How does the Japanese government revive the birth rate?

Article tags EconomyLabourJapan

By Vivian Tokai, North Asia director

The Ministry of Health, Labor and Welfare (MHLW) released the preliminary report of Vital Statistics on 28 February. The number of births in 2022 was 799,728 down 5.1% from the previous year and the lowest on record, marking the seventh consecutive year of decline.

Prime Minister Fumio Kishida stated at the Budget Committee of the House of Representatives on 15 February that he aims to double family-related social spending, including child allowances and childcare services, from 2% of GDP in FY2020 to 4% of GDP in FY2022. If the ratio doubles from 2% to 4% of GDP, it will increase by approximately 10 trillion yen to a total of 20 trillion yen.

Although Japan’s family-related social spending is on the rise, it is still far behind European countries such as France (2.85%), Sweden (3.4%), and Hungary (4.7%), which have raised their fertility rates.

The Administration for Children and Families, which will serve as the command post for child policy, will be inaugurated next month. It will respond swiftly to such issues as the enhancement of child-rearing support, abuse prevention, and poverty alleviation.

A more comprehensive overview of the measures to combat the declining birthrate is expected to be carried over to the “Children’s National Program Outline” to be decided by the Cabinet in the fall. How quickly and thoroughly will the measures be implemented? The government’s resolve, which has even created a new agency, will be put to the test.

The government has appropriated approximately 10 trillion yen as a child-related budget. If it is carried out as the prime minister said it would be, another 10 trillion yen will be required to be added to this amount. No matter how you slice it, this reminds us of tax hikes, such as that of the consumption tax.

The low birth rate and consequent population decline is a very serious problem that affects Japan’s national strength. Things being what they are, the government should take every possible step. However, there is a limit to the issuance of deficit-covering government bonds, and there is an urgent need to formulate and implement a growth strategy to raise tax revenues.

The Kishida cabinet has identified innovation, regional revitalization through DX, carbon neutrality and economic security as targets of its growth strategy. To date, no particular results have yet been seen. When can we see tangible results?

Tue, 28th Mar 2023 Article tags EconomyLabourJapan