Welfare Services and “Regional Sovereignty” in an Aging Society

ABSTRACT

The GDP share of social benefits related to the elderly continues to rise in Japan, and will likely surge ahead of even Germany and Sweden in the future. A closer look shows a recent shift from cash benefits to benefits-in-kind centered on personal welfare services, and a rapidly increasing role for local governments. In this way the aging of Japanese society is expanding the share of public welfare expenditure in local government budgets, an accelerating trend that could squeeze local government finances even more. Moreover, the transfer of public welfare expenditure from the national to local governments depends greatly on the nation’s fiscal condition. This impairs the freedom of local government finances and leads to regional destabilization.

Compared to public capital services, welfare services vary greatly among regions and are suited to be provided in a “decentralized” way that reflects local needs and preferences. The “Decentralization Reform Committee” recommends “decentralization” through strengthening the fiscal authority of local governments, while the Ministry of Internal Affairs and Communications promotes the creation of autonomous settlement regions through voluntary cooperation among local governments under the “Autonomous Settlement Region Concept.” Based on these recommendations and frameworks, the new government must quickly begin specific efforts towards enriching regional welfare services and establishing “regional sovereignty.”