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Japan PM pledges social security system overhaul in next 3 years

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Japan PM pledges social security system overhaul in next 3 years

Japan's Prime Minister Shinzo Abe, who heads into a leadership contest for the ruling Liberal Democratic Party on Sept. 20, vowed to implement changes in the country's social security system in the next three years to address Japan's falling population and rising fiscal debt.

In an interview with the Nikkei Asian Review, Abe proposed raising the retirement age beyond 65 and proposed an option for people to delay their pension benefits beyond the age of 70 to receive higher payments.

Abe, who is nearly six years into his second stint as prime minister, said he will combine his proposal with more investment in younger people. His government will offer free preschool beginning 2019 and help low-income families with college tuition in 2020.

The first year of the three-year plan will focus on labor issues, while the next two will tackle the country's pension and medical care challenges.

Abe also pledged "bold countermeasures" to cushion the impact of the planned consumption tax hike to 10% from 8% in October 2019 but did not elaborate.

On trade and foreign policy issues, Abe downplayed concerns on U.S. protectionist policy. In May, the Trump administration said it might raise tariffs on autos and auto parts to as high as 25%.

Abe said Washington has made no decision on the matter while pointing out that Japanese automakers produce 3.8 million vehicles in the U.S., more than twice what they export.

While Japan's economy is on track for its longest post-war expansionary period, the government has yet to beat deflation. Prices are rising at a sub-1% level despite the Bank of Japan's aggressive bond- and securities-buying spree.

"Japan may not have achieved the [BOJ's] 2% price stability goal, but what we are really focused on is employment," said Abe.

He said Japan's economy grew more than 10% on a nominal basis despite a shrinking population and that there is more than one regular job for each job seeker for the first time ever.

He added that he would have a comprehensive package of measures to help ease the entry of foreigners into Japanese companies and communities by the end of the year.