Japan struggles with population crisis as birth rates plummet

Japan is facing a demographic crisis as its birth rate continues to decline, raising concerns about economic stability and social structure.

According to the country’s health ministry, Japan recorded 721,000 births in 2024—while deaths more than doubled that number at 1.62 million. The nation’s population now stands at 123.5 million, significantly lower than in past decades.

Kamran Khan highlights the severity of Japan’s demographic challenges, noting that the country’s population has been in steady decline for 15 years. The fertility rate in Japan has fallen to 1.3 births per woman, far below the 2.1 replacement level needed to maintain population stability. Neighboring countries such as South Korea and Taiwan have even lower rates, at 1.1.

Government response to crisis

In an effort to reverse this trend, the Japanese government has introduced a series of policies aimed at encouraging young people to marry and have children. Prime Minister Shigeru Ishiba has prioritized tackling the population crisis, allocating 5.3 trillion yen ($34 billion) in the 2025 budget for incentives.

This includes salary increases for parents, extended maternity and paternity leave, childcare subsidies, and tax exemptions. The government has also introduced financial rewards for couples who have children, with additional grants provided by both public and private employers.

Tokyo’s metropolitan government has taken an unconventional approach by launching a state-owned matchmaking app to help young people find suitable partners.

The app, which is free to use, offers government incentives to couples who marry through the platform. The initiative has attracted international attention, with tech billionaire Elon Musk praising Japan’s efforts to boost its birth rate.

Work-life balance reforms

To address work-related barriers to family life, Tokyo is implementing a four-day workweek for its 160,000 government employees starting in April 2025. Employees will be allowed to take three days off per week, with parents of young children granted additional flexibility. If successful, the policy could be expanded nationwide.

Tokyo Governor Yuriko Koike has emphasized the importance of allowing women to balance their careers and family life, noting that many Japanese women delay or forgo having children to focus on their professional goals.

A BBC report highlights that self-sufficient, educated women increasingly choose to remain single and childless, contributing to the country’s low birth rate.

Economic and social implications

Despite these efforts, Japan’s aging population continues to pose challenges. Currently, 32% of Japanese women are aged 65 or older, and more than 20.6 million people in the country are over 90. By 2070, experts estimate Japan’s population could shrink to 87 million, with nearly 40% of citizens aged 65 or older.

The shrinking workforce is already affecting industries such as manufacturing, agriculture, and infrastructure. In 2023, 260 companies in Japan defaulted due to labor shortages, according to Time magazine. The government estimates that by 2040, Japan will need 11 million additional workers to sustain its economy.

Immigration could offer a partial solution, but Japan has historically maintained strict immigration policies. While foreign workers now make up a small but growing part of the labor force, cultural and linguistic barriers make long-term settlement difficult for many migrants.

The road ahead

Japan’s struggle with declining birth rates reflects a broader trend seen across parts of Europe and East Asia. Countries like Italy, Spain, and Poland also report fertility rates below 1.5, leading to similar demographic concerns. However, Japan’s situation is particularly severe due to its historically low immigration levels and rapidly aging population.

With billions invested in birth rate incentives and workplace reforms, Japan is making bold moves to address its demographic crisis. Whether these efforts will succeed remains to be seen, but the stakes are high for the world’s fourth-largest economy.