The Cabinet of Prime Minister Shinzo Abe on June 15 approved economic, fiscal and growth policy packages including a plan to expand the acceptance of foreign workers to counter labor shortages amid a low birthrate and an aging society. The packages included making nurseries free of charge from October 2019, when the nation’s consumption tax will be raised to 10 percent.
Prime Minister Abe told the Council on Fiscal and Economic Policy that there was “an urgent need” to secure a large number of quality personnel and thus push up productivity and increase Japan’s growth potential amid a tight labor market. He also indicated his intention to announce a road map for joint reform of the economy and finance.
The packages call for introducing a new residency status for foreign workers. Under the new framework, foreign workers with certain Japanese language and technical skills will be allowed to work for up to five years in construction and other industries with acute labor shortages. The workers coming to Japan under this status will not be allowed to bring their family members with them, but they may be allowed to do so and stay longer if they improve their skills and change their residency status.
Free nursing and education for toddlers will be introduced with the tax hike and not in phases as previously envisioned. Users of unapproved nurseries will be entitled to receive governmental financial support only when their households require such facilities because of working conditions. Measures to realize free higher education will include reduction or elimination of tuition or provision of scholarships that do not have to be paid pack. Households earning less than 3.8 million yen per year or an amount exempt from resident tax will be covered by these measures.
As for the consumption tax hike, the Cabinet clearly stated that it was necessary. In preparation for economic fluctuation due to increases and decreases in consumption before and after such a hike, “special, stop-gap measures” to stimulate the economy will be employed in the national budgets for fiscal 2019 and 2020.
Meanwhile, the deadline for turning the primary balance into the black was extended by five years to fiscal 2025. Also, the packages did not set a cap for the growth rate of social security spending, which is expected to bulge as Japanese society ages further.