The number of public welfare recipients in Japan is on the rise, with no end to this trend in sight. This increase is putting a strain on public finances at both the national and regional level. After a review of the welfare system, the government has formulated a new national strategy centered on getting people off welfare. By this June, concrete policies focused on supporting the working-age generation are to be completed, and the government plans to introduce related legislation during next year’s regular session of the Diet. Yet it will be no simple matter to bring about a significant policy reform.
Welfare Recipients Reach All-Time High
The rapid rise in public welfare recipients is a factor behind the shift in national strategy toward policies designed to get people off welfare. The number of those receiving public support reached a high of 2.04 million in 1951 during the tumultuous rebuilding period following World War II, declining steadily thereafter until reaching a low of roughly 880,000 in 1995. The trend then reversed and the number of welfare recipients set a new record high in July 2011; and as of January 2012, the number stands at 2.09 million. Welfare outlays totaled ¥3.4 trillion in fiscal 2010, with the national government covering three-fourths of the total and regional governments the remaining fourth.
In fiscal 2000, 45.5% of households receiving welfare were elderly, 38.7% were sick or disabled, and 7.4% came under the category of “other.” In fiscal 2010, sick or disabled recipients fell to 33.0%, while those in the “other” category rose to 16.1%; elderly recipients were still the largest demographic, at 42.9%, but there were a significant number of working-age recipients in the “other” category. This rise in recipients falling under the “other” category is a result of the prolonged recession and the deregulation carried out the 1990s, whose combined effect led to a rise in part-time, temporary, and other nonsalary employees to the level of one-third of the total workforce.
After a Kyūshū man denied welfare died of starvation in 2007, the Ministry of Health, Labor, and Welfare relaxed application standards, and the number of recipients rose. Apparently, there was a rush among those whose temporary contracts were not extended to access public welfare while the door was kept more open.
The Challenge of Real Welfare Reform
Despite the problematic situation of Japan’s welfare system, bringing about real change to the long-standing system remains difficult.
The Council on National Strategy and Policy—formed in October 2011 and led by Prime Minister Noda Yoshihiko to coordinate economic and fiscal policy and shape a long-term vision for Japan—held a meeting on the evening of April 9 at the prime minister’s residence. In response to Prime Minister Noda’s call for more government support for those in the low-income bracket, Minister of Health, Labor, and Welfare Komiyama Yōko introduced a policy to encourage self-reliance, tentatively named the “Earned Income Savings Plan.” Under the plan, the portion of the welfare allotment usually cut when recipients earn income would instead be returned to them when they got off welfare to foster their self-sufficiency. In general, as welfare recipients work and earn income, the amount of public assistance they receive is cut proportionally. The belief that this is actually a disincentive to work and a hindrance to self-reliance prompted the above proposal to instead return the cut directly to newly independent former welfare recipients.
Parallel with the meetings of the CNSP, the MHLW held talks on public welfare with regional governments, beginning in May 2011. One key issue dealt with was the medical costs of welfare recipients being paid from the total welfare pool in the form of medical deductions. As part of an interim review at the end of last year, regional governments proposed welfare spending cuts aimed at to encouraging self-reliance through the introduction of plans involving self-paid medical costs and time limits on welfare payments.
The Democratic Party of Japan has attempted to draw public attention away from the burden of a potential consumption tax hike by engaging in pork-barrel spending. The DPJ has refused to recognize the cuts proposed by regional governments, thereby putting off the task of genuine welfare reform. What is more, this row resulted in the unfortunate compromise of the Support System for Job Seekers scheme, which provides the unemployed with a ¥100,000 per month stipend and free job training.
Moving forward, a review of the system for medical benefits and other discussions will be carried out, but already within the DPJ some have raised the objection that there is a limit to how long recipients can make ends meet relying solely on the income provided by the Earned Income Savings Plan.
On April 9, the same day the DPJ announced its Earned Income Savings Plan, the Liberal Democratic Party made welfare cuts an official plank of its platform for the coming lower-house elections—confirming its move toward a strategy strongly focused on the theme of self-reliance. Given upcoming election and the current divided Diet (with the LDP in control of the upper house and the DPJ the lower), there will be fewer and fewer opportunities for the two parties to find common ground. Even though Japan’s welfare system has been said to be the aspect of social security most in need of reform, there is still no agreement on a clear path toward making that reform a reality.
(Originally written in Japanese on April 23, 2012.)
Senior staff writer at the Mainichi Shimbun, where he writes on politics and the social security system.