Japan’s billion-dollar plan for couples to have more kids (and why money isn’t always the solution)

It is “now or never,” the Japanese prime minister warned, referring to the sharp drop in fertility in his country.

Fumio Kishida said a few weeks ago that his country is on the verge of no longer functioning as a society because of its historically low birth rate: For the first time in more than a century, the number of babies born in Japan fell below 800,000 on last year, according to official estimates.

In the 1970s, that number was more than two million.

“Drawing attention to policies related to children and raising children is an issue that cannot wait or be delayed,” Kishida told lawmakers, adding that it is one of the most pressing issues on the agenda this year.

While falling births are a fairly widespread phenomenon in developed countries, the problem is more serious for Japan as life expectancy has risen in recent decades, meaning a growing number of elderly people and fewer and fewer workers to support them.

In fact, Japan is the country with the oldest population in the world, after tiny Monaco, according to World Bank data.

It is very difficult for any country to sustain its economy when a significant part of the population is retiring, the health services and pension system are under maximum pressure and the number of people of working age is declining.

Faced with this problem, Kishida announced that will double tax expenditures from the government for programs that promote the birth rate by supporting the education of children.

That means government spending would increase to about 4% of gross domestic product (GDP).

However, Japanese governments have tried to promote similar strategies before, without getting the expected results.

demographic time bomb

Currently, the average number of children a Japanese woman has is 1.3, one of the lowest in the world (South Korea has the lowest at 0.78).

There are many causes of this demographic crisis. Some of them are common in developed countries and others are typical of Japanese culture. Between them:

These are some of the reasons that converge to discourage birth rates, explains Tomas Sobotka, deputy director of the Institute of Demography in Vienna, Austria.

“Japan has a punitive work culture that requires long hours.a high degree of involvement and high performance of the employees”, leaving little room for having children.

“It is clear that financial support to families can only partially address the reasons behind the very low fertility in the country,” he adds.

In addition, typical financial measures, says Sobotka, are not enough to significantly offset the high cost of having children.

Immigration as a possible solution

Japanese governments have rejected immigration as a potential solution to chronic labor shortages and mounting pressures on health and social security funding.

Rupert Wingfield-Hayes, former BBC correspondent in Japan, says “hostility to immigration has not abated”.

Only about 3% of Japan’s population is foreign-born, compared to 15% in other countries such as the UK.

“In Europe and the United States, right-wing movements point to him as a shining example of racial purity and social harmony. But Japan is not as ethnically pure as those fans may think,” explains Wingfield-Hayes.

“If you want to see what happens to a country that rejects immigration as a solution to declining fertility, Japan is a good place to start,” the correspondent concludes.

Giovanni Peri, founder and director of the Center for Global Migration at the University of California and a research fellow at the National Bureau of Economic Research in Cambridge, Massachusetts, says immigration is key to Japan’s challenge.

“Increasing the number of immigrants would be an effective way to counter population and labor shrinkage.”

However, he warns, “I don’t see any governments willing to accept a large influx of immigrants needed to grow Japan’s population.”

What is happening in Japan is part of a global phenomenon affecting developed countries.

From a demographic point of view, Peri says, an increase in migration flows, especially of young people, to advanced economies is desirable.

More migrants would prevent the size of the working population from shrinking further and would generate more tax revenue, argues the professor of economics.

Is money the solution?

The government of Japan has already made it clear that immigration is not their solution and decides to go for the money.

Prime Minister Kishida’s plan is to double government spending on childcare support programs.

But some analysts, such as Poh Lin Tan, a scholar at the Lee Kuan Yew School of Public Policy at the National University of Singapore, argue that in other Asian countries, such as Singapore, higher fiscal spending to boost the birth rate didn’t work.

In that country, the government is grappling with the relentless downward trend in fertility since the 1980s.

In 2001, it introduced a package of economic incentives to increase the birth rate that evolved over time.

Currently, Poh says, the package includes paid maternity leave, childcare subsidies, tax credits and rebates, cash gifts, and subsidies for companies introducing flexible work arrangements.

“Despite these efforts, the fertility rate continued to decline,” says the expert.

And just as it has declined in Japan and Singapore, it is happening in South Korea, Taiwan, Hong Kong and high-income Chinese cities such as Shanghai.

“The Paradox of Success”

In Singapore and other Asian countries, there is a kind of success paradox.

“The inability to raise the fertility rate is evidence less of ineffective pronatalist policies than of the overwhelming success of an economic and social system that heavily rewards achievement and penalizes lack of ambition”says Pooh.

For that reason, he believes, changes are also needed that are not dependent on financial incentives.

A better policy, the academic argues, would be to help couples who want at least two children reach their fertility goals, rather than win over the unconvinced and encourage pregnancies in younger women.

Stuart Gietel-Basten, professor of Social Sciences at the Hong Kong University of Science and Technology and Khalifa University in Dubai, agrees.

To really increase the fertility rate, he explains, you need to support people who already planned to have one child to have two.

“The reason fertility policies haven’t worked is because they don’t address the fundamental reasons,” says Gietel-Basten, such as fragile employment, unequal gender roles at home, discrimination at work or the high cost of living.

In this sense, “low fertility is a symptom of other problems”.

A society stuck in the past

Improving people’s living conditions is essential to boost birth rates, says Tomas Sobotka.

Measures such as more labor flexibility, good public childcare, well-paid parental leave or affordable housing.

But even all that, he warns, is not enough to significantly increase birth rates in Japan.

What the country needs is an even deeper transformation, because “Society’s family and gender norms and expectations remain rooted in the past”.

Often, she explains, “mothers are still seen as the only ones responsible for caring for the family, for housework, for the well-being, upbringing and educational success of their children.”

According to Sobotka, some countries in Europe achieved sustained increases in their birth rates.

To some extent it has happened Germanywhich has introduced a Scandinavian-style family policy over the last 20 years, improving working conditions and childcare for those who decide to have children.

Estonia he also had some success in applying a number of similar measures.

At least in Europe, “the countries where more resources are invested Long-term family policy they have higher fertility rates on average,” says the expert.

Francewhich is now one of the most fertile countries in Europe, has succeeded, according to Sobotka.

According to her experience researching the issue, adopting pronatalist policies with a “narrow focus” doesn’t work.

That happens when governments set specific fertility targets, centered on economic incentives for parents.

And they’re less likely to work if those financial incentives are “accompanied by restrictions on access to sexual and reproductive health or abortion,” the expert argues.

It remains to be seen whether Kishida’s plan in Japan to double fiscal spending to boost birth rates works in the near term.

If not, Japan may realize that it needs to transform deeper aspects of the traditional values ​​of Japanese society and adopt more flexible immigration policies. However, all that can take much longer.