Japanese working mothers are best hope for growth

The new Japanese government is under pressure from the “wealthy nations club”, the Organization for Economic Cooperation and Development, to divert cash incentives promised to parents of junior high school age children to early years support.

Setting up a new family allowance system in 2010 was one of the incoming government’s key election pledges. But Japan is struggling to balance economic stimulus measures with the need to contain a massive public debt.

At around 170% of GDP, it is already the highest among the countries the OECD represents, and is thought likely to top 200% by 2011.

Incoming Prime Minister Yukio Hatoyama proposes to give a monthly allowance of 13,000 yen ($146) in 2010 and 26,000 yen from 2011 for each child of junior high school age or younger

But speaking at a Tokyo forum on the OECD's contributions to Japan's policy objectives, Secretary-General Angel Gurría argued that where preschool childcare facilities were adequate, women who worked were likely to have more children. Increases on both fronts would help to activate the Japanese economy.

"The Japanese government spends a relatively large amount on children who are ten-years-old compared with other developed countries – but one of the lowest amounts on five-year-olds."

Gurría also used cost benefit argument to support his case: "the rate of return on public investment in early childhood education is greater than for later years," he said.

OECD published a series of proposals [1], last week, with a recommendation that a number of children’s policies, such as those also connected to health and tax, should be integrated into a package to improve efficiency.

Such a strategy, the document argues, would encourage greater female labor force participation, improve the quality of education (on the basis that that the rate of return on public investment in early childhood education is greater than for later years), promote equality – and help raise the fertility rate.

In its coverage of the story last week, The Wall Street Journal [2] quoted OECD Far East desk economist Randall Jones to the effect that with future spending crimped by the growing public debt, and the central bank policy interest rate already at rock bottom, women were one one of the few remaining "tools for growth" in Japan.

Japan and Korea were the only OECD countries where women with a university degree were not any more likely to have a job than women without any upper secondary education.

It was a waste of talent, Angel Gurría said.