Tackling Japan's declining birth rate is a pressing issue for the country. But even though the government has vowed to take countermeasures "of another dimension," it has gone no further than merely listing policies, nor has it specified the resources for funding these measures. The government's approach is utterly irresponsible.
At a meeting of the Children's Future Strategy Council, an expert panel set up by the government, a draft plan of measures to be addressed over a three-year period starting fiscal 2024 was unveiled. A budget of around 3.5 trillion yen (approx. $25 billion) per year is expected to be necessary to implement the proposed measures.
Prime Minister Fumio Kishida has explained that he will outline the fiscal resources for doubling the child care budget by the time the government's Basic Policies for Economic and Fiscal Management and Reform are formulated in the coming days.
The newly mapped out framework for fiscal resources includes the creation of a "support fund system" to implement child-related policies and reforming social security spending.
While society as a whole, including companies, is supposed to contribute to the support grant, the details will not be finalized until the end of the year. It has yet to become clear just how exactly the aid will be financed.
Securing of funding sources postponed
Under the draft plan, a special account for managing the child-related budget will be created and the shortfalls will be covered through the issuance of "special child public bonds." These measures will continue until stable funding sources are secured in fiscal 2028. But if the expenditure to support child rearing ends up burdening future generations with debts, it will be defeating the purpose.
To enhance the sustainability of Japan's social security programs, it is essential to review spending on them. Yet it is not easy to curb social security expenditure. As society ages, social security costs keep snowballing, with more public funds being injected.
The government has curbed the rises in social security spending by driving down drug prices and boosting user charges every year. If social security expenditure is further compressed, medical and nursing care benefits could shrink. Due to strong opposition within the ruling parties, the specific amount of reduction was not included in the proposal.
At the end of this year, work toward finalizing a revision of the medical service fees and nursing care rewards is scheduled. The concurrent revision is made once every six years. Amid surging prices and personnel costs, medical associations and other related organizations have been calling for raising the medical and nursing care fees.
Regardless, the government insists that it is seeking to put practically no additional burden on the public by carrying out thorough spending reforms by fiscal 2028. Such a plan is totally unrealistic.
The failure to deepen discussions on funding sources may stem from the government's premise of narrowing the range of options. Prime Minister Kishida has from the very start ruled out raising the consumption tax or other taxes. The government placed a constraint on itself to raise necessary funds within the bounds of social security expenditure.
Government officials are considering raising public medial insurance premiums to divert the funds to the "support grant" for child policy. Yet medical insurance is for patients to receive services without concern when they get sick or injured by paying insurance fees in advance. It would be problematic to divert the funds to child-rearing, which is not what they're designed for.
When it comes to securing fiscal resources for boosting the nation's defense capabilities, Prime Minister Kishida envisages covering shortfalls with tax hikes if spending reforms fail to help finance all of the costs. In contrast, it remains unclear how serious he is about securing the necessary resources for addressing the declining birth rate. He cannot help but being regarded as giving a low priority to the issue.
Kishida has stressed that the period up to 2030 will be "the last chance" for tackling the falling birth rate issue. He could be labeled insincere if he is avoiding talks about funding sources for child policy and the public's share of the burden for it as he is conscious about the possibility of dissolving the House of Representatives for a snap general election later this year.
Priority must be given to stabilizing youth employment
If the nation's birth rate falls sharply, it could distort the demographics and undermine social sustainability.
The draft plan incorporates enhancing child allowances and bolstering financial assistance for workers on child care leave. Income caps for receiving child allowances will be abolished, and 10,000 yen (approx. $72) per month per child will be paid up to high school age. From the third child onward, the benefit will be doubled to 30,000 yen (some $220) per month per child from the current 15,000 yen (roughly $110).
From the standpoint of raising children as a society, it is necessary to improve measures to support children and child-rearing. Yet it remains to be seen if these measures targeting families with young children will help put the brakes on the flagging birth rate.
A major factor behind the fall in the birth rate is the rising number of people who remain unmarried. While marrying and giving birth are matters of individual freedom, some people cannot tie the knot even if they desire to, due to economic reasons such as unstable jobs and low incomes.
When it comes to men below 35 years of age, the marriage rate of nonregular workers stands at a mere one third of that of regular workers. It is said that regular employees can earn 100 million yen (approx. $720,000) more in lifetime earnings than their nonregular counterparts. While the draft plan proposes raising wages and turning nonregular employees into regular workers as part of measures to improve their income, these proposals are not concrete enough and are insufficient.
The sagging birth rate in Japan is a major challenge that could affect the shape of the nation, and politicians are responsible for providing the path toward curbing the trend. The government is urged to work out the details of its child policy and funding sources to secure public understanding.