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The Yomiuri Shimbun Prime Minister Fumio Kishida speaks at a press conference in Tokyo on Tuesday.
Jiji Press
11:34 JST, June 17, 2023
TOKYO (Jiji Press) — The government on Friday adopted its annual basic economic and fiscal policy guidelines, which included a target of doubling the amount of annual fiscal spending on child-related policy measures by the early 2030s.
The government said measures for children and child-rearing were “the most effective investments for the future.”
“We’ll reverse the low birthrate trend through a drastic strengthening of child-related policies,” Prime Minister Fumio Kishida told a meeting of his Council on Economic and Fiscal Policy.
The guidelines warned that “it is difficult to maintain our country’s economic and social system” without taking action against the falling birthrate, and said that the period until the 2030s was the last chance to reverse it.
Over three years from fiscal 2024, the government will expand child allowances, decrease financial burdens such as from childbirth and medical care and promote child care leave for men.
It plans to carry out an overhaul of government spending to secure funds for financing such measures. On the goal of doubling the amount of child-related spending, the guidelines do not say how it will be achieved.
The guidelines also urged structural measures to raise wages, such as aid for reskilling and other labor market reforms, in order to “revive a large middle class.”
A related action plan included detailed measures for labor market reforms, including making at least 50% of financial aid related to reskilling be in the form of direct government aid to individuals in the next five years. Currently, over 70% of financial support is distributed via corporations.
It also included a review of the tax system relating to retirement income, which places a significantly lighter tax burden on people who have worked at the same company for 20 years or more. The government said that the system was impeding smooth labor mobility.
On the state of government finances, the guidelines said that Japan will shrink the amount of spending that ballooned during the COVID-19 pandemic. Although the government maintains its goal of achieving a primary budget surplus for the central and local governments by fiscal 2025, the guidelines did not include a target year as in last year’s version.
The guidelines suggested that tax increases to pay for a planned boost in defense spending will not start at least until 2025. Previously, the government said the tax increases would start as early as 2024.
The guidelines also included a plan for the government to spend on decarbonization and other key areas over multiple years, to encourage private-sector investments. It said that Japan will increase investments in next-generation semiconductors and other goods that are important from an economic security perspective, with the goal of becoming a central part of global supply chains.
For measures to promote investments from households, which have over ¥2 quadrillion in assets but mostly keep them as cash and deposits, the guidelines called for compiling a policy plan this year to improve the capabilities of asset management firms. Japan will aim to become a leading nation in asset management, it said.
The government will boost the development of generative artificial intelligence while responding to related risks, it added.
