TOKYO -- Prime Minister Shinzo Abe on Monday called for overhauling Japan's social security system in a way that would allow people to work later into their lives and put off collecting their pensions.
Abe's solution would address the twin challenges of a falling population and a mounting fiscal debt.
In an interview with the Nikkei Asian Review, Abe said he wants to raise the retirement age beyond 65.
He called for a society in which people remain actively engaged throughout their lives. To get there, Abe said he will propose giving people an option: If they delay their pension benefits beyond the age of 70, they would receive higher payments.
Abe, who is nearly six years into his second stint as prime minister, said he will combine this proposal with more investment in younger people. His government has already laid out a policy of beginning free preschool in 2019 and, for low-income families, help with college tuition in 2020.
"In the next three years," Abe said, "I intend to overhaul the social security system to give peace of mind to everyone -- children, parents, active workers and senior citizens.
"More labor participation would boost economic growth, raise tax revenue and generate more social security premium receipts."
In the first year, Abe would focus on labor issues. During the following two years, the prime minister would tackle the country's pension and medical care crises. "Private consumption will be stimulated if working generations have less anxiety about their futures," Abe said.
He also pledged to take the sting out of the planned consumption tax hike, to 10% from 8%, in October 2019 with "bold countermeasures."
Uncertainties loom as the United States pursues a protectionist policy under President Donald Trump. In May, the Trump administration said it might raise tariffs on autos and auto parts to as high as 25%, a move that could deliver a blow to Japan's auto exporters. Toyota Motor warned last month that such tariffs could impact the company's bottom line by $4.2 billion.
Abe played down these concerns, saying the Trump administration has made no decision on a higher tariff rate. Abe pointed out that Japanese automakers produce 3.8 million vehicles in the U.S., more than twice what they export. "Japanese automakers are making a huge contribution to the U.S. economy by creating good jobs for American workers," the prime minister said. "I have used every opportunity to explain this to Mr. Trump. We would like to pursue a constructive dialogue with the U.S." under the recently launched bilateral forum for free, fair and reciprocal trade, he said.
"The U.S. and Japan share a broader goal of expanding bilateral trade and investment for the benefit of both countries and achieving a free and open Indo-Pacific based on fair trade," Abe said.
As he heads into a leadership contest for the ruling Liberal Democratic Party on Sept. 20, the economy is once again emerging as a decisive issue, even as Abe tries to shift his focus to amending Japan's U.S.-drafted constitution.
Abe, who could become Japan's longest-serving prime minister if he gets re-elected to a third three-year term, would like to point to a constitutional change as a key piece of his legacy.
In the past six years, Abe has brought his conservative Liberal Democratic Party to five straight victories in national elections, buoyed by economic growth and a stock market boom.
"I intend to settle the accounts of the postwar foreign policy," Abe said. "I'd like to lay the foundation for peace and prosperity in Northeast Asia for a new age. I'd like to amend the constitution for the new era" by incorporating the Self-Defense Forces -- the nation's de-facto military -- in the nation's pacifist charter.
A constitutional amendment requires two-thirds majority backing in both houses of Japan's parliament and a simple majority among voters.
In the ruling party leadership contest, Abe faces Shigeru Ishiba, a former defense minister who prioritizes economic development outside of big cities.
"The Japanese economy has reached a point where it is no longer in deflation," Abe said.
Although Japan's economy is on track to mark its longest postwar expansionary period, the government has yet to declare that it has licked deflation.
Prices are rising at a sub-1% level despite a hyper-aggressive bond- and securities-buying spree by the Bank of Japan that, after more than five years, has had little effect.
"Japan may not have achieved the [BOJ's] 2% price stability goal, but what we are really focused on is employment," Abe emphasized.
Abe noted Japan's economy grew more than 10% on a nominal basis despite a shrinking population and that there is more than one regular job for each job seeker for the first time ever.
Abe has also been striving to alleviate an acute labor shortage by allowing more foreign workers into the country. The government recently proposed relaxing rules governing visas for unskilled foreign workers.
"It is necessary to create a system that would bring in a broad range foreign workers with a certain level of skills and expertise," Abe said. He also said a more cosmopolitan Japan could experience friction due to language and lifestyle issues. By the end of the year he said he would have a comprehensive package of measures to smooth foreigners' way into Japanese workplaces and communities.
Abe voiced an eagerness to meet with North Korean leader Kim Jong Un to get to the bottom of North Korea's abductions of Japanese decades ago, an issue Abe has championed for decades.
"It is my personal resolve," Abe said, "to sit down with Chairman Kim personally and solve the issues of nuclear weapons, missile development and Japanese abductees."