VEZINA: Japan’s ‘lost generation’ an economic warning for Canada

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Japan is facing a crisis because of its aging population and we should pay attention to that in Canada.

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The same could easily happen to us.

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They are commonly referred to as Japan’s “lost generation”. Here’s what happened.

Today about 30% of the Japanese population is elderly.

In the coming decades, the number of people between the ages of 18 and 64 and the number of people aged 65 and over will be almost the same.

No county can afford the health care costs for nearly half of its population, which is older—the demographic where health care costs are highest—and maintain adequate health care.

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In some context, 80% of a person’s lifetime healthcare costs are typically incurred in the last six months of life.

Therefore, funding health care requires younger people to work and pay taxes.

For this reason, many governments have offered incentives to their citizens to have children and increased their rates of immigration for working-age individuals and families.

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So what happened in Japan?

The short version is that a generation of their people was left economically abandoned who thus found they could not feasibly or ethically support a family that lost hope and purpose and had no children.

The long version is that historically, Japan’s labor market has several unique characteristics.

People in particular tend to work in a company for life and are only promoted within that company.

Most get this job right after school.

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Huge job fairs are held for new graduates, where talent is immediately sought after graduation.

But if someone doesn’t find a job immediately after graduation, within a year or so, their value as an employee drops dramatically and they become virtually incapacitated.

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In other words, a person’s job prospects are tied to the job market at the time of graduation.

For example, if 20,000 jobs are available and 30,000 people graduate this year, 10,000 people will be almost out of work, in many cases for life.

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In the three decades prior to 1991, with rapidly expanding export markers, Japan experienced an economic boom with massive GDP growth.

The economic system of the time saw the government prop up large companies that invested in each other and create highly cooperative business cartels known as “keiretsu”.

Getting a job at one of these giant corporations essentially guaranteed lifetime employment and a lucrative career.

But from 1990 to 1991, due to several factors, there was a major economic correction and Japan’s economic bubble burst.

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During the economic upswing, many Japanese companies expanded rapidly and the labor market was able to respond to labor demand.

But when the bubble burst, many companies froze hiring for nearly a decade, prioritizing retaining existing employees and promoting from within.

This led to a massive slump in the labor market.

When Japanese companies started hiring again in the 2000s, those who graduated in the 1990s were largely overlooked as companies wanted young graduates instead.

For those who finished school in the 1990s, the odds were good that they would be virtually unemployed and hiring rates would never return to pre-recession levels.

These individuals lived through the equivalent of an employment ice age that became known as Japan’s lost generation.

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An estimated 15% of the total population, critical to the growth of the economy by buying houses, automobiles, consumer goods, and raising families that would provide future labor force for the economy, essentially disappeared economically.

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The issue has received such attention that some have even believed the conspiracy theory that the government of then Prime Minister Shinzo Abe, who was assassinated in July, was using cartoons and video games as propaganda tools to get more people to start families and grow up to procreate.

While some of the economic stresses in Canada are different, many of the underlying issues are the same.

We have an aging population and many young people today are not interested in starting a family because they say it is too expensive and worry about what kind of world their children would grow up in.

Our governments don’t take this problem seriously. Politicians are focused on the next year and the next election, not the next decade.

If people think we have serious health problems now – and we do – just wait until our population ages in the same way as Japan’s.

— Vesina is CEO of Prepared Canada Corp. and teaches disaster and emergency management at York University. He can be reached at [email protected]

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