Photo/Illutration A Ministry of Health, Labor and Welfare poster is expected to be shown at offices to urge employees to take parental leave. (Kyosuke Yamamoto)

Fears of a fund shortage are emerging in the government over the ballooning costs to provide allowances for company employees who take parental leave.

The amount of paid benefits nearly tripled over 10 years and is expected to rise further because employers are supposed to more strongly encourage their workers to use the child-rearing system.

The Ministry of Health, Labor and Welfare will soon start discussing possible revisions to the system and how to procure alternative revenue sources.

Parents who take time off work to care for children younger than 1 can receive 67 percent of their monthly wages for the first six months. The rate drops to 50 percent from the seventh month.

The benefits come from the parental leave program of the unemployment insurance system, under which employees and employers pay insurance fees at a 50:50 rate.

Taxpayers’ money is also injected for a portion of the sums paid.

The government has been strengthening the child care leave system as a countermeasure against the dwindling birthrate.

The insurance benefit percentage, for example, was raised from 50 percent to 67 percent in 2014.

The end of leave for parents who cannot find day care nurseries for their children was extended in 2017 from when their children reach 1.5 years old to 2 years old.

According to the labor ministry, the number of allowance recipients doubled from 210,000 in fiscal 2010 to 420,000 in fiscal 2020, mainly because more women continued to work after giving birth.

In fiscal 2020, 46,000 men took parental leave, 15.3 times the figure of 3,000 a decade earlier.

The number for women climbed 1.8 times from 203,000 to 373,000 over the same period.

For mothers, the average monthly benefit increased by 53 percent from 88,000 yen ($708) to 135,000 yen, while the pay to fathers rose by 47 percent from 125,000 yen to 184,000 yen.

In addition, the average paternity period for men lengthened by 12 percent from 2.6 months to 2.9 months, while the average maternity leave period expanded by 34 percent from 9.2 months to 12.3 months.

For these reasons, the paid allowance total has soared from 230 billion yen to 640 billion yen over the 10 year period.

In April this year, the government made it mandatory for business operators to confirm if their employees with small children want to take parental leave.

A new “birth leave” framework will also be put in place in October to allow fathers to take time off work for a maximum of four weeks before their children turn 8 weeks old.

Those changes are expected to prompt more parents to take leave.

According to a ministry estimate, spending for the program will surpass revenue in fiscal 2023 if the current pace continues. In fiscal 2025, the program could fall 57.5 billion yen in the red.

If benefit payments grow at an even quicker pace, the insurance proceeds could fall short as early as in fiscal 2024.

A ministry council in fiscal 2022 is expected to discuss possible modifications to the setup, including raising insurance fees to keep up with the increasing costs.

Also on the agenda will be the possible separation of the parental leave program from the unemployment insurance system and having the government play a larger role.

Offering allowances to a wider range of people has also been proposed.

The national parental leave system is operated under the unemployment insurance mechanism, which serves as a safety net for corporate employees.

Freelancers and temporary workers who do not meet the unemployment insurance requirements are left out of the framework.

Allowing them to take parental leave is a pressing issue because many say they are forgoing parenthood because they cannot afford to take time off work to raise children.

(This article was written by Hiroki Hashimoto and Kyosuke Yamamoto.)

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