Read the source material carefully before answering Question 1. Source material: Labour shortages in Japan Japan fact file 2022 Population 125m Total labour force including foreign workers 70m Foreign workers 1.75m Inflation rate 2.5% % of income saved 29% Japan has a high average age of population and a varied economic performance. It has a low birth rate, low inflation rate, good healthcare, high life expectancy and low unemployment rate. Fewer Japanese people enter the labour force each year. It is predicted that Japan's labour force will fall by 10 million by 2040. Many young Japanese people emigrate to Australia, Canada and the US in search of higher wages. However, Japan now experiences net immigration although foreign workers are currently only a small proportion of Japan's labour force. To achieve an annual economic growth rate of 1.2%, it has been estimated that the number of foreign workers would have to increase to 7 million by 2040. Some foreign workers are discouraged from working in Japan due to the requirement to pass a Japanese language test. Only the most skilled are allowed to stay for more than 5 years and to bring their families with them. Many Japanese industries are affected by labour shortages and the country's decline in population. For example, the fall in population has affected the quantity of furniture traded. It has also influenced the country's air transport industry. Air travel is the most important method of transport in Japan for foreign travel and long-distance internal travel. Japan's air passenger numbers follow a similar pattern to global air passenger numbers. Table 1.1 shows global GDP per head and global air passenger numbers between 2016 and 2022. Table 1.1 Global GDP per head and global air passenger numbers 2016 – 2022 Year Global GDP per head ($) Global air passenger numbers (billions) 2016 10217 3.8 2017 10745 4.1 2018 11289 4.4 2019 11 356 4.5 2020 10884 3.3 2021 12350 2.2 2022 13200 3.7 Demand for goods and services, including air travel, is influenced by how much people save. Japanese people save a relatively high proportion of their income. This has affected the country's inflation rate, current account balance of the balance of payments and its economic growth rate. Japan's macroeconomic performance is also influenced by the mobility of its labour force. There are several reasons why the mobility of Japan's labour force may change in the future. These include its ageing labour force and possible changes in education and training, house prices and the quality and price of transport. Answer all parts of Question 1. Refer to the source material in your answers.

Mark scheme

Marking points from the official mark scheme (Oct/Nov 2025). The mark or mark type is shown in brackets.

1. [1] 2.5% (1).
2. [2] Low birth rate (1) high life expectancy (1) good healthcare (1) young adults moving abroad (1).
3. [2] To gain high wages (1) enjoy a better living standard / able to purchase more goods and services (1).
4. [4] Logical explanation which might include: remove the Japanese language test (1) more foreigners would be able to work in the country (1) allow foreign workers to bring their families with them (1) foreign workers are more likely to settle in the country if they are not separated from their families (1) allow unskilled workers to stay for more than five years (1) if gain high wages / enjoy living in the country would not want to leave / attract workers who want to live permanently in the country / give workers the opportunity to stay permanently / increase international mobility of labour (1).
5. [4] D&S diagram: Axes correctly labelled – price and quantity or p and q (1). Original demand and supply curves correctly labelled (1). New demand curve shifted to the left (1). OR New supply curve shifted to the left (1). OR New demand curve shifted to the left AND new supply curve shifted to the left. Equilibriums – shown by lines P1 and Q1 and P2 and Q2 or equilibrium points marked as E1 and E2 (1).
6. [5] Expected relationship: Generally, a positive relationship (1) the higher the global GDP head, the higher the air passenger numbers (1). Supporting evidence: 2016-2019 GDP per head rose and air passenger numbers increased (1). Analysis of expected relationship: Higher GDP per head increases purchasing power / ability to pay for air travel (1) as people get richer, they travel more for leisure and business (1). Exception: 2021 (1) GDP per head rose but air passenger numbers decreased (1). Analysis of exception: May have been a time delay in people gaining confidence in flying after COVID-19 pandemic / other influences on demand e.g. air fares (1).
7. [6] Award up to 4 marks for logical reasons why it might, which may include: may keep inflation low (1) as spending will not be high (1) reduce (total) demand (1) reduce demand-pull inflation (1) may reduce imports (1) improve the current account of the balance of payments (1) provide finance for investment (1) firms able to borrow from banks (1) may enable households to finance future expenditure (1) on e.g. healthcare / education / provide for retirement / provide support for individuals in difficult times (1) may enable government to cut benefits, e.g. pensions (1) spend money saved on other priorities, e.g. healthcare (1). Award up to 4 marks for logical reasons why it might not, which may include: may lower total demand (1) reduce GDP (1) increase unemployment (1) cyclical unemployment (1) could cause a recession (1) may reduce investment as demand is low (1) reduce improvements in technology (1) Less indirect tax raised (1) may lead to reduced government spending (1).
8. [6] Award up to 4 marks for logical reasons why it might, which may include: Improvements in education and training (1) could increase skills / qualifications (1) increase occupational mobility (1) Improvements in transport / subsidised travel (1) could enable people to move to different areas (1) raise geographical mobility (1). Award up to 4 marks for logical reasons why it might not, which may include: Ageing population (1) may have out-of-date skills (1) more difficult to change jobs (1) reduce occupational mobility (1) may be more reluctant to move to a different area (1) reason (1) reduce geographical mobility (1) House prices may rise (1) making it difficult to move from areas with low house prices to areas with high prices (1).