Institutional Channels in Japan

Demographic shift leads to shortage of social care institutions

The fast pace of Japan’s ageing society has resulted in a shortage of institutions not only for the elderly but also for children. The population aged over 65 reached more than 33 million in 2015, which represents some 27% of the total population in Japan. Meanwhile, due to the lack of workforce, as Baby Boomers who were born in the post-war period reach retirement age, the government is encouraging women to go back to work after giving birth to compensate for the dearth of workforce. At the same time, increasingly career-orientated women pushes women who have children to remain in the workforce. This situation has resulted in a severe lack of institutions for child day care even though the number of institutions for both the elderly and children increased in 2015 and 2016. According to the Ministry of Health, Labour and Welfare, 23,000 children and 520,000 elderly are on a waiting list for a place in such an institution. Although the government has gradually moved to solve these problems by raising the budget as well as through deregulation, it is unlikely to catch up with demand.

Social welfare expenditure continues ballooning

Rising medical expenditure is in line with the high percentage of elderly Japanese over 65 years old who need relatively high-cost treatments. When including nursing care expenditure, social welfare expenditure accounts for more than 10% of GDP in Japan, one of the highest ratios among developed countries. In order to avoid further ballooning of social welfare expenditure, the Japanese government has advocated shortening the average length of stay in hospitals and encouraged more private enterprises to enter the social welfare sector especially in terms of offering care homes for the aged.

Consumer demand for contract foodservice remains fragmented

Due to the increasing number of nursing home and child day care institutions, new demand for contract foodservice has been generated. Demand for quality has risen; foods need to be not only edible but also healthy, safe and tasty. In addition, consumption of seasonal ingredients and traditional meals has come to be regarded as more important in recent years due to the notion of shokuiku (dietary education). At the same time, a variety of meals penetrate in Japan, not only traditional Japanese food but also Western and other Asian cuisine such as ethnic foods. To meet this demand, both public and private sectors are trying to develop mature foodservice for institutions. For example, the Ministry of Education, Culture, Sports, Science and Technology held a fair under the name, “School Foodservice Fair”, providing local cuisines from different geographical areas of Japan.

Increasing inbound tourist flows boost economy

The Japanese government has placed an emphasis on inbound tourists to spur economic growth and has designated this as one of its pillar strategies. The number of visitors from other countries has increased and reached record levels. This is led by the “Visit Japan Campaign” which has been promoted by the government since 2003, the low exchange rate of the Japanese yen against major foreign currencies, and relaxed visa programmes for China and Southeast Asia countries. Occupancy rates for hotels, especially city hotels and business hotels have also reached record levels. Consumption by inbound tourists has also resulted in positive impacts on accommodation, transportation and retail.

Economic growth positively influenced by 2020 Tokyo Olympic Games

Tokyo will host the 2020 Olympic and Paralympic Games. It is estimated that the economic effect of the two events will be around ¥30 trillion. In the run up to 2020, both direct and indirect effects such as maintaining and/or constructing infrastructure such as transportation and lodging are expected to be seen in the institutions market. Meanwhile, the number of households will start to fall in 2020 even in metropolitan areas where a high percentage of inflow had been seen. As large numbers of Baby Boomers have retired, this has resulted in a serious shortage of manpower in many industries including construction, retail, foodservice, medical and lodging. Therefore, despite the likely positive effects of the Olympic Games, there will be challenges facing Japanese society and institutional channels in terms of how to deal with the post-Olympic Games environment.

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