One of the potential outcomes for developed markets of the world in the next few years is the so-called ‘Japan Scenario’, characterised by stagnant economic growth and low consumer demand, echoing the much talked about ‘lost decade’ experienced by Japan when its economic bubble burst in the early 1990s. While some commentators, including the Economist’s Buttonwood, have questioned elements of this analysis, there is one area where Japan can undoubtedly be said to be leading where others will inevitably follow – the ageing of its population.
The statistics surrounding Japan’s greying society are well known – US Census Bureau forecasts say that by 2040, over one third of the country’s population (34%) will be aged 65 or over. It’s worth mentioning here that on this same measure, Germany will be not far behind, on 30%, with the equivalent figure for both France and the UK one in four. The implications of these statistics are of course many and far-reaching, and are already manifesting themselves in attitudes to contemporary financial issues.
This brings us back to Japan, where ‘the future of the retirement and pension plans provided by my government’ is the second most widely-held concern by Japanese consumers in 2012, according to the GfK Roper Reports Worldwide Mood of the World 2012 report. Fully half cite it as a top three concern for them, a figure that has increased by 11 percentage points in the past year.
What these figures show is that for consumers of all ages in Japan the implications of an ageing society are not just an abstract concept for the future, but a pressing concern now. This is unsurprising given that the current support ratio – the number of people of working age compared with the number beyond retirement age – is 2.6, a figure that the USA, for instance, is not expected to reach until 2050. In this respect at least, it seems that the ‘Japan Scenario’ is one that other countries can look to as a harbinger of what is to come, and indeed, GfK Roper data show that concern about this topic has also been growing steadily at a global level since 2008.
However, it’s important to remember that despite the uncertainty and undoubted concern this trend causes consumers today, the fact that many people will be living and staying active longer offers opportunities for companies who can augment the lives of older consumers. Here again, Japan offers valuable lessons to the rest of the world.