Saturday, March 20, 2010

Japan's Demorgraphics - Child Care Priming

In 2008, the latest year for which data are available from the Ministry of Labor, Health and Welfare, Tokyo had the nation's lowest birthrate, at 1.09 children per woman.

Elsewhere in the world's second-largest economy, the situation is similarly worrying. The national birthrate in 2008 was 1.37 children per woman -- up from a record low of 1.26 in 2005, but still nowhere near what the country needs to replenish its population. If current trends continue, Japan's population will fall to 95 million by 2050, from about 127 million now.

Japan's average life expectancy at birth was the highest in the world in 2008, at 86.05 years for women and 79.29 years for men.

But the ratio of the dependent population -- the sum of the elderly and young population, divided by the working-age population -- was 55.2% in 2008, according to the Statistics Bureau. The proportion of elderly in the total population has remained above that of the younger age group since 1997.

The Democratic Party of Japan was swept into power last August on a platform that vowed to shift the government's focus to boosting domestic demand, while postponing a hike in the country's 5% consumption tax -- despite Japan's burgeoning public debt.

Prime Minister Yukio Hatoyama vowed in January to "work to enhance the provision of childcare services."

The DPJ's plan includes paying cash allowances of more than $3,000 per child to families, with monthly payments for children under high school age to help defray child-rearing costs.

Japan's lower house of parliament passed the child allowance bill Tuesday, and it is widely expected to clear in the upper house -- where the DPJ holds a majority -- before the end of this month.

But some say the policy is aimed less at propping up the country's sagging birth rate and more at giving anemic consumption an immediate shot in the arm.

"I view child allowance as a tax break for people aged 35," said Hajime Kitano, chief Japanese equity strategist at J.P. Morgan in Japan.

This lost generation, he said, is now reaching the 35-44 peak age range for consumption.

"Although child allowance appears on the surface to be about children, upon closer examination it seems more like assistance for this generation," Kitano said.

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