The government plans to slash child-rearing allowances for single mothers in a bid to reduce rising social security outlays caused by increasing divorce rates in families with young children, government sources said Thursday.

The plan, which would drastically cut the length of eligibility for allowances for single mothers, would be incorporated in proposed legislation to be submitted to the Diet in mid-March. The government plans to implement the new allowance system from fiscal 2003.

At present, a single mother with an annual income under 2.05 million yen gets a government allowance of 42,370 yen per month. The monthly allowance drops to 28,350 yen for those with annual incomes between 2.05 million yen and 3 million yen.

According to a draft outline of the proposed legislation, the government would stop paying full child-rearing allowances when a child turns 5. Under certain conditions, a single mother currently receives child-rearing allowances until the child reaches 18.

The draft says the government will try to ensure that single mothers would be able to receive more than 50 percent of the allowances after the child turns 5 in the first five years of the reform plan.

After that, allowances will be gradually reduced.

The draft says the revisions are being made to encourage greater self-sufficiency among single mothers.

The government will offer incentive payments of about 300,000 yen to employers who hire single mothers as full-time workers.

The government will give about 5 million yen to single mothers who start their own businesses.

Another measure encouraging single mothers to be self-sufficient is financial aid for educational training for single mothers covering up to 80 percent of the costs. Children of single mothers will also be given priority when enrolling in nursery schools.

The outline also stipulates that a divorced father has an obligation to contribute to the cost of raising his children. However, no consequences for nonpayment are specified.

A record 708,400 single mothers received 260 billion yen in child-rearing allowances in fiscal 2000, according to government statistics.