In contrast, Society 5.0 actively challenges the conventional wisdom that an ageing demographic profile with a rising dependency ratio leads to secular stagnation. Instead, it presupposes that the impact of demographic decline can be offset through the application of advanced technology like artificial intelligence, the Internet of Things and big data across all areas of society, including healthcare, mobility, housing and resources.
It is banking on the country’s technology strengths and on the assumption that AI will support rather than displace human workers, meaning Japan will not face the structural adjustment challenges countries with younger populations may. In this respect, Japan is in quite a unique position. Japan may be the only major economy that doesn’t fear the rise of technology; in fact it welcomes it.
There are still questions on how these new programmes will be implemented. The Abenomics renaissance has so far been excessively dependent on the Bank of Japan’s extraordinary monetary stimulus policy, which is now running into limits, whereas the new policies will require much greater coordination across government and industry.
GROWING WORKFORCE PARTICIPATION
Japan has demonstrated a surprising new openness to the forces of globalisation. Consider Japan’s increased pragmatism towards foreign nationals with the number of foreign workers almost doubling between 2012 and 2017, its booming and efficient inbound tourism industry and its leadership of a revamped Trans-Pacific Partnership trade deal. Japan has also proved it can change traditional workplace gender imbalances, increasing its prime-age female labour force participation rate from 66.5% in 2000 to 77.5% in 2017. On this issue Japan has now overtaken the US.
The combination of a reinvigorated culture of industrial excellence with the looming power of artificial intelligence, may be giving Japan the opportunity to develop a new roadmap for dealing with the economic impact of ageing. With most western countries and many emerging markets beginning to face similar issues, many have a stake in Japan’s success.