Japan's shrinking population: what a country does when it runs out of workers

Japan is not debating whether a rich country can shrink. It is doing it, on a schedule, with published targets, and the rest of the developed world is quietly taking notes. The population peaked at about 128 million in 2008 and has since fallen by roughly five million — the equivalent of losing Scotland — while annual births have dropped below 700,000, a threshold the government's own demographers at the National Institute of Population and Social Security Research once pencilled in for the late 2030s. The same institute projects a population of around 87 million by 2070. Nothing currently on the table reverses that trajectory, so every serious policy is about managing it.

The first response was capital. With the labour force contracting, Japanese firms substituted machines for people at a pace that makes the productivity debate elsewhere look leisurely. Convenience-store chains rolled out self-checkout and remote-monitored night shifts because staffing a till at 3am became arithmetically impossible in some towns. Agriculture, where the average farmer is now around 68, leans on GPS-guided rice transplanters and drone spraying. Construction firms, facing a rule change in 2024 that finally capped overtime in the sector, responded with prefabrication and site robotics rather than wage wars they could not win. The lesson exported to Britain is uncomfortable for both sides of the productivity argument: automation genuinely fills gaps, but only in tasks with predictable geometry. It has not rescued logistics, hospitality or the care workforce, which is where the second response comes in.

That second response is the one Japan spent thirty years insisting it would never make. Officially, Japan still has no immigration policy in the European sense — no points-based settlement route, no multicultural framework. Unofficially, it has built one out of side doors. The Technical Intern Training Programme, long criticised as a rotating-labour scheme dressed as development aid, funnelled hundreds of thousands of Vietnamese, Indonesian and Filipino workers into factories and farms. In 2019 the Abe government created the Specified Skilled Worker visa, the first honest admission that these were workers, not trainees; its second tier permits indefinite renewal and family accompaniment, which is settlement by another name. In 2024 the Diet voted to abolish the intern programme outright and replace it with a system that allows job-switching and a route into the skilled visa. The result is a foreign population above three million and climbing — still under 3 per cent of the total, a fraction of the UK's share, but the direction is unambiguous and the business federation Keidanren now lobbies for more, not less.

Managed retreat as public policy

The most distinctive Japanese experiment is the one with no European equivalent yet: deciding, in advance, which places to let go. The 2014 Masuda report named 896 municipalities — half the country — as at risk of effectively vanishing by 2040 because their young women were leaving. The response was not denial but triage. Toyama rebuilt itself as a deliberate "compact city", concentrating housing, services and a new light-rail spine in the centre and thinning the subsidised periphery. Waves of municipal mergers cut the number of local authorities from over 3,200 in 1999 to about 1,700, pooling town halls that could no longer each staff a planning department. Even Japan's famous vacant houses — roughly nine million akiya at the last housing survey — are being processed rather than ignored, through municipal vacant-home registries, demolition subsidies and tax changes that stop heirs warehousing empty property.

None of this has raised the birth rate; successive "last chance" child-allowance packages, most recently a 3.6 trillion yen programme, have coincided with new record lows. What Japan demonstrates instead is that decline is a governable condition. The choices are unglamorous — which villages get a bus route, which visa category quietly expands, which tasks get handed to machines — but they are choices, made openly and sequenced over decades. The UK, whose Office for National Statistics projects population growth driven almost entirely by migration while deaths already outnumber births in most years, will recognise each of these dilemmas soon enough. Japan's real export is not robotics. It is the demonstration that a state can plan its own shrinkage without pretending the alternative is on offer.