by ISABEL REYNOLDS & EMI URABE
JAPAN will spend around ¥3.5 trillion (RM115.65 billion) on policies meant to bolster its sliding birthrate, Prime Minister (PM) Fumio Kishida said on June 1, without fully explaining how he will fund the plans.
“This will bring our country’s spending per child on families to the level of Sweden,” which is one of the highest among developed economies, Kishida said after a meeting of his children’s future strategy panel. The advisory panel released details of the extra annual spending that will include expanded handouts for families with children.
Kishida has warned the country’s population crisis threatens to undermine its ability to function as a society. He’s promised a raft of measures without specifying where the heavily indebted country will find the money for them.
Japan’s Finance Minister Shunichi Suzuki told reporters last Friday that the government isn’t considering a sales tax hike to fund the measures and that Kishida isn’t thinking of any other increases in levies.
Imposing new taxes would hurt government support amid speculation that Kishida may call an election in the coming months. While he need not hold the vote until 2025, renewing his mandate would help him maintain his grip over his ruling Liberal Democratic Party ahead of a party leadership election next year.
“In securing funding for birthrate policies, we must not damage the economy or reduce incomes for young people or those raising children,” Kishida said. “By reforming spending and making the maximum use of the existing budget, we will aim not to create any additional real burden.”
He added the government would issue bonds to make up initial shortfalls in funding.
“We’ll mull the specifics of fiscal reforms toward the end of the year,” Suzuki said. He added that a new framework will be created to secure stable funding, without going into details.
“If you think about an election that may be held, this is not the time to be talking aloud about who will bear how much of a burden,” said Masato Koike, economist at Sompo Institute Plus.
Almost 30% of Japan’s population is aged 65 or over. Last year the number of children born fell under 800,000 for the first time since records began in 1899.
Japan announced last Friday that the total fertility rate, or average number of children borne by a woman in her lifetime, had also fallen to its lowest on record at 1.26 in 2022. While South Korea now has a lower fertility rate, the trend began earlier in Japan and the population has been shrinking for more than a decade.
As a result of these trends, a study by independent think tank Recruit Works Institute published in March found Japan may face a shortage of more than 11 million workers by 2040. — Bloomberg
- This article first appeared in The Malaysian Reserve weekly print edition