Japan’s declining population crisis breaks 125-year record

The number of births in Japan has hit another record low, highlighting the increasing challenge of sustaining ballooning social security costs as the workforce continues to shrink.

Preliminary population data released this week by Japan’s health ministry shows that the number of newborns in 2024 declined by 5% from the previous year, dropping to 720,988. According to an article by The Japan Times, this marks the ninth consecutive year of decline and the lowest figure recorded in 125 years since data collection began in 1899. At the same time, deaths rose by 1.8% to a record 1.62 million, simultaneously leading to the largest annual population decline ever recorded. 

The persistent drop in births adds to the pressure on Japan’s government, which already carries the highest debt burden among developed nations. The International Monetary Fund projects Japan’s public debt to reach 232.7% of its gross domestic product this year. Japan’s declining birthrate is part of a broader global trend. South Korea’s fertility rate saw a slight increase last year for the first time in nearly a decade but remains critically low at 0.75—far below the level needed to sustain its population. France also experienced its steepest birthrate decline in 50 years in 2023, while China’s population has been shrinking for three consecutive years. A shrinking workforce translates to reduced tax revenue while placing additional strain on businesses struggling with labor shortages.

Since Japan’s working-age population peaked in 1995, the labor market has remained tight. The country’s unemployment rate stands at 2.4%—the lowest among OECD nations—and has remained below 3% for nearly four years. However, by 2040, Japan is expected to face an 11 million worker shortfall, according to an estimate by the Recruit Works Institute. The impact is already being felt, with a record 342 Japanese companies going bankrupt in 2024 due to labor shortages, as reported by Teikoku Databank.

At the same time, Japan’s social security costs continue to climb as a growing portion of the population reaches retirement age. For the fiscal year starting in April, the government has allocated ¥37.7 trillion ($253 billion) to social security, reflecting a nearly 20% increase over the past decade. The country’s pension system is also under strain, with fewer people paying into it and more retirees drawing benefits. Over the past 20 years, the number of contributors has dropped by approximately 3 million, while the number of recipients has surged by nearly 40%, according to the welfare ministry. 

The decline in births is partly attributed to younger generations' reluctance to have children, despite government efforts to reverse the trend. Prime Minister Shigeru Ishiba is building on previous policies with a ¥3.6 trillion ($24 billion) child care initiative, which includes financial support for expectant parents and better working conditions for child care workers. 

By Nazrin Sadigova