Japan's social security system is in the most critical state among those in other developed countries, as the aging of the population and depopulation are simultaneously progressing at an unprecedentedly fast pace.
Prime Minister Shinzo Abe described the country's declining birthrate and aging population as "a situation that should be called a national crisis" when he dissolved the House of Representatives on Sept. 28 to call a snap general election. However, this issue has been repeatedly debated for over a decade, and his mention of the matter as if it is a recent crisis was bizarre.
Most of the funds for medical and nursing care services are currently being spent on people aged 75 and over. In 2025, all baby boomers will exceed the age of 75. Several years from now, nursing care expenses will double from the current level.
On the other hand, the population of the working generation, which supports the social security system, is rapidly declining. Japan's population 50 years from now is estimated at 88.08 million, and the number of people of employment age will have fallen by about 40 percent. Furthermore, there is a fear that there will be a shortage of over 370,000 nursing care workers.
It is only natural, therefore, that concern has spread among members of the public that the country's medical and nursing care programs may collapse. This drives people to save money rather than spend, adversely affecting the country's economy as a whole.
It is no easy task for the government to draw up and implement countermeasures against the declining birthrate while dealing with the aging population to dispel concerns about the future.
The planned consumption tax increase from the current 8 percent to 10 percent is aimed at achieving the sustainability of Japan's social security system. Nevertheless, the Abe government has postponed it twice. Moreover, the government intends to divert an increase in revenue from the sales tax hike, which is now scheduled for October 2019, to cover the costs of making preschool education free. In other words, the government aims to reform the social security program, which prioritizes support for elderly people, to cover all generations.
It is essential to support those raising children and help boost the birthrate to prevent a decrease in the population of those who will support Japan's future. But before implementing such measures, the government must show specific steps it will introduce to overcome the aging society.
Diverting an increase in tax revenue from the sales tax hike to make preschool education free instead of repaying debts is tantamount to issuing education bonds. Such a measure would leave a massive amount of government debt to future generations.
The Party of Hope, a newly founded political party led by Tokyo Gov. Yuriko Koike, is insisting that the planned consumption tax increase be frozen. Instead of resorting again to long-used populism to cater to the wishes of voters who oppose an increase in their tax burden, the party should draw up policy measures that can respond to actual crises Japan faces.
The Abe government has put up such slogans as "women's empowerment," "raising the 'desired' birthrate (a birthrate that would be achieved if all people have the number of children they wish to have) to 1.8" and "eliminating the day care waiting list." However, there is no denying that some of these slogans were ad hoc and out of focus.
The Abe administration had declared that it will eliminate day care waiting lists by the end of fiscal 2017. However, the number of children on waiting lists has increased for three consecutive years, forcing the government to postpone the deadline for achieving this pledged goal by three years. This is because the government made the calculation in a sloppy manner, without accurately grasping the need for day care services as the definition of children on the waiting list differs by local body.
The Abe government also proposed to extend the period of child care leave to three years in an effort to promote women's empowerment. The administration ended up retracting the plan, however, after coming under fire for making such a proposal without understanding the reality that women cannot easily return to work after taking a three-year leave of absence.
All social security systems would fail without a long-term perspective based on an understanding of the situation of beneficiaries and their sentiment as well as accurate data.
The Liberal Democratic Party (LDP), Komeito and the Democratic Party of Japan (DPJ), which is the predecessor of the now largest opposition Democratic Party (DP), agreed in 2012, when the DPJ was in power, to raise the consumption tax from 5 percent to 8 percent, and then to 10 percent. The triparty discussions on the issue were based on multiple predictions calculated by the National Commission on Social Security, which analyzed various data on the medical and nursing care programs as well as the pension programs under the government of Prime Minister Yasuo Fukuda.
To plan a social security system that covers all generations, it is indispensable to accurately predict the demand for day care services, analyze detailed data on the need for compensation for child care leave and their efficacy, among other subjects, and hold multidirectional discussions.
Even if these measures were to be effective in raising the birthrate, it would take newborn children at least 20 years before they could play an active role in supporting Japan's society. Before then, we need to point out that securing a workforce and financial resources to respond to the "2025 crisis" is an urgent task.
Japan's social security system would be unsustainable unless not only the working population but also wealthy senior citizens shoulder appropriate financial burdens to support it. The government should consider all possible measures, such as expanding inheritance taxes and taxing pension benefits, in addition to the sales tax raise, to require all generations to share the burden of maintaining the social security system.
Political parties have shied away from proposing unpopular policy measures to require taxpayers to bear extra financial burdens whenever they face Diet elections. The triparty accord on the consumption tax increase is on the verge of being neglected. Each party should be reminded that dodging unpopular policies has led to the current critical situation.
To sustain the medical and nursing care systems, the government needs to implement policy measures that would increase the burden on taxpayers. Voters should ascertain which party is seriously facing such a reality.