Also in the news...
Ghana: UK Science and Innovation Network summary
A summary from UK Science and Innovation Network (SIN) on science and innovation in Ghana including UK SIN priorities and successes.
How to Build a Rewarding Work Environment That Employees Love
In today’s workplace, building a rewarding environment where employees feel valued and motivated is crucial for business success. Employees who love where they work are more engaged, productive, and loyal, which leads to better overall performance for the company.
Why UK Businesses Expanding Abroad Need Conveyancing Solicitors
As UK businesses increasingly look to expand their operations overseas, the importance of having the right legal support cannot be overstated. One of the key areas where businesses face significant challenges is in navigating foreign property transactions.
Navigating Crypto Regulations: What Investors Need To Know
Cryptocurrencies have shifted from niche investments to mainstream financial assets, attracting retail and institutional investors. With this rise in popularity, the regulatory landscape has become increasingly complex, presenting new challenges for those looking to invest. Understanding these regulations is vital for navigating the crypto market confidently.
Sweden: UK Science and Innovation Network
A summary from UK Science and Innovation Network (SIN) on science and innovation in Sweden including UK SIN priorities and successes.
The first in a 3-part series on the economic impact of aging in Japan
Debt Japan's government debt exceeds that of other industrialised nations while gross debt is around 200% of GDP (in the US, UK and Germany the ratio is below 100%). While the financial markets are punishing Ireland, Greece and Portugal for their high public borrowings, Japan stands largely immune.
The anomaly exists for the government has always covered its debt through Japanese government bonds (“JGB”) about 90% of which are held by risk-adverse domestic investors. The result is that the government has not had to worry about foreign perceptions of its debt burden.
Demographics
The Japanese population is shrinking, from a peak of 125M a few years ago to about 100M by 2050. At the same time, the proportion of people over 65 will rise to 40% by around 2050. The Mizuho Research Institute estimates that by 2025 around 70% of government spending will be consumed by debt service and social security spending. Yet with so few years left to rectify this situation, there still seems little sense of a pending crisis.
Debt & Demographics
As a higher proportion of people enter retirement, the household savings rate will turn negative as retirees spend their savings to cover necessities. The JGB market will then not be able to rely on domestic saving as it has in the past. Not only will these bonds become more volatile but when money has to be raised from overseas, interest rates will jump to international levels. More impactful is that foreigners will begin to have a say in Japanese economic policy – an unthinkable situation for a society as closely knit as Japan.
De-investment
Japan has had steadily falling prices (consumer prices minus food and energy) for about the last decade. While shoppers might be content, the constant pressure to reduce price means that companies are unable build up reserves to invest. Collectively Japan is not generating the new goods and services or pioneering sophisticated manufacturing and service delivery methods that are an essential for an innovation-driven economy (see Asia Insider 76 “Japan not starting enough start-ups”).
Abetting this is the strong yen meaning those seeking to export are struggling. Some are moving production to locations where currency is not an issue – in essence; they are de-investing in Japan while moving know-how and infrastructure offshore. Those that stay loyal to their domestic workforce are seeing profit margins on export sales hit hard and have no money to invest in innovation.
A positive spin
The government seems to be resting its hopes on growth that capitalises on the changing demographics. This includes more employment in aged care as well as childcare for women return to the workforce. While in theory elderly care should expand, low wages and the difficult work mean that there are not a lot of Japanese willing to take up these positions. The government thus has to look for foreign workers to fill these roles.
Green technology is seen as another growing source of employment. Know-how in these areas may also be able to be exported to geographies that face similar issues.
Author’s Comment:
The commentary is around economic measures and ignores items associated with Gross National Happiness (a term coined in 1972 by Bhutan's King). Here Japan's low crime rate and advanced health care that delivers long life spans suggests a better quality of life than in many other countries with better economic scores.