Spotlight: Rapidly aging society, hollowed out workforce eviscerating Japan's local economies

Located in a woody, mountainous area and with a crystal-clear river passing through the small town, Kamikatsu in Tokushima Prefecture on Shikoku Island deserves to be listed as one of Japan's most beautiful villages.

Relying on its outstanding natural scenery, Kamikatsu developed an eco-friendly business involving picking perfectly shaped and colored leaves in different seasons and selling them to top-class Japanese restaurants to adorn their delicacies. The business has netted the small town some 260 million yen (around 2.40 million U.S. dollars) per year.

This is, however, possibly the best albeit fleeting economic scenario amid a continuously worsening situation, as the small town is, essentially, vanishing.

Kamikatsu is an "old" village with about 52 percent of its villagers aged above 65 and its young people are increasingly leaving for nearby metropolitans in the Kansai region.

Kamikatsu is a typical case of the aging society that is deeply troubling local Japanese economies. Elderly people mean less consumption but more social welfare expenditure. More than 30 percent of the population in Tokushima prefecture are aged above 65, making the region the sixth most "aged" one among Japan's 47 prefectures.

The prefectural government is doing its utmost to mobilize the senior citizens to contribute to local economic growth or to attract more young people to work in Tokushima, but the effects are very limited. Kenji Yoshioka, a prefectural government official, admitted that it is very difficult to attract young people to remain in Tokushima to live and work.

"People come to Tokushima only for holidays and only a small number of people decide to leave big cities to move here," the policy inspection official with the Commerce, Industry, Labor and Tourism Department of the prefectural government, told Xinhua in a recent exclusive interview.

"Thanks to 'Abenomics', the job availability rate here has been boosted to about 1.25," Yoshioka said, but adding that due to the diminishing workforce, many small and medium-sized companies failed to recruit enough workers. The reading of 1.25 in job availability rate, which means 125 positions were available for every 100 job seekers, actually, therefore, means nothing.

"It takes time to feel the economic effects brought by "Abenomics"," said Yoshioka, admitting that the trickle down effect in local economies and small companies is far slower than in metropolitan areas and in big enterprises. But for the small and medium-sized enterprises that comprise 98 percent of all Japanese companies, time is rapidly running out.

Local economies and big companies in Japan rely heavily on small and medium-sized enterprises. However, the majority of Japanese companies that are already, or are facing bankruptcy are such businesses, Teikoku Databank said in its monthly report on the country's bankruptcy rate.

According to its report for April, bankruptcies totaling less than 50 million yen numbered 368 and comprised 57.3 percent of the total, meaning small-scale bankruptcies made up the majority. It added that by capitalization, the sum of bankruptcies of self-operated companies and those with a capitalization of less than 10 million yen comprised 58.9 percent of the total.

Yoshioka said many medium-sized and small companies that filed for bankruptcy in Tokushima was due to the shortage of new recruits or manpower.

Gatsuhide Hamabe, in his 60s and a father of two, runs a floating seafood restaurant in Kaiyo, a coastal town in Tokushima, and has been running the business for more than half a century.

"When the restaurant opened, it was very popular. We served many tourists who came by coaches everyday in the past," the fisherman, who has witnessed firsthand the meteoric rise and dramatic fall of Japan's economy, told Xinhua.

"We now maybe have one or two customers maybe every other day. People are moving out of the town," said Hamabe, whose restaurant is still the most popular in Kaiyo. Both of Hamabe's sons left their hometown for lives in big cities.

Some houses close to Hamabe's restaurant were abandoned years ago, with their ceilings collapsed, windows broken, and overtaken by weeds. Commuter train services in parts of the town have also been suspended due to a severe loss of the region's population, according to Hamabe.

Similar situations of a rapidly aging society and manpower shortages is like a growing pandemic affecting not only neighboring Kochi and Ehime prefectures, but also spreading like a social or demographic virus across other prefectures in Japan.

In the disaster-hit Rikuzentakata city in Iwate Prefecture, although the job availability hit 1.99, "many enterprises have had to reduce their production or cancel their orders due to a lack of workers," Futoshi Toba, mayor of the tsunami-damaged city, told Xinhua.

In Misaki, in the town of Ikata in Ehime Prefecture, a total of nine primary schools have been closed one by one since the 1990s and only one currently remains open now. Ehime is famous for orange growing agriculture, but many oranges could be seen left drying untended on the once fruit-laden trees in Ikata town as elderly farmers are incapable of harvesting their crop.

The success of Japan's economic recovery is inextricably linked to the revitalization of the country's local economy. But as of now, Prime Minister Shinzo Abe's economic policy dubbed "Abenomics" has seemingly failed to address the issue and to some extent damaged the local economy.

One of the three major arrows of the prime minister's economy policy mix is bold monetary easing which has showed some limited effects in export-related companies and the stocks market in Tokyo. But an after-effect of the economic remedy has seen the rise of imports prices, a real disaster for small local enterprises that rely on imported materials.

Meanwhile, "Abenomics" has also monumentally failed to restore young people's confidence in their and their county's future so that the younger generations are hesitant to get married or start families due to financial constraints and future economic uncertainty.

This means the only method of resolving the aging population and shrinking workforce problem is also beset with problems, compounding Japan's overall and growing demographic crisis. Endit