Ageing in Japan : the country of the rising sun has approved a historic budget of 115,500 billion yen (around 703 billion euros) for fiscal year 2025-2026, reflecting the government’s growing priorities in social security and national defense. This budget marks an 11.5% increase on the previous year, responding to two major challenges: an ageing population and a complex geopolitical environment.
A stronger social budget for an ageing population
Japan, one of the nations most affected by demographic ageing, spends around 38,300 billion yen (233 billion euros) on social security, an increase of 1.6% on the previous year. Currently, 29.3% of the Japanese population is aged 65 or more, an all-time record that is putting a strain on the country’s pension and medical care systems.
Ageing in Japan: Demographic crisis
Low birth rates and a cautious immigration policy are exacerbating this demographic crisis, leading to a shrinking active workforce and rising social costs. As a result, a growing number of older people continue to work: by 2023, they represented 13.5% of the active workforce. Ageing in Japan is now and will remain for a long time a big challenge.
This rapid ageing calls for structural reforms to ensure the long-term viability of social programs.
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During the SilverEco.org study trip to Japan in 2019, we asked several people about the phenomenon of large numbers of older people continuing to work despite their advanced age, with several elements of response depending on who we spoke to:
- On the state side: despite age, the Japanese want to continue to work for society,
- This, combined with a traditionally “timid” immigration policy, creates a labor shortage,
- From an economic point of view, pensions remain meagre, forcing people to combine work and retirement,
- From a sociological point of view, older Japanese people have lived in a traditional family base, with men working and women running the home. With the onset of retirement, this division of roles is shaken up, with women inviting men to return to work in a bid to maintain their role as mistress of the house.
Significant rise in military spending
At the same time, defense spending has risen significantly, reaching 8,700 billion yen (59 billion euros), reflecting Japan’s commitment to responding to growing regional tensions. The government aims to increase military spending to 2% of GDP by 2027, bringing its budget in line with NATO standards. Historically limited to 1% of GDP due to the pacifist post-war Constitution, these new policies reflect a strategic review initiated in 2022 in the face of the challenges posed by China, North Korea and Russia.
Ageing in Japan : A tense geopolitical context
According to the Ministry of Defense, Japan is facing its “most difficult and complex security environment since the Second World War”. China’s expansionist ambitions, North Korea’s regular missile launches and tensions in the Indo-Pacific region are behind this strategic reorientation. The budget also aims to improve military cooperation with the United States, particularly in Okinawa.
A record budget awaits parliamentary passage
The draft budget still has to be approved by Parliament between now and the summer of 2025, when the Liberal Democratic Party (LDP) and its coalition partner, the Komeito, will have to convince the opposition parties. They face a tough task after losing their majority in the parliamentary elections of October 2024.
The record budget for 2025-2026 illustrates the complexity of the challenges facing the country: Japan’s ageing crisis and the geopolitical crisis. Between the economic pressures of ageing in japan and security imperatives in an unstable region, the government must navigate between military modernization and social support, while maintaining a balanced budget.
Published by the Editorial Staff on