Mumbai: Japan's labour force will contract 7 per cent by the year 2015 due mainly to its ageing population, a new report by the International Labour Organisation (ILO) said.

Labour supply in the developing countries of Asia like China, South Korea, Sri Lanka and Thailand is also expected to slow down over the same period, the report, `Visions for Asia's Decent Work Decade: Sustainable Growth and Jobs to 2015', said.

"These countries will face emerging labour shortages and other social and economic consequences of their ageing workforces," the report said.

The challenge for these countries is to extend working life and enhance the employability of older workers. The ILO suggested a lifelong learning process in order to promote decent work at later stages in life, while at the same time providing a mechanism for skills and knowledge transfer to the next generation of workers.

Japan has been facing a fall in labour supply since 1999 when new retirees outnumbered new labour market entrants, the report pointed out.

For the whole of Asia, the study said, the availability of young labour would decline by about 8 million or 2.3 per cent between 2006 and 2015.

"Taking a longer-term perspective, the pattern of ageing is abundantly clear: the pyramid will change substantially in the coming decades, and the region will gradually become significantly older," it said.

Nevertheless, the study predicted that Asia's vast labour force, at 1.8 billion in 2006, constituting about 59 per cent of the world's total, is expected to continue to grow, albeit at a slower pace.