In a New Year address, Japan’s longest serving prime minister, Shinzo Abe, stressed his ambition to revise Japan’s pacifist constitution and realize an “all generational” social security system before his third term expires in September next year.
With the Tokyo Summer Olympics and Paralympics around the corner, Abe also expressed his hope of pulling off a “wonderful and exciting tournament,” one that “can let children dream about the future.” Japan will be hosting the global event for the first time in 56 years. Speaker of the House of Representatives Tadamori Oshima added that the Tokyo Olympics was a chance to show the world Japan’s “diverse cultures” and the “true image of Japan,” which includes reconstruction efforts since the 2011 East Japan earthquake and tsunami disaster.
On policy issues, Abe said he “will go ahead with major reforms that will shape our country, and beyond that I see constitutional revision.”
But the government’s biggest challenge is stabilizing revenue to keep the country’s social security system sustainable. According to Cabinet Office data from the 1950s, there were 12 people aged between 20 to 64 supporting each elderly person aged over 65 – or a ratio or 12:1. However, the figure is expected to drop to 4:1 in 2050 and without a drastic overhaul the current system is headed toward bankruptcy.
The dismal population projections are becoming difficult to ignore. The Ministry of Health, Labor, and Welfare announced that only 864,000 babies were born in Japan in 2019, making it the first time births fell below 900,000 since records began in 1899.
The government’s solution is the contentious “all generational” social security system, which aims to “drive reforms towards a social security system in which all generations can feel secure as we challenge the decreasing birthrate and aging population right in front of us.”
The core issue highlighted is the bias toward the elderly in the welfare system. An interim report compiled in December by the “All Generation Social Security Review Conference” chaired by Abe stated that the current social security system leads to intergenerational conflict, with welfare benefits mainly helping the elderly while burden is shouldered by those active in the labor force.
Japan has embraced the new “longevity” era as centenarians become increasingly common. As a result, the government has adopted tougher policies on workers nearing retirement age, requesting they take on additional work beyond the retirement age of 65. The new policy allows companies to extend employment to workers who are healthy and motivated up to the age of 70.
In the last seven years the Abe administration has increased the consumer tax rate twice. Most recently, in October, it was raised from 8 percent to 10 percent in an effort to raise funds (an estimated 13 trillion yen, or $120 billion, in total) to improve desperately needed child care and preschool education programs. But overall that’s a drop in the bucket — preliminary calculations show total social security spending this financial year was 124 trillion yen and will reach 190 trillion yen in 2040.
In order to keep ballooning public health costs in check, social security reforms will target baby boomers commonly referred to as “advanced seniors” who will be over 75 in 2022. The policy will increase the medical self-pay patio to 20 percent from 10 percent for those earning a certain level of income from 2022.
The reform debate has attracted criticism calling it a painful combination of increasing burdens and curbing benefits, forcing people to tighten their purse strings. While Abe stresses that social security should be supported by all generations, critics say the responsibility of large corporations and the government is retreating. Opposition parties have called for reform of a tax system that favors big business and the rich into one based on “pay for capacity” in addition to cutting back military spending and large public works projects, which could secure 23.5 trillion yen in the future.
It’s unclear as yet who will be leading Japan into its uncertain future. Some ruling party lawmakers have suggested altering the internal LDP laws to enable Abe to serve a fourth term. The same tactic was deployed to allow Abe to run for a third term when the limit was set to two terms. However, Abe has maintained he has no intention of continuing when his third term comes to an end.