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Economy

Japan’s workforce expected to drop 20% by 2040 unless economy grows

Gov't panel calls for more female employment and IT to forestall looming crisis

If employment-boosting efforts are not expanded, Japan's labor force will shrink from 65.3 million to 52.4 million workers by 2040, the Labor Ministry panel says in its report released Jan. 15.   © Reuters

TOKYO (Kyodo) -- Japan's workforce in 2040 is projected to drop 20 percent from 2017 due to overall population declines if the economy sees no growth and women and the elderly continue to have difficulty landing jobs, a government study showed Tuesday.

A study group of the labor ministry, releasing the first projection for the size of Japan's workforce in 2040, called for additional policies to boost employment and promotion of artificial intelligence as measures to sustain productivity.

The study did not take into consideration the expansion of the foreign workforce in 14 fields including construction and nursing care from April this year, as it was conducted before the start of the new scheme.

The panel on employment policies set up by the Ministry of Health, Labor and Welfare estimated the number of workers in Japan will stand at 60.82 million in 2025 and 52.45 million in 2040, down from 65.3 million in 2017.

By gender, the number of male workers in 2040 will fall by 7.11 million from 2017, while that of females will decrease by 5.75 million.

By industry, the wholesale and retail sector will be hit hardest, with the workforce expected to drop by 2.87 million between 2017 and 2040, followed by mining and construction with a 2.21 million fall, and manufacturing, down by 2.06 million.

The study said an increase was foreseen only in the medical and welfare sector, where the workforce in 2040 is estimated to rise by 1.03 million, reflecting the country's aging society.

However, if policies to promote the employment of women and the elderly bear fruit to a certain extent, the total number of workers in 2025 will be 63.43 million, down 1.87 million from 2017, and in 2040 56.44 million, down 8.86 million.

As for the entry of additional foreign workers under the new scheme to help tackle serious labor shortages in Japan, the group called for support measures such as more Japanese-language programs.

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