Paul Spoonley: A challenging demographic future

Distinguished Professor Paul Spoonley.

The largest and arguably the most influential annual meeting on immigration and diversity, Metropolis, took place in Nagoya, Japan, recently. Although far more densely populated than us, this island nation provides possible clues into the future of New Zealand's demographic trends.

In the same week as the conference, it was announced that Japan's population had dropped by 0.8 per cent (947,305 people) than five years earlier. Of the 20 largest countries (by population), Japan is the first to experience population decline. It signals an important shift in the population futures of most advanced countries.

This loss is in sharp contrast to New Zealand, which experienced population growth of 2.1 per cent last year. Unlike Japan, New Zealand's fertility rate remains relatively high and this is buoyed by very high immigration rates. Neither is true for Japan - and might not be true for New Zealand in the future.

Japan's fertility rate is at 1.3 (average births per woman). To replace the current population, it needs to be 2.1. As a result, the numbers under the age of 15 now only make up 12.6 per cent of the population. This has implications for the numbers entering the workforce. It signals one of the most important changes that will occur over the next three decades: in developed countries, the workforce will drop from its current 800 million to 600 million.

The other side to this equation for Japan is the ageing of the population. Those over the age of 65 now make up 26.6 per cent of the population - and this figure is growing by almost 4 per cent every five years.

Why is this important for New Zealand?

The first reason is that while the two countries face very different demographies in the short term, they might well converge in the long term. New Zealand is already seeing structural ageing and it will see a contraction in the size of the working age population - although this may be delayed by immigration rates.

Japanese attitudes towards immigration and immigrants are changing - and they need to. For example, by the time that the last of the Japanese baby boomers reaches 65 in the next decade, it is estimated that six million older Japanese will need nursing care, a 30 per cent increase over the current number. Who will provide that care?

The Japanese have a scheme, the Technical Intern Training Programme, that brings in foreign eldercare workers (amongst other sectors) to supplement the local workforce. But there are concerns about abuse and low pay. So Japan will have to review and alter such schemes. And it will. At the moment, only 1.6 per cent of the Japanese population is overseas born (for New Zealand, it is 25 per cent).

This all suggests that New Zealand needs to take note of the challenges faced by Japan, even if we have radically different approaches to immigration. Japan has few options - increasing the labour force participation of groups such as older Japanese or replacing people with machines (the robot that provides company for elderly Japanese), or they seek workers from other countries.

This raises the second issue: we will see a lot more competition for skilled immigrants in the future. Japan's fertility rate might be below replacement levels but so is China's, at 1.6. What if China also experiences labour or skill shortages in the future? Will it look to keep its skilled and middle class at home rather than agree that they should leave for New Zealand? And other countries like Japan will increasingly compete for these skilled immigrants. There are already more than half a million Chinese immigrants in Japan and this number will almost certainly grow.

Currently, population growth and very high levels of immigration puts New Zealand in something of a bubble. At the other end of the spectrum is Japan. But it would be foolish to overlook the lessons provided by Japan and the possibility that our ability to recruit the immigrants that we need might be curtailed over the next decade or so.

Distinguished Professor Paul Spoonley is Pro Vice Chancellor, College of Humanities and Social Sciences at Massey University and a member of the International Steering Committee, Metropolis.