Japan July 22, 2009, 10:10AM EST

Japanese Companies Address Baby Shortage

With the recession likely to reduce Japan's anemic birthrate, the government and companies such as Panasonic and Hitachi are taking action

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Japan, which has long fretted about its low birthrate, got limited good news when the government reported in June that the country's total fertility rate—the average number of children a woman is expected to bear during her lifetime—rose to 1.37 last year from 1.34 in 2007. It was the third straight rise from a record-low 1.26 in 2005.

With workers losing their jobs in the current recession, the 2009 rate is likely to drop. "Economic uncertainty and job insecurity have made people even less eager to get married and have children than we had expected," says Shigeki Matsuda, a senior research director at Dai-ichi Life Research Institute. Last September, a week after Lehman Brothers went bankrupt, the institute polled 200 single and 600 married Japanese company employees in their 20s and 30s. Half the singles polled in the much-publicized survey said they wanted to wed but were reluctant to do so now. Among married people, some 80% with a child said they wanted another, while 90% said the downturn made that decision difficult.

With citizens 65 and older on track to make up 26% of the population by 2015, the government is moving anew to raise the birthrate. An economic stimulus package approved in May earmarks $3.7 billion for aid to parents with newborns and for creating new day-care centers. And Minister of State for Social Affairs & Gender Equality Yuko Obuchi—daughter of former Prime Minister Keizo Obuchi—has endorsed a proposal by Keidanren, Japan's leading business federation, to spend 1% of consumption tax revenues, or $25 billion, on efforts to produce more babies. "With the severe economic situation these days, many mothers would be going back to work. By improving day-care centers and other environment, we want to back them up to manage working and raising their children at the same time," Obuchi told the daily Asahi Shimbun on June 4.

Business Steps Up

It's still unclear if Obuchi, who is 35 years old and pregnant with her second child, has the political chops to push through a program. Government and business have been dragging their feet for years on fixing some of the problems behind the low birthrate, such as a shortage of day-care centers. About 40,000 children are on waiting lists at both public and private centers. Mitsui and Sumitomo are among the few companies offering corporate day care.

Now some in business are trying harder. Panasonic (PC), Hitachi (HIT), and Nissan Motor (NSANY) are giving time off to employees needing fertility treatments. Sharp (6753.T), NEC (6701.T), and Canon (CAJ) grant low-interest loans or subsidies to women undergoing artificial insemination, treatments not covered under national health insurance. "Electronics companies are leading the way in supporting workers undertaking the treatment. It is a good step forward," says Akiko Matsumoto of Fine, a group supporting women who are having difficulties in conceiving. Some firms are even granting paternity leave.

Some smaller companies are focusing on child-rearing to attract talent that might otherwise go to bigger, better-known companies.