Japan – Australia: Ageing Populations – Demographic Socio Political Comparison

From ANU Australian National University’s East Asia Forum, articles on the issue of demography, ageing, electoral and social security in Japan ‘The problematic politics of Japan’s ageing electorate’ and Australia ‘Maintaining Australia’s status as an immigration nation’. 

Both nations, like elsewhere, are ageing, but dealing with campaigns opposed to immigration to ameliorate working, tax revenue and budget stress, while many retired and elderly voters have short term horizons or simply vote for their own future security.

However, as this issue continues to become significant, especially Japan, there is little political will to deal with it openly and honestly, hence, working age and younger generations will need to deal with it, while having low expectations of state social security support.  

Meanwhile in Australia, there has been two decades of nativist ‘dog whistling’ (undefined) immigration and population growth, via legacy and independent media to persuade voters, yet media and policy makers seem not to understand the demographics, immigration, population and economic effects?

While there is below replacement fertility, fewer youth, working age has passed the ‘demographic sweet spot’, more retirees and increasing old age dependency ratios, that should settle by mid century; in the meantime temporary net migration inc. international students, maintain the working age cohort, pay taxes and for services, while supporting budget health.

‘The problematic politics of Japan’s ageing electorate’

27 February 2023

Author: Yasuo Takao, Curtin University

Japan’s Prime Minister Fumio Kishida used a policy speech at the opening of the 2023 session of Japan’s parliament, the National Diet, to declare that Japan was ‘on the brink of not being able to maintain social functions’ due to the country’s population crisis. The country’s median age is 49 — the second highest in the world.

In the 2021 House of Representatives election, the median age of those who cast a vote was 59. The centre of gravity of Japanese electoral politics has shifted from taxpayers to pensioners, with the potential of the elderly exerting more political pressure over policymakers as the population ages.

The majoritarian decision-making model suggests that self-interested aging voters are likely to support increasingly generous social benefits for themselves, even at the expense of other generations.

In Japan, voter turnout has consistently been higher and is steadily increasing among older people. The age gap in Japan’s voter turnout is exceptionally high, with an OECD study finding a gap of 25 percentage points in voter turnout between voters 55 and older and voters under 35, compared with the OECD average of 12 points. Assuming that high turnout is a reflection of political interest, this implies that elderly voters influence politics in a self-interested way, to the detriment of younger generations.

But no studies have yet found clear evidence of such self-interest among Japan’s elderly voters. In the early 2000s, the Japanese public became seriously concerned about the country’s apparently unsustainable level of social security expenditure. The elderly, more than any other cohort of the population, consider social security issues to be important factors in casting their votes.

Japan’s older people may not be as explicitly self-interested as the median voter model would predict. A series of surveys conducted by Japan’s Cabinet Office and Ministry of Health, Labour and Welfare found that elderly respondents supported policy constraints on social security just as much as other age cohorts.

Internationally, the Japanese elderly are seen as more accepting of intergenerational equity than the elderly in other countries. Cross-national surveys on those 60 and older, conducted by the Cabinet Office in 2005, 2010, 2015 and 2020, asked whether government policy should prioritise younger people over older people or vice versa. Japan had the highest percentage — 31 per cent — of respondents agreeing that ‘young people should be prioritised’ —compared to 14 per cent in the United States and 17 per cent in both Germany and Sweden.

On this evidence, self-interested voters seeking to maximise their own benefits seems less applicable in the case of the Japanese welfare state. But other factors might also be at play..

The primary factor influencing public attitudes toward social security is demographic changes. In the early 2000s, the urgent need for social security reform in response to Japan’s population crisis captured public attention. The debate that followed played a significant role in influencing the attitudes of the elderly toward social security benefits.

There is undoubtedly a distinctive generational difference in political attitudes. The dankai baby boomer cohort born between 1947 and 1949 experienced turbulent events in their youth — Japan’s rapid economic growth, anti-establishment student movements, industrial pollution and the Vietnam War among them. These dankai-specific experiences bred life-long progressive political attitudes and a propensity to embrace the common good rather than sectional interests. In the 2009 general election a plurality of 49 per cent of voters aged 60–69 voted for the Democratic Party of Japan, which toppled the conservative Liberal Democratic Party.

Japan’s elderly cohort also has the highest labour-force participation among the OECD countries. Nearly half of Japanese men aged 60–70 and one quarter of those aged 70–75 are still in the workforce. About three-quarters of the Japanese elderly workforce work in non-regular positions and consider social security issues important to their votes.

Despite having less secure employment, elderly voters do not necessarily influence politics in a self-interested way to the detriment of younger generations. Employed elderly people continue to find security in belonging to a particular company, which dissuades them from organising around their own interests with others beyond their company ties. Employed elderly people are more likely to identify with the interests of their younger co-workers.

Japan’s public, mandatory long-term care insurance has had a significant impact on the elderly. The dramatic rise of the costs of its operation has undermined its fiscal stability and this universal system weakens the interest in political activism by the elderly. Eligibility is not based on income or family situation but purely on age and physical and mental health.

Anyone 65 or older, plus those aged 40–64 with aging-related diseases, are eligible for institutional or community-based care.

Self-employed individuals, of whom 40 per cent are 65 or older and have no mandatory retirement age, hold opinions aligned with the protection of their small businesses, often against the interests of elderly consumption.

The aging of the Japanese electorate may not have led to politically charged generosity for the elderly at the expense of younger generations, but there are still many puzzles to unravel about how the elderly in Japan are affecting policy choices and political outcomes.

Yasuo Takao is Adjunct Senior Research Fellow at the School of Media, Culture and Creative Arts, Curtin University, Perth.

‘Maintaining Australia’s status as an immigration nation’

20 May 2023

Authors: Stephen Clibborn and Chris F Wright, University of Sydney

Australia has been widely regarded internationally as an exemplary ‘nation of immigrants’, with migration policies that effectively serve the national interest. But since the mid-1990s, Australia’s migration system has shifted away from the long-term provision of skills for nation-building towards a guest worker model aimed at satisfying the short-term demands of business.

The current migration system inefficiently supplies skills, exposes temporary migrants to underpayment and mistreatment and poorly serves the national interest. It has disintegrated to a point where the recent Parkinson Review of the Migration System and Home Affairs Minister Clare O’Neil declared it ‘broken’ and in need of an overhaul.

The Parkinson Review identified three general principles to return to a sound migration system: tripartite involvement of unions and employer associations with government in designing and implementing policy, universality of regulation for migrants and mobility for migrants to transfer between employers. The government announced it will now undertake a major reform of the migration system using input from the Parkinson Review.

The government’s single concrete immediate policy announcement in response to the review was increasing the Temporary Skilled Migration Income Threshold (TSMIT), which was justified on grounds that it would help reduce exploitation of workers. This policy increases the effective minimum pay rate for some classes of migrant workers from AU$53,900, where it has languished since 2013, to AU$70,000. That means employers sponsoring temporary migrant workers under the Temporary Skill Shortage scheme from 1 July 2023 must pay a minimum annual salary of AU$70,000. This is a compromise between recommendations from business groups — AU$63,000 — and the Australian Council of Trade Unions — AU$90,000.

The government has stated that simplifying the migration system, delivering skills needed by business and reducing exploitation of migrant workers are its main priorities. Many of the Parkinson Review’s recommendations will help achieve these goals. Recommendations such as removing restrictions on temporary skilled migrants’ mobility between employers and independent assessment of skills demand are helpful. But other recommendations potentially undermine them, such as continued reliance on the TSMIT and creating three tiers of temporary labour migration. This may further complicate the system, reduce labour supply and maintain exploitation.

Historical and comparative research suggests that the government’s goals can be best achieved by strengthening ties between migration and employment regulations. Many problems with the migration system can be traced back to the expansion of temporary visas in 1996. Prior to this, the migration system was relatively simple. It supplied skills to business efficiently and migrant worker exploitation was lower. Complementary migration and employment regulations contributed to these outcomes.

Three changes would better align migration and employment regulations.

First, abandon the TSMIT pay threshold. Minister O’Neil’s headline policy announcement — raising the TSMIT — places excessive faith in salary level as a measure of skill and worker power. The Parkinson Review’s recommendation to build a three-tier system of employment regulation around salary levels does likewise on the basis that those workers paid above the TSMIT are likely to be at limited risk of exploitation. The policy focus should not be on the level of the threshold but its very existence.

For many years, Australia’s Minister for Home Affairs has had the power to set the TSMIT, resulting in pay rates being determined by political considerations rather than labour market assessments. This contrasts with the methodical and transparent way the Fair Work Commission’s Expert Panels set minimum wages.

Maintaining the TSMIT risks reinforcing separate labour markets for migrants and citizens, undermining the government’s objectives. An increased TSMIT could also price out some skilled jobs in sectors with pronounced labour demand, such as health, social care and hospitality. This would likely generate political pressure for new job-specific visas to address Australia’s skill needs, further complicating the migration system.

Second, independently assess skills needs. The Parkinson Review recommended using Jobs and Skills Australia, a new Commonwealth agency, to better align migration and labour market regulations. This agency will help to ensure migration better complements the education and training system. For decades these policy areas have been at cross-purposes, despite their mutual objectives of supplying necessary skills.

Using Jobs and Skills Australia to strengthen coordination between migration, on one hand, and education and training, on the other, will help ensure skills and workforce needs are assessed and addressed more reliably. This approach will give employers more confidence to invest in developing their workforces.

Third, enforce employment regulations more effectively. Without this, unscrupulous employers will continue to underpay and mistreat vulnerable temporary migrants, gaining a competitive advantage over honest operators. Without effective enforcement, businesses are discouraged from seeking to succeed through quality, innovation and productivity improvements, which are essential for Australia’s international competitiveness. The assumption that a certain level of pay in the TSMIT and a proposed higher-paid visa tier equates to individual worker power to resist underpayment is misplaced.

In implementing the Parkinson Review’s recommendations, the government must ensure migration regulations are better integrated with wider employment regulations. This will help achieve the government’s triple goals of simplifying the system, supplying skills more effectively and reducing worker exploitation. This will ensure the migration system continues to support Australia’s international standing as a successful ‘nation of immigrants’.

Stephen Clibborn is an Associate Professor and Co-Director of the Sydney Employment Relations Research Group at the University of Sydney Business School, University of Sydney.

Chris F Wright is an Associate Professor and Co-Director of the Sydney Employment Relations Research Group at the University of Sydney Business School, University of Sydney.

For related links and article on Ageing Democracy, Australian Immigration News, Demography, Government Budgets, Pensions, Taxation and Younger Generations click through:

Population Pyramids, Economics, Ageing, Pensions, Demography and Misunderstanding Data Sets

Australian Migration Review 2023 – For Immigrants and Nation or a Nativist Trap?

Global Population Decline and Impacts

Population Decline in Asia is Near with Africa to Follow

Population Decline and Effects on Taxation, Benefits, Economy and Society

Grey Tsunami – Electoral Demographics – Ageing Populations vs. Youth

Ageing Democracy, Nativism and Populism

Political Parties Hollowed Out and Identity Issues

Australian politics as with Trump’s America and U.K.’s Brexit has become hollowed out with declining membership, less organic policy development, more reliance upon both external policy development by trans national think tanks and promotion or opposition by media or PR.

An enforced focus upon immigration, population growth and refugees, or white nationalist issues, may risk bi-partisan support and ignore the immigrant heritage of Australia versus aggressive demands for a WASP white Anglo Saxon protestant and Irish Catholic culture to rule.

Populist Politics and White Nationalism (Image copyright Pexels).

This is especially so among the less diverse above median age vote in regions, while Australia’s elites in business, government, politics and media also reflect the same mono culture or lack of diversity.

Further, positives and benefits of immigration are seldom cited and especially the leveraging of temporary resident churn over; whether students, backpackers or temporary workers who are net financial contributors supporting the tax base, vs. ageing and increasing proportion of pensioners or retirees in the permanent population.

From The Lowy Institute:

‘Hollowed out, but not unhinged

Judith Brett

The scenario put forth in Sam Roggeveen’s “Our very own Brexit” runs counter to the major parties’ economic realities.

Sam Roggeveen has written a lively essay on the current state of Australian federal politics, centred on the hypothetical scenario that one of the two major parties takes an anti-immigration policy to an election, overturning Australia’s post-war bipartisan commitment to immigration to gain political advantage. Such an election would be a referendum on continuing population growth, and bring to a halt our cultural diversification and our integration into Asia, which is now the largest source of permanent new settlers.

It sounds unlikely, but as Roggeveen argues, both Brexit and the election of Donald Trump were unlikely, rogue events that have overturned political assumptions. His scenario is not a prediction, he stresses, but a plausible, worst-case scenario arising from the current state of our political parties.

Our two major parties have become “hollowed out”, Roggeveen argues, untethered from their traditional social bases in class-based interests. Party membership and party loyalty have declined, leaving a more volatile and skittish electorate potentially vulnerable to the anti-immigration siren song of a party desperate to gain electoral advantage.

There are two parts to this argument. The first is that the parties have become hollowed out; the second that it is plausible that one of the major parties break the bipartisan support for the migration program.

First, the evidence is clear for the decline in rusted-on party loyalty.

However, Roggeveen does not, to my mind, have a sufficiently nuanced understanding of the reasons for this decline and writes as if it is mainly the result of a deficient political class.

In the early 20th century, when our current party system took shape, it made social and economic sense to have two parties based on two class blocks. Working and middle class, employee and employer, labour and capital – these spoke both to people’s everyday experience and sense of themselves and to competing economic interests. This is no longer the case. More than a hundred years later, Australia’s society and its economy are much more complex.

In developing their policies, parties have to broker compromises among various competing interests, and this undertaking is much harder today. To take a stark example: the problem Labor has in developing policies responsive both to its traditional union base and to the middle-class social democrats who flocked to the party with Gough Whitlam. Compared with the early 20th century, lines of class division have blurred, and new lines of difference have been politicised: gender, race, ethnicity, attitude to nature, and, after the fading of sectarianism, religion again. If the parties are failing, it is in part because the task of uniting disparate constituencies is harder…..

……Second, I do not find it plausible that one of the major parties would break the bipartisan consensus on immigration.

A minor party might succeed with an anti-immigration policy, but neither major party could afford the electoral risk. The 2016 Census reported that 49% of the Australian population was either foreign-born or had at least one foreign-born parent. Not all of these people will be on the electoral roll, but all who are citizens will be, and once on the roll, they will have to vote.

Because of compulsory voting, Australian parties do not need highly emotional and divisive policies to get out the vote, and to support them carries considerable risks. Both Brexit and the election of Trump occurred in polities with voluntary voting, where it makes electoral sense to risk courting an alienated minority. There is no doubt there is a nativist faction in Australia that would support a stop to immigration, but Australian elections are won and lost in the middle, which is occupied by increasing numbers of foreign-born voters and their children.

Also holding the major parties to their consensus on immigration is its contribution to the economy. Australia’s recent sluggish economic growth would be even slower were it not for migration. The housing and retail sectors in particular would be sharply affected by its halt. Our two major political parties may be untethered from their historical social bases, but they are not unhinged from contemporary economic reality.’

 

For more articles about populist politics, demographics, immigration and white nationalism click through.

 

Pension Systems and Budget Sustainability

As populations age and work forces decline i.e. few taxpayers contributing to budgets, pension systems have been subjected to conflicting needs.  This includes preserving the tax base into the long term while catering to ageing electorates, in some cases dominated by pensioners or retirees.

Pension and Budget Sustainability (Image copyright Pexels)

Following is an overview of the top five most sustainable systems including Australia which is a hybrid of state asset tested pension and the still developing private pension of superannuation system.

Further, an essential part of supporting the tax base is to use temporary residents churn over of international students, backpackers, temporary workers etc. as net financial contributors.

From The Nation:

‘Global top five most sustainable pension systems

WITH pension contributions expected to rise globally, a number of nations have developed models to reward their workforce for life after retirement.

As the retirement age and life expectancy continues to rise around the world, having a sustainable pension scheme is more important than ever

Thanks to gradually rising life expectancy and a higher state pension age, pension contributions are set to soar around the world. World Finance explores the top five countries with sustainable pension systems, where retirees can live particularly well with their pension pot.

Thanks to rising life expectancy and a higher state pension age, pension contributions are set to soar

Australia

Australia’s three-tier ‘superannuation’ pension system is one of the most touted in the world. It includes a tax-financed age pension, providing basic benefits, a company pension pot and the individual contribution to a retirement savings account. Employers are required to contribute 9.5 per cent of worker’s gross earnings, which totalled AUD2.3trn ($1.8tn) at the end of 2017.

Canada

Canada provides its workforce – especially low-income citizens – with the Canada Pension Plan, which is a universal flat-rate pension plus a supplement based on income. Voluntary pension plans were also recently introduced, and from 2019 until 2025, workplace contributions will increase by one percent to 5.95 percent.

Denmark

The average Danish pension pot is well funded due to its ‘folkepension’ – a universal pension scheme ensuring that pensioners receive a basic retirement income. One notable result of Denmark’s successful system is that, according to an OECD 2017 report, its private pension assets represented 209 percent of Denmark’s GDP in 2016.

Germany

Germany’s pay-as-you-earn state pension makes up its main retirement system, which provides a safety net for low-income earners. Occupational pensions are not compulsory but approximately 60 percent of all German workers participate – a number that is expected to grow in the coming years.

Switzerland

Ranked sixth in the world in 2017 by Mercer’s Global Pension Index, Switzerland’s public pension primarily depends on workers’ earnings. Conversely, the compulsory organisational pension depends on a worker’s age – meaning that with age comes a larger contribution. Swiss insurers and various banking foundations have also put voluntary schemes in place.

 

For more related blogs and articles on demography, economics, populist politics and younger generations click through.