Japan’s low birthrate and ageing population pose an urgent risk to society, the country’s prime minister, Fumio Kishida, has said, as he pledged to address the issue by establishing a new government agency.

According to a UK paper, birth rates are declining in many developed countries, but in Japan, the issue is particularly acute because it has the world’s second-highest proportion of people aged 65 and over, after the tiny state of Monaco, according to World Bank data.

“The number of births dropped below 800,000 last year, according to estimates,” Kishida told lawmakers in a policy address marking the start of a new parliament session on Monday.

“Japan is standing on the verge of whether we can continue to function as a society,” he said. “Focusing attention on policies regarding children and child-rearing is an issue that cannot wait and cannot be postponed.”

The conservative leader said his policies – including launching the new children and families agency in April – were designed to support parents and ensure the “sustainability” of the world’s third-largest economy.

Kishida added that he eventually wanted the government to double its spending on child-related programmes. “We must build a child-first social economy to reverse the [low] birthrate,” he said.

Japan has a population of 125 million and has long struggled with how to provide for its fast-growing number of elderly residents.

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Birthrates are slowing in many countries including Japan’s closest neighbours, owing to factors including rising living costs, more women entering the workforce and people choosing to have children later.

Official data showed last week that China’s population shrank in 2022, for the first time in more than six decades.

Japan’s previous efforts to encourage people to have more babies have had limited impact despite subsidies for pregnancy, childbirth and childcare. Some experts say government subsidies still tend to target parents who already have children rather than removing difficulties that are discouraging young people from starting families.