Photo/Du Wei (NBD)

April 3 (NBD) -- Japan may face a shortage of more than 11 million workers by 2040, underscoring the economic challenges the nation faces as its population ages rapidly, according to Bloomberg citing a study by independent think-tank Recruit Works Institute.

The working-age population is expected to rapidly decline from 2027. The worker supply is expected to shrink by about 12% in 2040 from 2022, even as labor demand remains steady, the report said.

Japan's population of more than 125 million has been declining for 15 years and is projected to fall to 86.7 million by 2060, according to AFP.

An earlier research by the Value Management Institute said Japan needs 6.74 million foreign workers by 2040, or nearly four times the number it had in 2020, to achieve an average annual growth of about 1.24%.

NBD noticed that following the release of the report by Recruit Works, a Japanese Cabinet minister in charge of tackling the country’s declining birthrate unveiled a draft proposal Friday aimed at reversing the downtrend, including increased subsidies for childrearing and education and a salary increase for younger workers to incentivize marrying and having kids.

Prime Minister Fumio Kishida pledged to increase the number of international students in Japan to 400,000 and lift the figure for Japanese students studying abroad to 500,000 in 2033, reported the Asahi Shimbum.

In addition to encouraging births, Prime Minister Fumio Kishida is also looking for ways to boost the working population. He pledged to increase the number of international students in Japan to 400,000 and lift the figure for Japanese students studying abroad to 500,000 in 2033.

The plan is part of the government's effort to send more Japanese students to the international arena while drawing and retaining overseas students to address the domestic labor shortage.