Japanese Prime Minister Fumio Kishida’s $25 billion package of measures to boost the birthrate of the country’s shrinking population is unlikely to be the game changer he has called for or a big vote winner should he call an early election.
(Bloomberg) — Japanese Prime Minister Fumio Kishida’s $25 billion package of measures to boost the birthrate of the country’s shrinking population is unlikely to be the game changer he has called for or a big vote winner should he call an early election.
The premier’s package promises spending levels per child on par with the support offered by Sweden. But experts warn his plan doesn’t tackle the structural flaws that place a heavy burden on women for raising children and lead many to put off the idea of starting a family.
Opinion polls indicate majority support for expanded handouts, but not on a scale that would convince Kishida that now is the time to go to the polls without considering other factors.
Most of the policies announced are focused on helping people who already have children or partners, and don’t help the people who aren’t at that stage yet, experts say. Without improving job prospects, wages and the general feeling that young people can’t afford to have a family, the government’s measures will only go so far, they said.
“Prime Minister Kishida probably knows the package isn’t on any ‘new dimension’ as he characterizes it,” said Junya Tsutsui, a sociology professor at Ritsumeikan University with expertise in Japan’s birthrate crisis. “The policies support those who have children, but it’s likely that they don’t really resonate with people who haven’t or can’t marry.”
Kishida’s package so far includes a range of measures, including expanding monthly child support payments of 15,000 yen ($107) for children up to 2 years old, and 10,000 yen for children aged 3 and above. He’ll extend it by three years until children graduate from high school and remove income caps for receiving support. From the third child, handouts will increase to 30,000 yen per month.
Another measure raises support for fathers who take paternity leave to the same level as their post-tax salary, with the aim of raising the percentage of men working in the private sector who take at least two weeks of paternity leave to 85% by 2030. Currently only 14% of them take the leave.
Other measures include improving access to childcare facilities and decreasing birth costs. In total the policies are expected to amount to around 3.5 trillion yen of spending or around 0.6% of gross domestic product. The Organization for Economic Cooperation and Development shows Japan’s existing support for families at around 2% of gross domestic product.
Sweden has the highest level of spending on family benefits among OECD members at 3.4% of GDP. The Nordic country has maintained a fertility rate above the OECD average, although the rate has been slowly decreasing.
For Japan, the real problem lies in the fact that so many young people are in low-paying, unstable jobs that don’t allow them the sense that they can afford to marry and have kids, said Tsutsui.
In a country where hardly any children are born outside marriage, raising wages will have the biggest impact in improving the declining birth rate, the academic said.
“A major barrier to marriage is the wage divide between regular and non-regular workers,” said Tsutsui.
Around 64% of Japan’s workers are regular employees, meaning they are full-time workers that enjoy job protection, higher pay levels and social security benefits. Some 36% are non-regular workers, an umbrella term for people working on fixed-term contracts, part-timers, or those dispatched from temp agencies. Pay levels for non-regular workers are around two-thirds of their regular counterparts, according to labor ministry data.
Among men in their early 30s, around 60% of regular workers are married, while only a quarter of non-regular workers have tied the knot, according to the cabinet office. That directly ties into a lower birthrate for the latter cohort.
Nobuko Nagase, a professor of labor economics at Ochanomizu University in Tokyo says non-regular employees on minimum wage earn only about 2 million yen a year for full-time hours. That’s barely enough to live independently, let alone support a family.
“Raising young people’s wages should be the very first thing that’s tackled in birthrate policies,” she said.
Japan’s overall pay levels are rising, but are being outpaced by inflation at a decades high. The results of spring wage negotiations showing much bigger increases have yet to translate into substantially higher pay in monthly data.
If the country doesn’t succeed in improving its declining birthrate, its population is set to roughly halve from 2004’s levels to around 64 million by 2100, according to the National Institute of Population and Social Security Research data compiled by the cabinet office. Along the way, Japan’s social security, pension and basic societal systems are likely to suffer.
It is also unclear whether the measures would serve as a major vote winner. In a poll conducted by TV Asahi from June 10-11, 53% of those who said they didn’t support Kishida’s cabinet cited a lack of positive expectations over his policies, far more than any other reason. Still, 54% said they were in favor of the expansion of handouts.
Kishida’s government remains coy on how they will be funded, promising to avoid adding to the burden on households. But economists wonder if the plans are sustainable without an increase in taxation.
“While the birthrate tackling measures don’t go beyond conventional policies, they involve a great deal of money,” said Takahide Kiuchi, economist at Nomura Research Institute.
“What’s really needed is a long-term perspective,” he said. “It’s difficult for people to have more children when there are no future growth prospects. What’s needed is an outlook where people can expect Japan’s productivity to rise and real income to increase.”
–With assistance from Erica Yokoyama.
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