By Linda Sieg
TOKYO, June 13 (Reuters) - Four decades after the first forecasts that Japan's population decline was inevitable, Prime Minister Shinzo Abe is drawing a demographic red line with a target to halt the slide at 100 million people by 2060, a 20 percent drop from current levels.
But holding the line will likely be difficult and costly unless Japan opens the door wider to long-term immigration, a step policy-makers say they have no intention of taking. A proposal floated among Abe's advisers to increase the number of immigrants to 200,000 a year by 2050 was rejected.
"What the prime minister is thinking now is to let foreign workers in for a limited period because of the shortage of construction workers in the run-up to the Olympics in 2020," said ruling Liberal Democratic Party (LDP) executive Seiko Noda.
"As for the idea that in 50 to 100 years, this country won't be able to function unless foreigners are allowed to stay more permanently - no one is thinking about that," she told Reuters.
Many Japanese have long prided themselves on their cultural homogeneity, although Japan has tiny minorities within its population of about 127 million. With strict immigration laws, less than 2 percent of the population are foreign nationals.
The population has been shrinking for the past three years, and demographic forecasts make grim reading.
The number of newborn babies fell to a record low of 1.03 million in 2013 despite a slight uptick in the fertility rate, as the number of women of childbearing age shrank.
If the trend continues, the population will fall below 100 million in 2048, and to about 87 million by 2060. At that point, 40 percent of people will be 65 or over.
Such figures have raised the spectre of a Japan where ghost towns dot the countryside and huge numbers of elderly huddle in Tokyo, government coffers collapse under the fiscal strain, and the nation's global influence fades.
"If we do not alter the trend of a rapidly shrinking, ageing population, there is a risk the economic scale will ... fall into a contractionary spiral," the government said in a draft of economic policies to be released this month.
With a labour shortage already biting, those policies include steps to increase the numbers of highly skilled foreigners as well as expand a "trainee" programme for blue-collar workers widely criticised for human rights abuses.
But authorities insist the steps are not part of an "immigration policy".
"That is probably the worst policy," said LDP lawmaker Taro Kono, deputy head of an LDP committee on foreign workers and an occasional critic of his party's policies.
"If you stay five years, you don't have to be a good citizen, you don't have to practice the Japanese language. The Keidanren (business lobby) is pushing this (expanded trainee programme) because every five years, wages go back to zero. They are trying to introduce cheap labour," he told Reuters.
Plans to fill labour shortages caused by the shrinking population by increasing the participation of women and the elderly in the work force will not suffice, Kono said.
"The government is not telling the truth, so a lot of people don't want to look at immigration," he said.
A cultural allergy to diversity and negative impressions of the experience of other countries have combined to make authorities and the public wary of immigration.
Xenophobic voters with a presence on the Internet have amplified those concerns, making conservative politicians even more reluctant to address the topic.
"Japan must ultimately open its doors and become open to immigrants," said Hiroya Masuda, a former cabinet minister and member of the advisory panel that rejected the proposal to raise the intake of foreigners to help halt the population slide.
"But if we suddenly said 'we'll allow immigration', people are not ready for that," Masuda told Reuters.
Abe's plan to stabilise the population at 100 million people by 2060 is new, but politicians have long been promising steps to help women juggle work and childcare in order to fill labour market gaps and bear more children, but with limited impact.
Japan's fertility rate, the average number of children a women bears during her life, was 1.43 last year. That was above a record low of 1.26 set in 2005 but far below the 2.1 needed for a stable population.
Even hardened sceptics, however, say the focus on the population problem looks different this time, now that Japan's mostly male corporate managers are feeling the pain of labour shortages as the economy picks up on Abe's recipe of hyper-easy monetary policy and spending.
"Previous debate about working women focused on gender equality," the LDP's Noda said. "This time, what Mr Abe is talking about is the economy."
The government is shying away from explicit fertility rate targets, not least because they would have uneasy echoes of Japan's wartime "Beget and Multiply" policy.
But experts say stabilising the population even at about 90 million without a significant increase in immigrants would mean getting the fertility rate to 2.1, and the sooner the better.
The Japan Center for Economic Research, a private think-tank, estimates that would require spending an additional 13 trillion yen ($127 billion) on childcare benefits annually over 15 years.
That amount would equal 2.6 percent of gross domestic product (GDP) and the revenue from a 6 percentage point rise in the sales tax. Japan now spends just under 1 percent of GDP on such support. Major changes in life-styles, work patterns and mindsets would also be required.
In a proposal rejected by the government advisory panel, former Bank of Japan Deputy Governor Kazumasa Iwata, who heads the think-tank, suggested Japan aim for a fertility rate of 1.8 while gradually allowing more immigrants, to 200,000 a year by 2050, increasing the percentage of foreigners to 6 percent.
Iwata said initial costs associated with immigrants would be more than offset by the benefits. "At first, there is a cost for infrastructure and the like. But these foreigners will work and pay taxes so in the long-term, it is a plus for the Japanese economy and that plus becomes larger," he told Reuters.
Japan's experiments with immigration have hardly been encouraging. A programme allowing in Brazilians of Japanese descent, thought easier to assimilate, as a source of cheap labour ground to a halt when the economy stalled in 2008, prompting the government to pay for many to go home.
But the nascent debate suggests attitudes may be slowly changing.
"People in the more conservative parts of the government are starting to realize there aren't a lot of options left," said Kathy Matsui, chief Japan strategist at Goldman Sachs.
"When push comes to shove, they don't really have a choice and that is forcing changes to the mindset at the margins." ($1 = 102.3500 yen) (Editing by Robert Birsel)
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