The Cabinet on Tuesday approved a package of policies designed to tackle Japan’s long-pressing issue of a declining birthrate, although it was short on details on how to secure the necessary funding for an increased child care budget.

Since Prime Minister Fumio Kishida vowed early this year to introduce “unprecedented steps” to stop the fall in the number of births and the fertility rate in order to head off a severe long-term economic impact, the public has been waiting to hear what that would involve.

“Depopulation is an imminent problem that cannot be shelved and affects our nation’s overall social and economic activities,” Kishida said at a panel meeting Tuesday at the Prime Minister’s Office in Tokyo.

“The rest of the 2020s will be our last chance to attempt to reverse the trend.”

The prime minister had previously stressed that the government would shore up financial support for parents, while his administration’s economic policy would focus on boosting the income of young people, as many of them are hesitant to have children, thinking they can’t afford to raise them. As part of that, Kishida pledged to raise the budget for child care policies over the next three years, with around an extra ¥3.5 trillion ($25 billion) to be spent each year.

The government aims to expand the distribution of allowances to child-rearing households by abolishing the income cap.

Currently, parents with children up to 2 years old — and under a certain income threshold — receive ¥15,000 a month per child, with that figure dropping to ¥10,000 per month for children between the ages of 3 and 15. But under the new plan, the income cap will be abolished, with the ¥10,000 benefit expanded to cover children up to 18 years old, and the amount increased to ¥30,000 per child through the end of high school for the third child and beyond.

The government also plans to increase subsidies to cover the salaries of those who take child care leave, as well as increase funding for childbirth costs.

But it remains unclear how the government will fund such a large budget, and the prime minister has faced criticism for seemingly shelving the issue for now.

Kishida told parliament recently that the government will conduct a thorough analysis of its spending in order to find the necessary money, thereby avoiding an additional burden on taxpayers. He said that the government would come up with a road map on how it will secure the funds.

Opposition lawmakers have criticized Kishida for failing to show a stable source of funding, saying that the prime minister will eventually need to rely on tax hikes.

The promotion of four-day workweeks was also included in the policy guideline, with the aim being to give child-rearing households more time to focus on parenting.

Previous measures to stop the decline in the number of births and the fertility rate have failed to bear fruit.

Last year, Japan’s fertility rate dropped to a record-tying low of 1.26, marking the seventh straight year of decline, data released from the health ministry earlier this month showed. The total fertility rate — the average number of children a woman will give birth to in her lifetime — was down from 1.30 in 2021.

Japan also saw a record-low number of newborns in 2022 at 770,747 — down 40,875 from 2021 and the first time the figure had fallen below 800,000. The number is less than one third of the roughly 2.7 million logged during the first baby boom in 1949.

The government is growing increasingly alarmed by the situation, as the decline in the number of newborns appears to be speeding up. Although the number of newborns in 2000 had dropped by only about 3% compared with 1990, the figure in 2020 was down by about 20% compared with a decade before.

At this rate, the government predicts that the number of newborns will fall below 500,000 around the year 2060.

If Japan is unable to stop this trend, “it would be difficult to maintain our socioeconomic system, which would significantly impact our status as the world’s third-largest economy,” the policy guideline to counter the issue says.

Source : The Japan Times (14-6-2023)

(Economic Counsellor, Tokyo)