Commentary / Japan

Addressing Japan's demographic problems

by Haruaki Deguchi

What is the most fundamental challenge confronting Japan? It must be the policy steps addressing the declining number of births in this country. If the number of births in a group of animals keeps falling, that group will likely become extinct. The 5,000-year history of mankind since the invention of letters shows that without exception, no country or region that experienced medium- and long-term population decline has ever prospered.

Among the Group of Seven countries in 2016, France had the highest total fertility rate — the average number of children born to a woman in her lifetime — at 1.96, followed by the United States and Britain at 1.80, Canada at 1.60, Germany at 1.50, Japan at 1.44 — which is 184th among the world’s 203 countries — and Italy at 1.35. Japan’s fertility rate is indeed quite low. Meanwhile, the fertility rate is 2.33 in India and 1.62 in China. Northern European countries have fairly high rates — Sweden at 1.85, Norway 1.72 and Denmark 1.71.

What lies behind Japan’s low fertility rate? First, the social position of women is low. The United Nations gender gap index for 2018 puts Japan at 110th among the 149 countries covered — the lowest among the Group of Seven members. As illustrated by the large wage disparity between men and women, not only is the social position of women low but much of the burden of housework, child rearing and nursing care for elderly members of the family weighs heavily on women. This is the root cause of the sluggish fertility rate in this country. Accordingly, the first policy priority for us is to introduce a thorough quota system in every segment of society to shore up women’s position in society.

Second is to beef up policy support for women to pursue both career and family life. Quite a few managers at Japanese companies tell young female employees to design their career plans and think carefully about when they want to have children. Given the current situation in the workplace, they are effectively forcing women to choose either to have a career or children. If no babies are born to a group of people, that group is destined to go extinct. On the other hand, people who do not work cannot sustain an independent life. People must both work and have children. It is not a matter of choosing one or the other. Such an outmoded way of thinking must be stamped out.

As far as numbers are concerned, France has been successful in supporting women in their pursuit of a career as well as raising children. Its policy is known as Chirac’s three principles: (1) a woman should not suffer any additional economic burden from giving birth; (2) day care services for babies and young children will be provided free of charge (with nobody on waiting lists for nurseries and kindergartens); and (3) child care leave must be treated as continuation of work and there must be no demotion for women coming back to work after giving birth and raising children.

After France introduced these principles, along with a civil solidarity pact that prohibits discrimination against children born out of wedlock, its fertility rate, which went down to 1.66 in 1994, recovered to about 2.00 in just 10 years. If Japan were to introduce Chirac’s three principles in their entirety, the nation could expect to see a higher fertility rate. We should proactively implement a good policy like this.

Japan should also promptly introduce a system that allows a couple to have different surnames. Among the 35 OECD member states, Japan is the only country that legally requires a married couple to have the same surname. As a country, we should be ashamed that the United Nations has recommended as many as three separate times that Japan end this system.

Since Japan is the most advanced among the G7 countries in terms of the graying of its population with a low rate of childbirth, the nation should explore every conceivable policy measure to create a society that has the most favorable conditions in the world for giving birth and raising children.

There is a cynical view that since the absolute number of women of child-bearing age in Japan has become so small, any improvement in the fertility rate will no longer lead to an increase in the population. If we follow this view, we may come to the conclusion that accepting immigrants is more important. But is that realistic? Will talented people from abroad gladly come to Japan, a country where women have a low social standing and measures to support women in both building a career and raising children lag far behind the rest of the world? The key to attracting highly talented people from all over the world is to build a society without gender discrimination that also provides adequate support for childbirth and care.

The third issue is whether the government is spending enough money on measures to deal with family-related issues. In 2015, the ratio of social policy spending for family-related issues to GDP was 2.23 percent in Germany, 2.92 percent in France, 3.64 percent in Sweden and 3.79 percent in Britain. Japan’s corresponding figure was a meager 1.31 percent.

The figure for the U.S., which was very low at 0.69 percent, cannot be used as a reference since its population is growing the fastest among major industrialized economies because it accepts large numbers of immigrants. The corresponding figure for public spending on education in 2017 was 7.55 percent in Sweden, 5.54 percent in Britain, 5.46 percent in France, 4.99 percent in the U.S., 4.81 percent in Germany, 4.08 percent in Italy and 3.47 percent in Japan, which was 114th among the 154 countries surveyed.

Some people may criticize the education ministry or the welfare ministry for cutting spending at a time when Japan is facing a rapidly graying population, but these ministries are not to blame. Behind all this is the nation’s primary balance deficit.

Japan’s national burden rate — the ratio of the burden of tax and social insurance premiums to national income — was 42.6 percent in 2017, the seventh lowest among the 34 OECD members. Among the G7 countries, France had the highest corresponding figure of 67.1 percent, or the second highest among the OECD countries, followed by Italy’s 63.7 percent, Germany’s 53.2 percent and Britain’s 46.5 percent. The U.S. figure was 33.3 percent. Other OECD data show that Japan’s social welfare benefits amounted to 23.7 percent of its GDP in 2011, 15th among the OECD members and above the OECD average of 22.1 percent. These figures mean that while Japan’s tax and social insurance premium burdens are relatively small, it offers a medium level of social welfare benefits.

This practice cannot be sustained much longer. Japan has filled the gap by issuing government bonds, but it is becoming harder to continue to rely on debts to cover the deficit. Unless Japan raises the tax and social insurance premium burden, and improves its primary budget balance, the government cannot make necessary policy investment for its future — spending on family-related expenses and education. These are the deep-rooted challenges that must be addressed to successfully deal with the problem of the nation’s declining birthrate.

Haruaki Deguchi is the president of Ritsumeikan Asia Pacific University in Beppu, Oita Prefecture. A popular lecturer and author of more than 30 books, he founded Lifenet Insurance in 2008 after a career spanning nearly 35 years at Nippon Life Insurance Co.