Indonesia Enters Aging Population Phase as Japan Has Long Faced Demographic Challenges

Japan has long been a global example of the fastest-aging population. However, in recent years, the phenomenon has evolved from a demographic issue to a factor reshaping economic direction, labour markets, and consumer patterns.

Amid declining birth rates and rising life expectancy, Japan now faces a growing elderly population alongside a shrinking working-age population. A similar trend is emerging in Indonesia, with Statistics Indonesia (BPS) reporting that the country has officially entered an aging population phase, with 11.97% of the population aged 65 and above according to the 2025 Inter-Census Population Survey (SUPAS). The dependency ratio has also risen to 45.05% in 2025, marking a significant shift from Indonesia’s previous demographic dividend era.

Japan remains the world’s oldest population, with the World Economic Forum noting over one in ten citizens aged 80 or older. The country has seen consistently declining birth rates for decades, directly impacting its labour market as the working-age population shrinks, forcing businesses to raise wages, extend retirement ages, and recruit senior workers to sustain operations.

Reuters reported a 32% increase in bankruptcies due to labour shortages in Japan in 2024.