Who will pay?

Japan's changing demography;

By 2015 the proportion of elderly will have risen to one in four of the population, or more than 30m. This is thanks mainly to an unusually large baby-boom generation passing into the ranks of the old. Between 1947 and 1949, 2.7m children a year on average were born to surviving Japanese soldiers who returned from war, married and settled down—about a third more than in previous years. This year, the baby-boom generation began to retire (at present, 60 is the mandatory retirement age at most companies). The size of their pensions obligations has funding implications both for companies and for government. But there is another dimension to the baby-boomers' retirement: these workers drove Japan's economic transformation of the 1970s and 1980s. They are a reservoir of technical and managerial skills.

Who to pass these on to? Japan's birth rate fell below the replacement rate of 2.1 in the early 1970s. It slid to a low of 1.26 in 2005, before inching up last year to 1.32—nobody calls it a recovery. In 2005 Japan's population began to fall in absolute terms, despite increasing life expectancy. It is about to shrink at a pace unprecedented for any nation in peacetime. The National Institute of Population and Social Security Research estimates a total population of 95m by 2050, with the elderly accounting by then for two-fifths of the total.