Japan's population is steadily declining, pushing the country into a demographic crisis. The latest reports show that the birth rate has dropped by 5%, with only 720,988 births recorded in 2024. This marks the lowest birth rate since 1899. Meanwhile, the elderly population is increasing, and the workforce is shrinking, creating economic challenges for the government. As incomes decline and expenditures rise, Japan’s Health Ministry confirmed that the number of births has been falling for the ninth consecutive year. In contrast, the death rate has risen by 1.8%, reaching 1.6 million in 2024.

Despite government incentives to boost the birth rate, Japan’s younger generation remains uninterested in having children. In response, Prime Minister Ishiba has allocated 3.6 trillion yen for child care policies. In 1955, Japan had its highest working population, but the current situation is drastically different. The unemployment rate stands at 2.4%, one of the lowest among OECD countries, but experts predict it could rise to 3% by 2040.

Labor shortages have severely impacted businesses, with 342 companies filing for bankruptcy in 2024 due to a lack of workers. The pension system is also under strain, with contributors decreasing by 3 million, while the number of pension beneficiaries has increased by 40%. Japan’s welfare department has highlighted the growing burden on the system, making economic recovery even more challenging.