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Monday, May 21, 2012

Who will support aging Japan?


Under the leadership of Prime Minister Lee Hsien Loong, Singapore more than a decade ago adopted the growth strategy of making the medical industry the core of the nation's industrial development.

Lee, the eldest son of the city state's founding father Lee Kuan Yew, known for his "developmental dictatorship," has invited the world's top ranking medical scientists to the National University of Singapore (NUS), offering them abundant research funds and high salaries.

I have been told that, in 2002, professor Yoshiaki Ito of the Institute for Virus Research of Kyoto University moved to the Cancer Science Institute of the NUS Department of Medicine just before his retirement age, together with nine researchers of his laboratory. Since then, he has been engaged in research related to carcinogenic genes as head of the Singaporean institute.

Treating medicine as a new "industrial segment" is novel. Since a majority of Singapore's population is of Malay or Chinese ethnicity, any pharmaceutical certified in that country is virtually assured of certification in China, Malaysia, Indonesia and other Asian countries. Thus, a sharp rise in exports of medicines from Singapore to other parts of Asia is expected.

Also expected is a rise in the production and export of Singaporean medical equipment. With medical diagnosis and surgical operations becoming increasingly mechanized with the use of integrated-circuit technologies, sophisticated medical equipment now plays as crucial a role in determining the quality of medical service as do the skills of individual doctors. That in turn will trigger a sharp rise in the demand for advanced medical apparatuses from hospitals in China and India.

The government of Singapore has established a target of increasing to 1 million this year the number of wealthy visitors from the Middle and Near East, India, China and Russia on "medical tourism" — the practice of traveling across international borders to receive high-quality health care and medical treatment. Thus, high hopes have been placed on Singapore's medical industry creating the added value to help support the country's population of around 5 million.

In Japan, too, medical and elderly care services will undoubtedly become an essential element of the economy as the population ages at unprecedented speed. According to a median forecast by the National Institute of Population and Social Security Research, Japan's total population will dwindle to 97 million by 2050, with those at least 65 years old accounting for 39 percent of the population. Thanks to progress in medical science and people's greater interest in health, the average life expectancy for people who are 75 years old is likely to surpass 20 years easily.

As a result, the number of elderly people requiring nursing care will keep rising, and nursing homes will fill to capacity. The cost for entering homes offering adequate medical and nursing care services will skyrocket. After reaching retirement age, an average wage earner who has bought a residence with loans will have no choice except to sell it and combine the proceeds with his or her retirement allowance just to pay the initial cost of entering nursing homes that provide adequate medical and nursing care. Monthly payments thereafter will be financed by pension income.

So, a comfortable life for 10 to 20 years at a well-equipped nursing home will mean that one will have to spend all the assets that he or she has accumulated from 50 years of working plus pension benefits.

In Japan, as in Singapore, the gross domestic product portion of the medical industry will grow rapidly. But if Singapore's growth strategy is an example of the "positive founding of a nation on medical industry," Japan's situation might be described as the "negative founding of a nation on medical industry."

One-third of the Japanese population will be visiting hospitals or staying at elderly care facilities. One estimate shows that in 2020, ¥44 trillion of GDP will derive from medical and elderly care services and that 7.3 million people will be working in that sector. In other words, about 15 percent of the working-age population will be engaged in services accounting for nearly 10 percent of GDP. That's a glimpse of how Japan's super-aging society will look in the future.

The number of workers in manufacturing and in the service sectors — other than in medical and elderly care services — will decrease. The nation's trade balance will fall into the red as the costs of maintaining the national health insurance program continue to rise and the fiscal deficits expand proportionally. Therein lies a specter of becoming like Greece.

To cope with the shrinking working-age population, abolishing the compulsory retirement age and encouraging more women to enter the labor market will become necessary, among other things.

Also indispensable will be accepting more foreign workers. Even today, young men and women from the Philippines and Indonesia are coming to Japan seeking to qualify as nurses and nursing care workers. A major impediment facing these eager youths from Asia is the requirement to master the Japanese language.

Unless Japan welcomes foreigners who work in the medical, education and engineering fields, it will be doomed — not only on the economic front but also on the academic and education front.

Takamitsu Sawa is president of Shiga University, Japan.


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