Japan Will Spend Billions To Boost Its Birth Rate

Japan says it will spend $25 billion a year on stipends, childcare, family leave, and other measures to encourage couples to have children as its population shrinks and ages rapidly. 

The fertility rate, or the average number of children born to a woman in her lifetime, was just 1.2565 in 2022, Japan’s health ministry said – a new low, and well below the fertility rate of 2.07 needed to keep a country’s population stable. Birth rates in Japan have fallen in each of the last seven years. 

"The youth population will start decreasing drastically in the 2030s,” Prime Minister Fumio Kishida said this week while visiting a daycare facility, Reuters reported. “The period of time until then is our last chance to reverse the trend of dwindling births." 

Japan is just one of many developed economies where flatlining birth rates and older populations pose a risk to the labor force, future innovation, and fiscal health, as smaller cohorts of young workers struggle to pay the pensions of the old. Last year U.N. data showed that birth rates in China - which spent decades pushing policies to hold back population growth - had fallen to the point at which its population would begin to shrink.

The changes have happened fast. In 2010, 98 countries had fertility rates below 2.1, the Economist reported. By 2021 the number had grown to 124. By 2030, the UN says, the number of countries in the sub-2.1 club might hit 136. 

In 2022 Italy’s fertility rate was 1.3. South Korea had a fertility rate of just 0.8. The U.S. fertility rate stands at 1.7.

Japan’s plan to boost its birth rate includes a monthly allowance of 15,000 yen (around $107) for each child up to two years old, and 10,000 yen a month for every child from the age of three – all the way through high school, Deutsche Welle reported. Stipends will be available to rich and poor alike.

Parents currently receive a one-time payment of 420,000 yen at the birth of a child. It costs an average of 473,000 yen, or $3,400, to have a baby in Japan, Deutsche Welle reported.

Kishida’s government also plans to open new day-care centers that will be available to all children, whether or not their parents are working. And starting in 2023, the government will provide four weeks of paid leave to support families when parents have to stay home from work to care for their children. Subsidized fertility treatments are also part of the plan. 

Last year, in an effort to shore up its social security program, Japan proposed changes to national pension rules that would increase the number of years each citizen has to pay into the system from 40 to 45 years.