Japan's Aging Society to Stunt Growth Unless Productivity Rises: OECD

Tokyo, Jan. 11 (Jiji Press)--Japan's aging population will slow the country's growth unless its productivity is improved, the Organization for Economic Cooperation and Development warned in a report released Thursday.

In the 2024 OECD Economic Survey of Japan, the Paris-based organization said that the country's post-pandemic recovery, backed by the restoration of supply chains and an increase in foreign tourists, "is moderating against the backdrop of heightened uncertainty."

"Rapid population aging will drag down trend growth unless productivity gathers speed," it said.

Noting that Japan has "relatively few" startups, the OECD said, "Reforms to improve the innovation framework and incentives for startups are key to boost productivity and potential growth, and address aging pressures."

The OECD also voiced concern that the high shares of younger and female workers in nonregular jobs could delay family formation due to lower wages and bleaker career prospects for such jobs.

"The take-up and duration of parental leave by fathers is low," the OECD pointed out.

Japan may be able to boost its birthrate through measures focused on families and children, such as those to improve work-life balance, the OECD suggested.

At a press conference at the Japan National Press Club in Tokyo on the day, OECD Secretary-General Mathias Cormann said that Japan's inflation is expected to "more durably settle at around 2 pct."

While noting that Japan's real wages still remain at a relatively low level, Cormann said that wage growth is seen "gaining momentum into 2024 and 2025" through pay hikes and other measures.

Saying that Japan's consumption tax rate of 10 pct is "among the lowest" across the OECD framework, he suggested a hike in the tax as a way to secure more revenues without increasing public debt.

But Cormann stressed the need for such a step to be taken gradually and announced well in advance to avoid any negative effects on low-income people.
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