How to make Japan's social security system sustainable into the future presents a major political challenge that both the government and political parties cannot escape. The rapid aging of the population — by 2025 the youngest baby boomers will have turned 75 — spells trouble for the social security system. While the cost of medical and nursing care services is mushrooming, the working-age population — which primarily shoulders the expenses of social security benefits through tax and social insurance premium payments — is set to decline, raising doubts about the sustainability of the system.
For the past decade or so, the government has grappled with measures to cope with this troublesome demographic scenario. It has pushed for greater efficiency in providing social security benefits while rectifying how people pay taxes and social insurance premiums to cover the expenses. It has also sought to reform the way in which welfare benefits are heavily concentrated on the elderly population and shift more benefits to the younger generations.
The Liberal Democratic Party's recent campaign promise to achieve social security for all generations toed this policy line. It makes sense to beef up child-rearing support as a measure to address the declining birthrate. However, it is questionable whether making pre-school education and day care services free for children — as Prime Minister Shinzo Abe pledged ahead of the Lower House election — is the right way to go about it. A mechanism based on income is in place to reduce the cost of kindergarten and nursery schools. If such services are made free for all children, high-income households may use the savings to give their children additional educational opportunities, possibly widening the disparity between the rich and the poor.