difficulties are substantial and may lead to increased inequality among the elderly population.

Last year, Japan recorded only 721,000 births, the lowest recorded figure. In contrast, during the peak of the Baby Boom in 1949, around 2.69 million babies were born. Many of these are now expected to reach the age of 75. The Economist predicts that the population over 75 will rise to 22 million. A decade ago, this figure was only 17 million.

Image | Tommao Wang

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