Abe: Japan's shrinking population not burden but incentive

By Linda Sieg and Kiyoshi Takenaka

NEW YORK (Reuters) - Prime Minister Shinzo Abe said Japan's aging, shrinking population was not a burden, but an incentive to boost productivity through innovations like robots, wireless sensors and Artificial Intelligence.

Abe's comments on Wednesday came days after official data showed that Japan has 34.6 million people aged 65 and older, or 27.3 percent of the population - the highest proportion among advanced nations.

"I have absolutely no worries about Japan's demography," Abe said in a prepared speech at a Reuters Newsmaker event, noting that nominal gross domestic product had grown despite losing 3 million working-age people over the last three years.

"Japan may be aging. Japan may be losing its population. But these are incentives for us," he said.

"Why? Because we will continue to be motivated to grow our productivity," Abe added, citing robots, wireless sensors, and Artificial Intelligence as among the tools to do so.

"So, Japan's demography, paradoxically, is not an onus, but a bonus."

Abe has said he wants to halt the slide in Japan's population at 100 million people by 2060, about one-fifth below the current level. The government also aims to raise the fertility rate from 1.4 births per woman to 1.8 - still below the 2.1 needed to prevent a population from shrinking.

Abe has focused on mobilizing women and the elderly to compensate for a shrinking workforce rather than tackle head-on the politically touchy topic of immigration, although some changes are being considered on that front.

He outlined plans for labor-market reform, which he said would help boost long-term growth, but steered clear of a move many experts say is vital - making it easier for companies to fire workers.

A divide has emerged between a falling number of salaried workers and a rising tide of part-time or other "irregular" employees, whose lower wages and scant job security depress spending and constrain consumer confidence.

Abe vowed that a task force he is convening will fill this gap and ensure equal pay for equal work, as well as find ways to encourage more women and older people to work.

But he declined to directly address a question on whether the government would make it easier to dismiss workers who do not have the needed skills.

Instead, Abe referred to a domestic debate about whether to settle dismissals with cash payments rather than in court.

"I have no intention of introducing a system where you can fire people freely with monetary compensation," he said.

Abe, who returned to office in December 2012 for a rare second term pledging to reboot the economy with mix of ultra-easy monetary policy, fiscal spending and reforms, reiterated that the economy remained his top priority.

Critics worry he might switch his attention to trying to revise Japan's post-war pacifist constitution, as Abenomics seems to be running out of steam.

BOJ SHIFTS FOCUS

Hours before Abe spoke, the Bank of Japan made an abrupt shift to targeting interest rates on government bonds to achieve its elusive inflation target, after years of massive money printing failed to jolt the economy out of decades-long stagnation.

Abe welcomed the decision, expressed confidence in his hand-picked central bank chief, Governor Haruhiko Kuroda, and vowed to work with the BOJ.

"The government and the BOJ will work as one in close coordination to accelerate 'Abenomics'," he said.

"We haven't escaped from deflation yet. I believe we can make steady progress toward escaping from it."

The prime minister also said his government would seek quick approval by parliament of the Trans-Pacific Partnership (TPP) pact and urged the United States to do the same.

"Please do ratify the TPP," Abe said. "We are simply waiting for you to take a leadership role. 'Come along, America', should be my own message to you."

U.S. President Barack Obama's administration intends to make a final full-court push to convince Republican leaders in the U.S. Congress to approve the 12-nation trade deal in a "lame duck" session after the Nov. 8 presidential election.

Both Hillary Clinton, the Democratic Party candidate, and Republican candidate Donald Trump are opposed to the pact, which is unpopular with U.S. labor unions and environmental groups.

Abe also made a pitch for Japan's high-tech "maglev" railway, suggesting once again that the technology, which Central Japan Railway Company (JR Tokai) <9022.T> aims to use to link the cities of Tokyo and Nagoya by 2027, would be a good fit for the New York-to-Washington route.

"The distance between Tokyo and Nagoya is almost the same as that between New York and D.C.," Abe said. "And by the way, you could do the same thing here with the maglev technology that is there for you to get."

(Reporting by Linda Sieg and Kiyoshi Takenaka in Tokyo; Editing by Simon Cameron-Moore and Andrew Roche)

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