Japan’s PM Kishida unveils new childcare plan amid talk of election

TOKYO – Japanese Prime Minister Fumio Kishida unveiled on Tuesday a package of wide-ranging measures aimed at reversing the country’s dwindling birth rate.

He said the problem needed to be tackled as an ageing population threatens the world’s third-biggest economy.

The announcement of his flagship policy comes amid market speculation that Mr Kishida will dissolve Parliament this week and call a snap election. That is a move that could heighten calls from within his ruling party for big spending.

“Now is the last chance to reverse the downtrend in childbirth by the early 2030s,” Mr Kishida told a televised press conference.

“The low birth rate is a massive problem that concerns our country’s society and entire economy and can’t be put off.”

With measures such as bigger payouts to families with children and providing homes for hundreds of thousands of such households, Mr Kishida said he hoped to

double childcare spending

by the early 2030s, from about 4.7 trillion yen (S$45 billion) now.

The package may help his party appeal to the public, fanning speculation of an early election.

Although an election for Parliament’s powerful Lower House is not due until late 2025, Mr Kishida, who swept to power in October 2021, is keen to boost his grip on power in the party ahead of a leadership race in September 2024, analysts say.

He sidestepped queries on plans for a snap election. He said numerous factors would govern the decision as the approaching end of the Parliament session could make for a fluid political situation.

“I want to be sure that I can assess the situation appropriately,” he added. “I would like to refrain from commenting further on this matter.”

Some opposition lawmakers may threaten to submit a no-confidence motion against Mr Kishida’s Cabinet by the end of the current parliamentary session on June 21, which could trigger a snap election.

Funding sources

Japan’s birth rate has been on a steady decline

despite a series of government initiatives to reverse the trend. The rate fell to a record low of 1.26 in 2022 from 1.57 in 1990, government data shows.

The number of births in 2022 was less than 40 per cent the annual number of births during the second generation of baby boomers, who were born in the early 1970s.

Mr Kishida’s plan would see the government earmark about 3.5 trillion yen annually for the next three years for childcare allowances and support for those taking childcare leave.

The government will also urge companies to allow employees to choose more flexible working styles such as taking three days off a week, according to a draft of the package obtained by Reuters.

The government has yet to outline how it would fund the measures, stoking fears of a worsening of Japan’s already tattered finances.

On Tuesday, Mr Kishida once again ruled out the prospect of a near-term tax hike, saying the funding gap would be filled by the issuance of special childcare bonds.

The government will raise more from social insurance premiums – a move that could backfire on corporate efforts to raise wages – while also curbing increases in social security spending.

The government will work out the details of securing stable sources of funding by year end, officials have said.

It was “inappropriate” to criticise the government for pushing back a decision on funding sources, Mr Kishida said.

Analysts, however, doubt the package will do much to stem a chronic decline in the birth rate and Japan’s rapidly ageing population.

“While the steps could help families with children, the real problem that must be dealt with is how to support low-income households unable to get married,” said Mr Toru Suehiro, chief economist at Daiwa Securities. REUTERS