The future of Japan’s Society 5.0

Source: Keidanren Society 5.0 Co-Creating the Future 2018

According to a 2018 report by Japan’s leading business body, the Japan Business Federation (Keidanren), Society 5.0 will rely heavily on AI, robotics, the internet of things and big data to provide the technological edge Japan needs to address the current problems of aging people and infrastructure while leading the world in transformation to the next era.

But it is not just about technologies alone. Society 5.0 has consequences that reach beyond the economy to the digitisation of society itself.

This includes achieving societal consensus on ethical matters, changing of mindsets regarding the relationship between people and machines, revolutionising and digitising the entire healthcare industry, even discussion of what the pursuit of happiness should mean in a Super Smart Society 5.0.

For a country that currently lags far behind its contemporaries in the take-up of cashless payments, for example, Society 5.0 is designed as a catalyst for leapfrogging straight to blockchain.

Japan’s diminishing and ageing population is already taking a societal toll. The dwindling numbers of young Japanese entering the workforce already find the prospect of having to support a whole generation of aged retirees daunting and frightening.  It’s easy to understand why Japan needs Society 5.0 to instill new hope. But why does Japan think it is ideally placed to lead the world?

Data and excellence

Firstly, a universal health system and the abundance of raw data available through the lateral linkages between academia, industry and government has been the cornerstone of Japan’s economic model for decades. This positions Japan well to take advantage of big data and distributed ledger technologies such as blockchain.

Secondly, a culture of monozukuri or excellence in manufacturing can provide a leading edge if applied selectively in a coordinated and disciplined way to industries that will solve the problems of the future.

Japan has already staked out important ground as a world leader in the practical application of regenerative medicine, robotics and AI, driverless cars and the use of drones in service industries, all of which are designed to play a critical role in enabling greater longevity, mobility and connectivity for its aging population.

And while Japan retains its spot with the world’s most aged population (in 2018 over 28 per cent of Japanese or 35.6 million were over 65 and for the first time one in five people were over 70), there are many other countries not far behind.

The demographic pyramid has long been considered as either a blessing or a curse by countries moving along the development continuum. Japan’s hope is Society 5.0 will bring about huge disruption and change all that, allowing it to re-establish global dominance in a paradigm that does not rely on population or size.

Aging quickly

One of Japan’s leading researchers on population trends is Professor Ryuichi Kaneko, a visiting Professor at Meiji University and former Deputy Director General of the National Institute of Population and Social Security Research.

His research indicates that based on current trends, Japan’s population is likely to shrink from 127 million in 2015 to 88 million in 2065 and 59.7 million at the turn of the next century in 2100.

And as society heads towards the turn of the century, many other countries will be facing the challenge of a diminishing workforce and rapidly growing aged population.

The United Nations notes in its 2017 revision of World Population Prospects that compared with 2017, the number of persons aged 60 or above is expected to more than double by 2050 and to more than triple by 2100, rising from 962 million globally in 2017 to 2.1 billion in 2050 and 3.1 billion in 2100, a global average of 36.7 per cent.

In 2100, Japan will be facing an alarming 38.3 per cent of its population over the age of 65; South Korea, which has experienced a particularly rapid ageing trajectory, is looking at 35.5 per cent, while an average of more than 30 per cent is predicted across Europe. Some of the world’s largest populations are ageing rapidly, notably China.

In 1950, around 5 per cent of China's population was 65 years of age or older; by 2100 this percentage will have increased to 28 per cent. Only 37 per cent of the population will be younger than age 35. India and the US are ageing less rapidly but by 2100 they too are predicted to have 26 per cent of the population over the age of 65, with Australia following closely behind at 25 per cent, and New Zealand facing the prospect of more than 33 per cent.

Developing countries are also heading down the ageing pathway. The UN notes that Africa, which has the youngest age distribution of any region, is also projected to experience a rapid ageing of its population. Although the African population will remain relatively young for several more decades, the percentage of its population aged 60 or over is expected to rise from 5 per cent in 2017 to around 9 per cent in 2050, and then to nearly 20 per cent by 2100.

First movers

As large proportions of both leading and emerging economies age, clearly there is a need for global thought leadership and practical application in setting the tone for how we should aim to live and work in the digitally connected super smart world of tomorrow. The sheer numbers alone mean that the potential for new opportunity is virtually unlimited.

The Japanese government tells us with firm conviction that “Society 5.0 will change the world”.

Let’s hope that Japan can secure a first mover advantage and shine some light on how the world can not only age gracefully, but thrive.

Elizabeth Masamune is a former Senior Trade Commissioner for Austrade, and Managing Director of @Asia Associates Japan, based in Tokyo.