Wednesday, June 21, 2023

Kishida's population strategy

Introduced Without A Firm Basis

By Takuya Nishimura
, Editorial Writer, The Hokkaido Shimbun
The views expressed by the author are his own and are not associated with The Hokkaido Shimbun
June 19, 2023. Special to Asia Policy Point.

Prime Minister Fumio Kishida announced his plan, the Children’s Future Strategy Policy, for dealing with Japan’s declining population on June 13. Recognizing the urgency of turning the current trend around, Kishida offered an “acceleration plan” to fix the problem of a declining birthrate by 2028. His policy package, which includes subsidies for families with children, met immediate skepticism as it did not include credible budgetary resources. Experts on Japan’s demography believe that policy is misguided, arguing that the measures wrongly focused on the existing children instead of encouraging childbirth.

Financial benefits for children currently are available only to those families beneath an income cap. The acceleration plan removes that cap. Benefits will also be expanded to include families with a high school student in addition to those with a middle-school student or younger. Every child between the ages of 0 and 2 will receive ¥15,000 monthly, and she or he between 3 and 18 will receive ¥10,000. The amount will be raised to ¥30,000 monthly for the third child or more. For the families with a student in higher education, the plan streamlines the application process for student loans and scholarships. The system of nursery schools will also be improved for the workers with small children.

Recommending that all fathers take time off from work to help raise new-born babies, the plan aims for a society in which male workers’ recess for a new baby is nothing strange. The policy sets a target of 85% of all male workers taking the new-baby leave by 2030 and offers public financial support to guarantee nearly 100% of the family’s income. Mid- or small businesses that provide their own additional measures for the new-baby leave will receive subsidies from the government.

Those policies require certain amounts of budgetary resources to be viable. One thing clear is that the plan requires ¥3.5 trillion annually for the concentration period between FY2024-26. While the plan assumes ¥1.5-1.6 trillion for financial supports for children, ¥700-800 billion for improving nursery services, ¥700-800 billion for the families with double income and ¥500 billion for poverty or abuse on child, there is no explanation of how the government will fund the budget. First, Kishida rejected any tax increase, including a consumption tax, and stressed the necessity of reforming the whole structure of current expenditures. One option on the table is the creation of a new budget for child support, supported by cuts in the social security budget or reforms to the social insurance system. Because the social insurance system supported by payments from both employers and employees, increasing those payments may contradict the current governmental policy of raising worker salaries. Although the plan mandates that the government find stable financial resources by the end of FY 2028 and offers a bridge bond until then, the anxiety about possible additional tax burdens on old agers cannot be removed.

Kishida’s seriousness about the decline of interest in parenthood, which the policy describes as “the biggest crisis we are facing,” is not baseless. The Ministry of Health, Labor and Welfare released the annual population trend statistics of 2022, which indicate that Japan’s total birth rate – the average number of children a woman will bear in her lifetime – hit a record-tying low of 1.26. While a nation needs 2.07% to maintain its population, the statistics shows consecutive drops for in the past seven years. The number of new-born babies in 2022 was 770,747, falling below 800,000 for the first time.

One of the biggest questions on Kishida’s demographic policy is whether the measures for existing children are effective enough to change the negative trend on childbearing. According to the study by Kenji Kamata, Assistant Professor at Meiji University, non-marriages or late marriages account for 90% of the downward trend and the remaining 10% is the decline in the number of children each married couple has. A policy to support child-raising accordingly will not improve the birth rate. Rather, closing the gap between the regular and non-regular employment and remedying the disparity between male and female workers are more to change the course of demographic downturn.

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