Japan's Finance Ministry proposes cuts to local government workforce as population drops


The Finance Ministry on Wednesday issued a set of proposals on the reform of local finances, including a call for cuts to the number of local government employees in line with the country’s shrinking population.

According to the package, local governments should streamline clerical duties by using artificial intelligence and taking other measures in order to maintain their administrative services as they reduce the number of workers.

The proposals were presented to the day’s meeting of a subcommittee of the Fiscal System Council, which advises the minister of finance.

The council plans to reflect the proposals in its policy recommendations, set to be compiled shortly.

In the package, the Finance Ministry said that it will become difficult for local governments to hire employees at the current pace, due to manpower shortages in both the public and private sectors as the population shrinks.

Based on future population estimates, the ministry said that local governments will likely be able to maintain a certain number of employees per resident even if the total number of local government workers in general administrative jobs is reduced by 30,000 by 2025 — from some 920,000 at present.

It also called on local governments to boost efficiency in medical services, citing current large gaps between prefectures in medical costs per resident.

In addition, the ministry underlined the need for reforms to the huge budgets local governments have earmarked for health insurance programs and public hospitals.

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