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japan celebrated respect for the aged day on monday, a national holiday that highlighted an uncomfortable fact: the country has a record number of elderly people.

every year on the third monday of september, japan holds respect for the aged day to pay tribute to older citizens and thank them for their valuable wisdom and contributions to society.

government data released before "respect for the aged day" showedas of september 15, japan's population aged 65 and over was 36.25 million, an increase of 20,000 from last year, a record high.。

the data also showed that while japan's total population has been declining, the proportion of people aged 65 and above has risen to 29.3%, the highest among all countries.

the labor market crisis deepens

robert feldman, chief economist at morgan stanley mufg securities, said:the data further heightened concerns about japan's changing demographics and labor shortages.。

a survey last month by research firm teikoku databank showed 51% of companies across industries in japan see a shortage of full-time employees.

“the labor shortage is as acute as it’s ever been,” feldman said, noting that this was particularly true in labor-intensive industries such as food service. he warned that as older workers begin to exit the workforce, there won’t be the same number of younger workers to replace them.

at the same time, as the labor shortage worsens, the elderly population has to extend their retirement age. the number of workers aged 65 and over in japan will increase for the 20th consecutive year to a record 9.14 million by 2023, government data showed.

according to data from japan's national institute of population and social security research, based on recent trends,the proportion of elderly people in japan is expected to continue to rise, reaching 34.8% by 2040。

meanwhile, feldman estimated in a recent research note that japan’s total labor force could decline from around 69.3 million in 2023 to around 49.1 million in 2050, based on past demographic trends.

there is no "magic formula" to reverse the situation

the japanese government has recognized the economic and social harm that demographic trends could cause and has taken measures to address them.

to reverse the falling birthrate, the government has taken steps such as providing more funding for childcare and supporting the creation of more daycare centers. local governments have even taken steps to support dating apps aimed at getting japanese to meet, marry and have kids.

in the short term, however, boosting the birth rate will do little to address labor shortages.as a result, japan has been steadily bringing in immigrants in recent years, with the number of foreign workers now at a record 2 million and expected to rise by another 800,000 in the next five years.

however, according to feldman, japan would theoretically need to add foreign workers at a much faster rate, to tens of millions, if it wants to make up for its expected population losses in the coming decades.

but he also believes that this scenario (introducing tens of millions of foreign workers) will not happen, noting that this means a large part of japan's labor force decline must be made up by improving the productivity of young people, which will require more capital investment in worker productivity and new technologies such as artificial intelligence and automation.

earlier this year, carlos casanova, senior economist for asia at ubp, said artificial intelligence technology is often touted as a "silver bullet" to solve japan's demographic crisis, but so far it has had little effect on alleviating the crisis.

he suggested that the japanese government must also take other measures, in addition to increasing the influx of immigrants, it should also work on social and structural changes, such as increasing the female labor force participation rate.