It’s no secret Japan has the world’s most rapidly declining population. Last year less than 800,000 babies were born, resulting in a rapid decline that experts hadn’t predicted until 2030.
Japan has reached an historical turning point. In eight years time it’s believed the number of women of child bearing age will fall to a point where population decline cannot be reversed. In a New Year public speech, Prime Minister Kishida Fumio stressed that the birth rate had fallen “to the brink of not being able to maintain a functioning society,” and the time to act is now.
Japan’s birth rate is one of the lowest in the world. The fertility rate, which indicates the number of children a woman will have during her lifetime, fell for the sixth consecutive year to 1.30 in 2021.
Japan’s labor force is also shrinking amid its rapidly aging population. This is prompting calls from politicians to increase the retirement age to 68 and have seniors re-join the labor force on a part time basis. Japan’s life expectancy is among the highest in the world, with 1 in every 1,500 people in Japan over 100 years old.
The government will unveil “radical” countermeasures to try to boost the birth rate, including more financial assistance to help with child rearing, preschool education, nursing care services, and workplace reforms. The government is set to raise the lump sum baby bonus to 500,000 yen (around $3,800) starting in April to cover childbirth expenses, which cost 470,000 yen on average but over 500,000 yen in Tokyo. A financial support package valued at 100,000 yen is also being devised to help cover the cost of postnatal necessities such as strollers, diapers, and infant formula.
Japan has been praised for being a land of hard workers, with a social norm of working for long hours. But the economy has been criticized as being “labor focused” rather than “people focused.” Japan’s lifetime employment system means employees are under pressure to choose their company over their family.
A lack of equal child rearing responsibility from male partners is a major barrier to starting a family or having more children. Women tend to leave the workforce after having their first child and are then essentially locked out of high-skilled jobs due to Japan’s rigid corporate culture, which prefers to hire fresh graduates. This leads to gendered parenting roles, in which women are burdened with solo child care and household responsibilities.
Growing pessimism among young people about the future in combination with Japan’s stagnant economy is also accelerating the population crisis. In his New Year address, Kishida said it is necessary to help younger generations have a better outlook for the future through allowances for children under 18 and general wage increases.
While China’s population shrank in 2022 for the first time in six decades, its economy is projected to grow by 4.6 percent in 2023. Japan, on the other hand, has downgraded its economic growth projections for the next two years as it struggles to rebound from the peak of the COVID-19 pandemic.
Kishida’s plan to combat population decline focuses on government spending. He proposed “smart spending” by reforming the social security system and reviewing ineffective subsidies and integrating growth strategies. But Japan’s public debt is double the size of its annual economic output – the highest of any OECD country. Raising much needed public revenue requires future consumption tax hikes that will be borne by younger generations.
At the same time, Kishida has also unveiled a plan to raise Japan’s annual defense spending from 1 percent to 2 percent of GDP by 2027. That’s still more government spending that will need to be funded, and may compete with his vision for expanding cash offerings to new families. Recently, the commitment to bolster defense spending while also postponing a decision to double spending on children-related projects due to difficulty securing financial resources has sparked public debate.
Over the years Japan has had a patchwork of family policies that have failed to lift the birth rate. Kishida’s general plan is an expansion of existing policies, but the key difference this time appears to be stronger political intent and a new priority status.
Kishida may also be banking on the new policies to help battle a sinking approval rating. Some experts have criticized Kishida, saying he is raising concerns over the survival of the nation in order to deflect attention away from domestic political problems.
Concrete policies addressing Japan’s declining population are expected to be laid out in June.