Abe’s HR Development Initiative

Prime Minister Shinzo Abe has added human resources development as yet another new pillar of his Cabinet’s policy agenda. Given the rapid aging and decline of the population caused by fewer births, which saps the growth potential of the nation’s economy, the idea that investment in human resources is indispensable is laudable. It will be difficult to sustain a vibrant society without adequate human resources. Still the Abe administration needs to clarify many points over the new policy, including how it aims to secure the funding needed for carrying it out and from what viewpoint the government will be pushing the agenda.

Abe declared the new policy in a news conference in June, when he said he would like to carry out a “human resources development revolution” that is free from a uniform way of thinking “in order to change Japan into a country full of chances.” Human resources development was among the basic policy agenda when he reshuffled his Cabinet early this month, and Abe tapped Economic Revitalization Minister Toshimitsu Motegi to concurrently take charge of human resources development. The administration plans to launch a panel of experts by the end of this month to work out concrete measures to flesh out the policy, which is expected to come up with its ideas around June 2018.

Measures that are reportedly being contemplated by the administration include making preschool education and nursery services free, eliminating waiting lists for admission into nursery schools, a system for reducing the financial burden of higher education — under which the government will pay tuition fees, which will then be repaid by students after graduation in accordance with their income — as well as the promotion of continuing education that allows workers to learn new practical skills and knowledge.

The administration stresses that education will play a crucial role in a building society in which the chain of poverty across generations will be broken and children can seek to obtain a bright future irrespective of their family’s financial situation. Abe has instructed Cabinet ministers concerned to give priority to beefing up spending related to human resources investments when they submit budgetary requests for fiscal 2018.

Despite the seemingly lofty ideas advocated by the administration, the new policy to “revolutionalize” human resources development may cause concern among some people that the government might be trying to nurture the kind of manpower that are useful from the viewpoint of the government or businesses. The phrase “human resources” itself may give an impression that the government is treating people as resources to be manipulated for the achievement of particular purposes. The government needs to quickly flesh out the new policy and develop specific measures to dispel any misgivings about the initiative.

The Abe administration likes to spell out new policy slogans every once in a while ranging from “regional revitalization” to “promoting dynamic engagement of all citizens” and “working-style reform.” Some of these tout grandiose ideas (and with seemingly overlapping agenda) but result in few concrete achievements. The administration needs to make sure that its latest initiative will not just be yet another addition to the list of these policy agendas.

The biggest problem with the new policy will be how to secure funding for the measures to carry out human resources development. The Abe administration’s outline of basic policies for economic and financial management adopted in June calls for considering cuts in government expenditures, tax increases and creation of a new social insurance program that will have both businesses and employees pay premiums to create a fund to make preschool education and nursery school services free of charge.

However, an education ministry estimate shows that ¥1.2 trillion will be required annually to provide free preschool education and nursery school services. Another estimate by the ministry shows that ¥4.1 trillion will be needed each year to realize free education from preschool to graduate school levels.

Opposition will be anticipated to the increase in public burden in the form of tax hikes or premiums for the proposed new social insurance system. The administration needs to conduct its discussion on fiscal means to implement the new policy in a transparent manner so that it can clearly explain what benefits it will bring to people and at what cost. This is a prerequisite for winning public support and understanding for the initiative.