Can social security be maintained in the future, when population decline will become serious? It is imperative to face reality squarely and reexamine the balance of benefits and burdens, to build a sustainable social security system.
The government has released estimates of social security costs for fiscal 2040, when the elderly population will reach its peak.
Social security costs -- for covering such services as medical treatment, nursing care, pensions and child-rearing -- will rise to the equivalent of 24 percent of the gross domestic product, up from the current 21.5 percent. The increase will be especially large in the medical and nursing care fields, where demand is expected to grow. Nursing care costs as a percentage of the GDP will rise to 1.7 times the current level.
Second-generation baby boomers will join the population of elderly people in 2040. The elderly population is anticipated to increase to nearly 40 million, surpassing one-third of the total population. The drop in the working population will accelerate.
The year 2025, when the baby boomers born in 1947 to 1949 will become 75 or older, was previously seen as the focal point in social security reform, and estimates for the future were made up to that point. It is significant that the state of affairs in 2040, when the population structure will drastically change, has been clearly stated for the first time.
According to government estimates, the nominal costs for payment of social security benefits will amount to 190 trillion yen, 1.6 times the current figure. But this will be equivalent to 1.1 times the GDP. This seems to present a different image from the general perception that the social security system will fall apart due to endlessly swelling costs.
Vague anxiety about the future has prevailed among the public. This has caused sluggish consumption and made it difficult to break away from deflation. Anxiety must be removed through level-headed discussions from a realistic perspective.
Halt population decline
Needless to say, it is indispensable to strive to prevent social security costs from swelling as much as possible.
The efficiency of medical and nursing care services must be thoroughly promoted by strengthening tie-ups between medical and nursing care services to switch from medical treatment centering on hospitalization to treatment at home; transferring nursing care insurance service for those with a mild degree of disability to entities operated by local governments; and expanding preventive measures and thus extending healthy life expectancy.
Considering the public's lifestyle, there is a limit to what can be done to curb benefits. Who will shoulder swelling costs and how? Relying only on the decreasing working-age generations will hit a deadlock sooner or later. The system needs to be reviewed to ensure all the generations, including elderly people, share burdens according to their financial capacity.
To increase the number of people sustaining the social security system, it is essential to promote work style reform and thus encourage women's and senior citizens' participation in the workforce.
Discussions on increasing burdens are unavoidable. The environment for realization of a consumption tax rate hike to 10 percent should be created. Then, it is imperative to look into the possibility of a further tax rate increase.
The biggest agenda eyed for 2040 and beyond is how to halt the decline in population. The future of Japan will largely depend on whether the birthrate can be promptly turned upward. Measures to deal with the declining birthrate must be expanded further.
(From The Yomiuri Shimbun, May 23, 2018)
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