Japan To Increase Childcare Spending to Challenge Declining Births

Japan has announced plans to increase its spending on childcare. The government aims to reach levels comparable to countries like Sweden to combat the country's declining births. Toward that end, it will double its current childcare spending by the early 2030s. The move is outlined in a draft plan for comprehensive child-rearing support.

Prime Minister Fumio Kishida views the present moment as the last opportunity to reverse the declining births before 2030. He highlights the pressing demographic challenges that pose long-term economic growth concerns for Japan. For example, the number of newborns fell below 800,000 in 2022 and is projected to further decrease to 500,000 in 2070. That is according to the National Institute of Population and Social Security Research.

In addition, Japan's population of approximately 125 million is expected to dip below 100 million by 2056.

JAPAN Forward's Galileo Ferrari takes a look at what's in the plan and interviews four fathers for their perspectives on the government's proposal.

What the Plan Envisions

Prime Minister Fumio Kishida expressed his commitment to strengthening child-rearing support during a June 13 government panel meeting. In it, he stated that Japan's efforts would be on par with Sweden, which leads among OECD members in terms of family benefits expenditure per child. He also emphasized the significance of this step, calling it "epoch-making."

His proposed plan envisions an increase of approximately ￥3.5 trillion JPY ($25 billion USD) in annual spending. The goal is to achieve this over the next three years, by fiscal 2027. However, funding sources for this expansion have yet to be determined. Moreover, Japan currently faces significant public debt.

The draft plan aims to expand the scope of child allowances and implement other measures to support families. It is expected to be incorporated into an economic and fiscal policy blueprint scheduled for unveiling in the second half of 2023.

To measure the doubling of spending, the government is considering two options. One is the budget allocated to the relevant government agency, currently around ￥4.8 trillion JPY (about $30 billion USD). The other is measured by state support per child.

While Kishida's childcare policy has gained public support and helped his Cabinet's approval ratings, opposition parties have criticized it. They say the government spending is excessive during a time of political speculation surrounding a potential snap election.

Finding the Funding

Kishida affirmed that spending reform would be a priority to secure the necessary funds, with a stable funding source determined by fiscal year 2028. Government bonds are also under consideration to offset any shortfalls.

In addition, a support scheme funded by companies and other entities would be established.

Ruling out tax hikes, Kishida assured the public that no additional burdens would be placed on the Japanese people. Instead, he instructed ministers to allocate more funding towards addressing child poverty and abuse and expanding support for children with disabilities or in need of medical care.

In 2019, Sweden's public spending on family benefits accounted for approximately 3.4 percent of its gross domestic product (GDP). Meanwhile, Japan's equivalent ratio stood at 1.7 percent. However, it should be noted that Sweden and other European nations typically have higher tax rates and social security contributions than Japan.

Insights from the Fathers We Interviewed

JAPAN Forward interviewed four fathers living in Japan. Among the respondents, all four expressed a preference for investing the government's funds in education. Specifically, they focused on preschool education.

In their interviews, they explain why.

Finding a Good Preschool

Halayko (45) is the father of a 3-year-old son. He appreciates the financial support and acknowledges its practicality. He explained his perspective:

"I think just throwing money at the [declining births] situation will be a plus-alpha. But I think more issues that we had after my son was born, and throughout [raising him], trying to get him into a decent preschool nearby was actually more of an issue than money.

"I think a lot of people with kids already know. You know, some people obviously struggle with raising children with prices and everything like that. More so than that, trying to find a good preschool is also a really big issue for a lot of parents.

"Sure, throwing money at parents is great, I'll take it, buy some clothes, go on a trip, and use it for groceries. But that alone is not an end-all and be-all fixing the [declining births] problem for sure."

Compensation in Childhood Education

According to Dr Tatetsu, a significant factor contributing to the declining births is inadequate compensation in the childhood education industry. He is the 39-year-old father of a 2-year-old son. The lack of workers in the industry leaves families with no choice but to prioritize work above other options, he says.

"The salary for nursery school workers is too low. Even for teachers, too. I think maybe that's the basic point. That's what should be improved."

He highlighted that not only nursery teachers but also administrators receive low salaries. Their average annual income was ¥3.9 million JPY ($28,000 USD) in 2022. Per month, in some cases, individuals earned less than ¥200,000 JPY ($1,440 USD).

Making 'Great Childcare Available'

Hachiro (43) is the father of a 2-year-old daughter. He echoed the sentiment of investing in preschool and education. Meanwhile, he also emphasized the importance of supporting the workforce and industry with nationally allocated funds.

"People realize raising kids is hard. It's a lot of work. I think it's certainly fair that we should have better childcare.

"Childcare workers should get paid a lot more. If anything, as much as [the government program would pay] the parents. I think it's more about paying childcare people better so that there's more of them as well.

"What would make parents' lives easier more than anything is having great childcare available."

Changing the Income Bracket Eligibility System

Dart (46) is the father of a 17-year-old daughter, a 14-year-old son, and an 11-year-old daughter. He highlighted the challenges related to family income and tax brackets.

Depending on a family's financial situation, he explained, career advancement becomes more difficult because it impacts eligibility for government benefits. That, he pointed out, adds strain to the overall dynamics.

"We're in a certain income bracket where if you are over a certain amount you are seen as making too much to receive government subsidies. But in reality, if you have more than two children, you don't have [enough] money. If you have three or four kids, you leave Tokyo.

"In other words, [you go] where you have far more families with more than two kids.[I know] because that's where we started. And most of the people in the village we lived in had three kids.

"So [moving up in your career], you end up just being hurt. You don't want to go forward because you know you're going to get too much money [for assistance]. Then you're not going to have enough to do what you need to do."

Big Challenges for Single-Income Families

Single-income families face heightened pressure and stress in sustaining themselves. Meanwhile, simultaneously they face the risk of being disqualified from financial benefits if their income exceeds certain thresholds.

This dual challenge adds to the complexities and burdens faced by such families.

Halayko recounts a recent situation.

"I was just talking to a friend the other day, he wants to start a family with his wife but they're worried about the timing because maybe his job isn't so financially stable.

"So [what if] there were options for that, to have a stipend or allowance? It depends on the amount. If the government is going to give you an extra 100 bucks a month, then 'Thank you,' I'll go buy groceries for the week.

Most families now have to have a double income just to survive here in Japan as well. And that's not even just in Tokyo. [To have kids,] you have to have enough money coming in that one parent doesn't need to work for a couple of years."

Focus On Society's Priorities

Given the immense pressure in ensuring financial stability as a sole working parent, the focus shifts to determining society's priorities. And also finding ways to promote and support such a lifestyle.

Dart reflects on the challenges he faced as the primary income earner. He expressed hope for improved societal and workplace support for young families.

"I really wish I could've had more time when the kids were smaller just to sit at their eye sight, to play with them, and not feel pressure like I had to work. I had to provide all the time.

"That's a societal issue. It's something where you have to have people think differently, work differently. Companies have to change their policies, the expectations have to change."

Socializing Childcare

Hachiro argues that addressing the decline in births requires considering a broader perspective. It should encompass factors such as parents' ability to return to work, the availability of quality nursery care for children, and the need to provide stronger incentives for the nursery school industry. By focusing on these interconnected aspects, he believes a more comprehensive solution can be achieved.

"Giving people money won't help them go back to work. I think a lot of people do [want to go back to work]. Especially women who want to go back to their careers, to have careers. And I think the way to do that is to pay childcare people more so that they do a better job and parents could feel better about leaving their kids there.

"That's who you should give the money to. You should give money to childcare run by the government: 'socialized child care'."

How the New Program Can Best Support Families

Insights from the fathers living in Japan shed light on several key points regarding declining births and childrearing support. They are a useful guide for how the government should consider utilizing the funds.

The respondents expressed a preference for investment in education, particularly preschool education, to aid in reversing the population trend.

They brought attention to the challenges of inadequate compensation for childhood education industry staff. In addition, they highlighted the struggles faced by single-income families.

Furthermore, the interviews underscored the importance of improved societal support, workplace considerations for young families, and incentives to strengthen the nursery industry.

Taking these perspectives into account can guide efforts to address declining births and promote a more supportive environment for families in Japan.

Author: Galileo Ferrari