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December 26, 2009

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Home » Business » Economy

Japan boosts welfare spending in record fiscal US$1t budget

JAPAN yesterday unveiled a record 92.29-trillion-yen (US$1 trillion) budget for the next fiscal year, reflecting the prime minister's campaign pledge to boost spending for child support and slash wasteful outlay for public works.

The budget for the year starting in April 2010 came as Japan's economy -- the world's second-largest -- struggled to shake off its worst recession since World War II amid deflation.

"This budget is to protect lives. I made all my efforts to secure budgets to support child-rearing, employment, the environment and welfare," Prime Minister Yukio Hatoyama said after his Cabinet approved the budget.

Spending on social welfare, which includes expenditures of monthly child allowances -- one of Hatoyama's election promises -- will jump by 10 percent from the initial budget of the current fiscal year to 27.3 trillion yen, a Finance Ministry official said.

The government will start giving families 13,000 yen a month per child through junior high from April 2010 to help ease child-rearing costs and encourage more women to have babies.

Japan has the lowest percentage of children among 31 major countries, trailing Germany and Italy, according to a government report. In contrast, the nation's elderly population is swelling.

Hatoyama, who came to power in September after a historic electoral victory in August, had also vowed during the election campaign to cut wasteful spending on public works.

His budget proposal earmarked 5.77 trillion yen in public works spending, down a record 18 percent from the initial budget of the current fiscal year, the ministry official said.

The budget must be cleared by Japan's parliament early next year to take effect.

It came as Japan struggled to spur its nascent economic recovery amid falling prices and a firmer yen, which hurts Japanese exporters.

Japan's jobless rate in November climbed to 5.2 percent, reversing an improvement to 5.1 percent in October, the government said. The result marks the first rise since July and matches Kyodo News' average market forecast of 5.2 percent.

Deflation also deepened, the government said in a separate report, with core consumer prices down 1.7 percent in November from a year earlier.

Falling prices, which plagued Japan during its "Lost Decade" in the 1990s, can hurt economic growth by eroding company profits, sparking wage cuts and causing shoppers to delay buying.


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