Welfare in Japan

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Social welfare, assistance for the ill or otherwise disabled and for the old, has long been provided in Japan by both the government and private companies. Beginning in the 1920s, the government enacted a series of welfare programs, based mainly on European models, to provide medical care and financial support. During the postwar period, a comprehensive system of social security was gradually established.[1][2] Government expenditures for all forms of social welfare increased from 6% of the national income in the early 1970s, to 18% in 1989. The mixture of public and private funding have created complex pension and insurance systems. But a much older tradition calls for support within the family and the local community.

The futures of health and welfare systems in Japan are being shaped by the rapid aging of the population. Medical insurance, health care for the elderly, and public health expenses constituted about 60% of social welfare and social security costs in 1975, while government pensions accounted for 20%. By the early 1980s, pensions accounted for nearly 50% of social welfare and social security expenditures because people were living longer after retirement. A fourfold increase in workers' individual contributions was projected by the twenty-first century.

Pension system[edit]

In Japan there are three types of Japanese national pensions arranged by the government and corporate organizations.

The basic pension (Category I)
Providing minimal benefits. The basic pension (premium is a fixed amount)
A secondary part (Category II)
Providing benefits, based on income up until retirement. Employees Pension Insurance, Mutual Aid Pensions (Premium is a fixed percentage of monthly income)
A third part
Company Pensions (Employees' Pension Fund, Tax-qualified Pension Plan. The premium depends on the organization)

Enrollment in an employees' pension plan or a mutual-aid pension automatically enrolls you in the basic pension system as well.

National pension plan
A secondary part   Employees Pension Insurance National Public Service Mutual Aid Pension Local Public Service Mutual Aid Pension Private School Teachers and Employees Mutual Aid Pension
The basic pension The National Pension Fund (The basic pension)
Insured persons Employers、unemployed persons and
part-time & casual workers or equivalents
Salaried employees who do not meet necessary conditions
for members of an employees' pension plan
Spouses of category II insured persons
Company employees Public employees
  CategoryⅠinsured persons Category III insured persons Category II insured persons
Other pension plans
Individual type Worker's property accumulation promotion system
Personal type Defined Contribution Pension Plan
Corporate type Defined benefit pension plan
Employees' pension funds
Tax-qualified Pension Plans
Defined Contribution Pension Plans
Retirement mutual aid pensions for small sized businesses
Retirement mutual aid pensions for specific small sized businesses

A major revision in the public pension system in 1986 unified several former plans into the single Employee Pension Insurance Plan. In addition to merging the former plans, the 1986 reform attempted to reduce benefits to hold down increases in worker contribution rates. It also established the right of women who did not work outside the home to pension benefits of their own, not only as a dependent of a worker. Everyone aged between twenty and sixty was a compulsory member of this Employee Pension Insurance Plan.

Despite complaints that these pensions amounted to little more than "spending money," an increasing number of people planning for their retirement counted on them as an important source of income. Benefits increased so that the basic monthly pension was about US$420 in 1987, with future payments adjusted to the consumer price index. Forty percent of elderly households in 1985 depended on various types of annuities and pensions as their only sources of income.

Some people are also eligible for corporate retirement allowances. About 90% of firms with thirty or more employees gave retirement allowances in the late 1980s, frequently as lump sum payments but increasingly in the form of annuities.

Pension Reform in an Aging Japan

The public pension system in Japan is obligated to review its own financial stability every five years and thus it is reformed to a degree every five years, with some notable reformation years. In 1942 the KNH, Employees Pension Insurance, was formed for private sector employees and in 1954 was rebuilt, replacing the previously established earnings-based pension model with a two-tier model including a basic flat-rate feature. Disparity existed between private and public sector pension plans as public sector pension benefit levels were generally better and more widely covered, and to address the lack of coverage for certain private sector employees the KN, National Pension law, was passed in 1961 which set up a compulsory savings system requiring everyone from self-employers to the jobless to pay a flat-contribution rate on an individual basis for a flat-rate benefits package. In 1986, women obtained a way into the pension system through their husbands via contributions deducted from his pay, which entitled the wife to a flat-rate basic pension plan. In 1999, due to economic downturn the government froze increases in pension contributions and altered the age requirement to receive old age benefits from 60 to 65. [3][4][5]

Japan has the fastest aging population in the world due to a combination of low birth rates and high life expectancy rates. This is due to an increase in women participating in the workforce, the rising age of marriage and a growing proportion of unmarried women. In an attempt to alleviate a deteriorating pension system, the 2004 reform efforts were directed primarily at two goals, with the first being to cut benefit levels to better reflect the number of those supporting the pension system. The second goal was to slow down the total amounts of benefits paid so as to provide for increased longevity in the pension system's ability function as a reaction to the longer life-spans of the citizenry. Still, the issue of an aging population persists and the ratio of the elderly to the youth will therefore continue to rise, putting into doubt whether the youth will ever receive full benefits. [6][7][8]

Public assistance[edit]

Japan also has public assistance programs to cover basic living expenses, housing costs, compulsory education and skill training costs, health insurance, and funerals. To apply, people must visit the welfare office of their municipality, which checks their claim and usually gives an answer within two weeks. If a household's total income falls below the minimum living expense set by the health and welfare minister, the household is eligible for welfare benefits. Before their claims are even considered, applicants must first sell off any items in their household deemed unnecessary "luxury goods" by caseworkers, though the definition of what constitutes "luxury" items varies among the municipalities, and individual welfare officials have discretion in determining what must be sold off. Generally, items such as wide screen televisions, cars and motorbikes (unless found to be necessary in seeking work), and musical instruments must be sold. In some cases, applicants have been even told to sell their own homes and live off the revenue before eligibility for welfare. Once approved for public assistance, recipients must follow the guidance of a caseworker assigned to them in how to spend their money. The public assistance programs benefit about 1.7% of the population. About 50.8% of these households are elderly people, 26.6% were households with sick or disabled members, and 6.2% are single-female-parent families.[9][10][11][12]

Public assistance households (as of March 2016)[9]
Category Households  %
Elderly 826,656 50.8
Single 747,957 46.0
Others 78,699 4.8
Others 800,263 49.2
Sick or disabled 433,167 26.6
Single-female-parent 100,924 6.2
Others 266,172 16.4
Total 1,626,919 100.0

Social Insurance[edit]

Companies in Japan are responsible for enrolling their employees in various Social Insurance (社会保険,, Shakai Hoken) systems, including health insurance, employee pension, unemployment insurance, and workers' accident compensation insurance. The employer covers all costs for workers' accident compensation insurance, but payments to the other systems are shared by both employer and employee.

Minimum wage[edit]

The Minimum wage law, introduced in 1947 but not enacted until 1959, was designed to protect low-income workers. Minimum wage levels have been determined, according to both region and industry, by special councils composed of government, labor, and employment representatives.

Welfare for foreigners[edit]

Japanese law technically states that only Japanese citizens are eligible to receive public assistance. However, in actual practice, foreign permanent residents with no legal restrictions preventing them from working in Japan are allowed to receive welfare payments. In 2011, this de facto situation was upheld by a Fukuoka High Court decision in favor of a 79-year-old Chinese woman with permanent resident status who had been denied social welfare payments by Oita city government.[13]

As of July 18, 2014 the Japanese Supreme Court has ruled that foreigners are not entitled to receive welfare payments.[14]

See also[edit]


  1. ^ Konosuke Odaka (2002). "The Evolution of Social Policy in Jpapan" (PDF). World Bank. Retrieved 18 March 2013. 
  2. ^ Worawan Chandoevwit (2007). "Social Security Systems in Japan: Lessons Learned for Thailand" (PDF). Japan Center for Economic Research. Retrieved 18 March 2013. 
  3. ^ Noriyuki Takayama (2005). "Pension Reform in Japan" (PDF). Hitotsubashi University. Retrieved 28 November 2016. 
  4. ^ Tetsuo Fukawa (2001). "Japanese Welfare State Reforms in the 1990s and Beyond: How Japan is Similar to and Different from Germany" (PDF). National Institute of Population and Social Security Research. Retrieved 28 November 2016. 
  5. ^ Noriyuki Takayama (2001). "Pension Reform in Japan at the Turn of the Century". Palgrave Macmillan Journals. Retrieved 28 November 2016. 
  6. ^ Sagiri Agiri Kitao (2016). "Costs of policy uncertainty and delaying reform: The case of ageing Japan". Vox. Retrieved 28 November 2016. 
  7. ^ Yuichi Shionoya (1997). "Japan's Grand Reforms From an Economic Social and Political Perspective". Ministry of Foreign Affairs of Japan. Retrieved 29 November 2016. 
  8. ^ Alan J. Auerbach (1989). "The Dynamics of an Aging Population: The Case of Four OECD Countries" (PDF). National Bureau of Economic Research. Retrieved 30 November 2016. 
  9. ^ a b "Public assistance report as of March 2016" (PDF). Ministry of Health, Labour and Welfare. June 1, 2016. 
  10. ^ Kamiya, Setsuko, "Welfare rise: sign of economic, aging times", Japan Times, 5 July 2011, p. 3.
  11. ^ Brasor, Philip, "Welfare system not faring well", Japan Times, 25 September 2011, p. 9.
  12. ^ http://www.express.co.uk/expressyourself/89248/Recession-Japanese-style
  13. ^ Tsukasa Kimura (16 November 2011). "High court overturns ruling denying welfare payments to foreigners". Asahi Shimbun. Retrieved 18 March 2013. 
  14. ^ Kyodo (17 July 2014). "Foreign residents can’t claim welfare benefits: Supreme Court". Japan Times. Retrieved 17 July 2014. 

External links[edit]