[ Keidanren ] [ Policy ]

Finding Specific Answers to the Problem of the Declining Birth Rate

A Call for an Integrated Approach to System Reform by Government, Businesses, Communities, and Families

March 19, 1999

  1. Introduction
  2. The speed at which Japan's birthrate has been falling is without parallel in any other country. The economic and social implications of Japan's reduced birthrate include lower economic growth, an increased social security burden on the working-age population, labor shortages, and reduced educational capacity in regional communities. Widespread public unease about the lack of preparedness for a lower birthrate and an aging population is one of the reasons cited for the present economic downturn. The time has come for genuine national debate about responses to the problem of the falling birthrate, both as a social issue and from the perspective of promoting domestic demand over the long term.

    The reasons for the decline in the birthrate have already been exhaustively discussed in various forums. We need now to turn our attention with a sense of urgency to more specific measures to deal with this problem.

    Keidanren (Japan Federation of Economic Organizations) has produced this paper for two reasons. First, we wanted to clarify our basic position on the issue of the declining birthrate. Second, we wanted to offer specific recommendations on future responses by the government, businesses, communities, and families.

  3. Basic Thinking on the Declining Birthrate
  4. Given the declining birthrate, Japan's population is bound to start declining. We must formulate responses that take this fact as a given. But there are also numerous underlying issues that should not be neglected. Our aim in developing a response to the birthrate issue should be to ease the impact of Japan's transition to a society with a low birthrate and an aging population in line with the following fundamental principles.

    Decisions about marriage and birth must be left to individual choice.

    Individuals must be free to make their own decisions about marriage and birth. Coercive measures based on population policies must not be allowed to distort individual values or lead to reverse discrimination against those who wish to have children but are unable to do so.

    But we need to stop the birthrate from declining further.

    Japan now has one of the lowest birthrates of any advanced nation. A continuing decline in the birthrate could deepen the seriousness of many national problems, including those of pensions and health care. Some way must be found to halt the present rapid fall in the number of births.

    We must create an environment in which those who wish to have children feel confident about doing so.

    The basic solution is to reform those systems that are likely to become unsustainable because of the declining birthrate and to create systems that capable of surviving in a low-birthrate environment. Keidanren has made some recommendations along these lines already, calling for radical reform in such areas as public and corporate pension systems.
    There are also factors that make it more difficult for people to bear and raise children. The principal focus of our response to the falling birthrate, therefore, should be the removal of these obstacles and the creation of an environment in which those who wish to have children feel confident about doing so.

  5. Specific Responses to the Declining Birthrate
  6. In line with the basic thinking set forth above, Keidanren offers the following specific recommendations on the roles of government, businesses, communities, and families.

    1. The Role of Government
      1. Enhancing and Reforming Child-Care Systems
        The inadequacies of child-care systems in Japan have been the subject of debate for many years. There are still problems. They include the large number of children on waiting lists for admission into child-care facilities, especially in major cities, and the inability of existing facilities to meet the diverse needs of those who use them.
        As far as waiting lists are concerned, the Ministry of Health and Welfare appears to have provided sufficient funding in its budget for fiscal 1999 to overcome the problem and we look forward to steady progress. Local governments will also need to do everything possible to eliminate waiting lists.
        Steps are also being taken to respond to the diverse needs of users. In fiscal 1995 the government drew up a five-year emergency program for child care and has since launched a number of initiatives. These include the development of multifunctional child-care centers and the promotion of both extended and temporary child care. However, the level of implementation of these diversified child-care services is still far from adequate; public child-care services in particular are far behind the private sector in this respect. Solving this problem will require effort in the following areas.

        Increased emphasis on private sector initiatives
        To ensure that the services provided match the needs of users, we must create a competitive environment in which operators of child-care centers are encouraged to be creative and innovative. There needs to be an increased emphasis on private-sector initiatives in this field.
        Priorities from this perspective include the abolition of the regulations that ban the operation of child-care centers from being contracted out to private companies, a review of the operational funding system under which large subsidies are paid only to approved child-care centers, and a further review of the minimum standards for child-care centers. However, some sort of child-care standards must be imposed to ensure children's sound development.
        Consideration should be given to the introduction of a voucher system so that subsidies can be provided to the users rather than to the providers of child care. To assist users with the task of choosing a child-care center, the Internet and other forms of information technology should be employed in the disclosure of information about child-care centers.
        There is also strong demand for flexible child-care services that are not tied to particular times and locations, such as home-based services provided by "child-care mamas" and baby-sitting services. Efforts should be made to increase the availability of such services.

        Closer coordination between kindergartens and child-care centers
        Another priority for the improvement of child-care support services is the development of closer coordination between kindergartens and child-care centers. These are supervised by different government departments. In June 1998, the Education-Child-care Facility Liaison Council was established to foster closer communication between the Ministry of Education and the Ministry of Health and Welfare and to make sure that policies implemented in these areas are effective. This council has decided to examine a number of issues, including the role of public subsidies to kindergartens and child-care centers and the percentage of costs that should be borne by users. It has already implemented joint training programs for kindergarten teachers and child-care workers. We hope that initiatives such as these will lead as quickly as possible to the achievement of closer coordination and communication between kindergartens and child-care centers.

      2. Economic Support for Child Raising
        The fiscal 1999 tax reform bill provides economic support for child raising and education in the form of permanent tax relief through an increased deduction for dependents. The 1999 pension reform bill provides for the exemption of employers from contributions under the Employees' Pension system for employees who are on child-care leave. And the budget adjustment group established by the Liberal Democratic Party and the Komeito has just reached agreement on the inclusion of expanded child-care allowances in the budget for fiscal 2000 and on the expansion of scholarship programs.
        Child care is not an issue that can be approached solely from an economic perspective. Yet it is a fact that child care imposes an economic strain on many families. Thought needs to be given to support measures, including changes to the tax and pension systems. However, care must be taken to ensure that such measures are compatible with the overall direction of reform of these systems.

      3. Creating Residential Environments Amenable to Raising Children
        In urban areas in particular, it is difficult to secure housing that provides the sort of space required for raising children. Poor housing conditions clearly discourage people from bearing and raising children. This is apparent from the fact that birthrates are especially low in prefectures with major cities and that Tokyo's birthrate is the lowest of all.
        The creation of residential environments amenable to the raising of children will depend on urban development plans designed to achieve effective high-intensity utilization of land in inner-city areas and reduce the distances between the places where people work and live. Furthermore, the introduction of a fixed-term housing lease system is essential to the provision of high-quality rental housing. We look forward to the early passage of the amendments to the Law for Land Lease and and the House Lease currently before the Diet. Steps should also be taken to reduce construction costs through the easing of regulations and other means.
        Parks play an essential role, both as play areas for children and also as places for discussion and contact among parents. Accordingly, the development of parks is an important priority from the viewpoint of a creating an environment in which people feel confident about raising children. In fiscal 1996 the government launched the Sixth Seven-Year Urban Park Development Plan. This calls for the provision of approximately 9.5 square meters of park per capita by the end of fiscal 2002 (7.5 square meters at the end of fiscal 1997). Another goal in the plan is to raise the percentage of people who live within walking distance of a park to 65% (58% at the end of fiscal 1997). We hope that the government will do everything in its power to ensure that these goals are achieved. Consideration should also be given to community access to the grounds of child-care centers on days when the centers are closed.

      4. Other Measures
        If we assume that the birthrate will continue to fall, it will be necessary to minimize the effects of the anticipated decline in the working population by creating a diversified range of employment opportunities through the easing of labor-related regulations and through the provision of support to small enterprises. The diversification of job opportunities and employment formats could be an effective way to counter the effects of a lower birthrate, as it would then be easier to combine work with child raising. During its current session the Diet will deliberate on bills calling for the liberalization in principle of the regulations concerning the provision of temporary staffing and the operation of employment agencies. We hope that these bills will be passed into law without delay.
        The government should also seek to broaden the discussion of the birthrate issue by implementing active public information campaigns on the actual state of the declining birthrate and the anticipated consequences. It will also be necessary to ascertain the true causes of the falling birthrate through expanded research activities.

    2. The Role of the Business Sector
    3. The business sector has an extremely important part to play in the development of responses to the falling birthrate. The shrinkage of the working population is expected to result in labor shortages in the near future. In this context, it is essential for businesses to amend the rigid employment practices of the past so that people can reconcile work with child raising. Specifically, action is needed in the following areas.

      1. Reform of Management and Workplace Attitudes
        It is important for businesses to be aware of their role in coping with the falling birthrate and to participate in countermeasures. The first requirement will be to change the attitudes of business executives and employees.
        Business executives need to recognize that child-care support and other forms of assistance can enhance corporate vitality by helping employees to reach their full potential. In the workplace, companies will need to show proper understanding and consideration toward employees who are trying to reconcile work with child raising. For their part, employees should work to improve their efficiency and productivity.

      2. Effective Operation of Employment Systems that Allow Work to be Combined with Child Care
        We need to create flexible and diversified employment systems for people who wish to remain in employment while raising children. For example, companies should diversify their employment formats through such changes as expanded mid-career hiring and the use of part-timers. They should also prepare more flexible working arrangements, including the expansion of flextime systems, the use of home-work arrangements, and limited-area recruitment (providing assurance against long-distant transfers). Other concepts that merit consideration include the extension of the age range within which reduced working hours are available for those raising children (currently available only to those with children aged under one) and the introduction of child-care time systems (systems that allow workers to take a certain amount of time off during working hours to care for children).
        Most large companies already have systems of child-care leave. They should also consider systems to provide workers on leave with information and to support employees in their transition back to work.
        Though many companies have introduced these measures on an institutional basis, in many cases they are not being used well. Steps are needed to ensure that the systems operate effectively.

      3. Fair and Reasonable Personnel Evaluation and Remuneration Systems
        Another priority is the development of personnel evaluation and remuneration systems that do not disadvantage those raising children and that provide equal treatment for men and women. This will require the establishment of systems to ensure that personnel evaluation is both fair and reasonable. Efforts in this area will lead to reasonable performance evaluations and companies will benefit in terms of their ability to attract workers from a shrinking labor market.

      4. Products and Services to Reduce the Burden of Housework and Child Raising
        Companies can also help to reduce the burden of child raising and housework by developing and supplying products and services. Examples include dishwashers, barrier-free housing, and outside child-care and creche services. The fact that many people find housework and child raising burdensome indicates that there are expanding business opportunities in this area. We hope that companies will react positively by supplying attractive goods and services.

    4. The Role of Communities and Families
    5. Traditionally housework has been carried out mainly by women in Japan. Today, however, there are more women in paid employment and it is likely that the mental and physical burdens of housework and child care feel heavier than in the past. Communities and families need to work in the following areas to reduce this burden, which at present is carried disproportionately by women.

      1. Participation of Fathers in Housework and Child Care
        Japanese men devote significantly less time to housework and child care than their counterparts in other countries. To remedy this situation it will first be necessary to change men's attitudes, starting with the social tendency to regard housework and child care as women's tasks. We need to rethink the roles of men and women and to promote shared participation in the family. Of course, such changes will be meaningless unless they are accompanied by the reform of corporate systems. The government will need to promote these ideas actively through public information and education campaigns.

      2. Community-Based Child-Care Networks
        Contact with people who have shared aims is vital in terms of a reduction in the psychological burden of housework and child care. Local governments have an important role to play at this level. We need to think about the creation of various types of child-care networks in our communities, including the distribution of information through child-care circles, the Internet, and other systems. Examples of initiatives that could contribute to the sound development of children and community revitalization include increased interaction between retirement homes and kindergartens and the establishment of systems that allow retired people to participate in community sporting and cultural groups. The creation of parks and the opening up of child-care centers for community use, as mentioned above, would be effective ways to help provide the needed infrastructure.

  7. Conclusions
  8. The decline in Japan's birthrate is attributable not only to changes in personal values, but also to factors throughout the social system that make people reluctant to bear and raise children. To overcome these problems we will need to reform our systems through the combined efforts of government, businesses, communities, and families. We must also ensure that our efforts to cope with the effects of a lower birthrate are compatible with the overall direction of reform.

    The problem of the falling birthrate has not been debated fully and openly in the past. More recently, however, a variety of proposals have been put forward, and a consensus appears to be forming about responses to this issue. The measures that we have recommended will also contribute to corporate development and the improvement of urban and residential environments. Thus, they have the potential to become comprehensive domestic-demand-promotion measures.

    In his policy speech to the current ordinary session of the National Diet, Prime Minister Obuchi called upon society as a whole to work toward the creation of an environment in which people can look forward with hope to having families and raising children. He also announced that a "Citizens' Council" would be established with the participation of representatives from all walks of life in an effort to find an appropriate approach to this task. The establishment of this council as a forum for discussion of this issue is highly significant and we welcome this move. However, in order to ensure that this initiative does not end in mere debate, the government will need to show leadership in creating the institutional arrangements necessary for implementation; this will include identifying measures to deal with the falling birthrate as a national project of equal importance to measures relating to the aged.

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