TOKYO – The Japanese government approved a plan Friday to welcome more foreign workers into the country, a move aimed at addressing the worsening labor crunch.
While the plan, part of the government’s annual economic policy blueprint, is still short on details including how many workers will arrive and what industries they will be employed in, it is expected to open the country’s doors to blue-collar laborers from abroad in contrast to the highly skilled workers it currently accepts.
The plan, which still requires legislative work to be implemented, stops short of endorsing full-blown immigration amid persistent fears of a rise in crime. It places a five-year limit to their stay and forbids them from bringing along family members.
This year’s blueprint, which was given the green light at an extraordinary meeting of Prime Minister Shinzo Abe’s Cabinet, also states for the first time that the planned increase in the nationwide consumption tax – from 8 percent to 10 percent – is slated to take place on Oct. 1, 2019.
Abe had already postponed the tax hike twice after judging the economy too fragile to weather the hit to private consumption. In a bid to balance out the surge in demand before the hike and sharp fall afterward, the government said in the blueprint it will include “extraordinary measures” in the budgets for fiscal years 2019 and 2020.
These could include tax breaks for big-ticket purchases like cars and homes. Free education for young children will also begin on Oct. 1, 2019, according to the blueprint. The government had previously said the subsidies, which apply to children in low-income households aged 0 to 2 and all children aged 3 to 5, would see a staggered implementation in April 2019 and April 2020.
Abe is hard-pressed to ensure the tax hike does not stall the economy by dampening domestic demand, as happened after the previous consumption tax hike in 2014.
This is especially true because, with spending on social security swelling amid a rapidly aging population, economic expansion is key in improving the country’s tattered fiscal health.
The government said in the blueprint it is aiming to achieve a surplus in the primary balance – annual tax revenues minus outlays other than debt-servicing costs – in fiscal 2025, five years later than the previous target.
The blueprint also includes three milestones to be achieved by the end of fiscal 2021 – lowering the primary balance deficit as a percentage of real gross domestic product to around 1.5 percent, lowering the public debt-to-GDP ratio to below 185 percent, and lowering the budget deficit-to-GDP ratio to below 3 percent – though these have been criticized as being unambitious. (Reuters)
