Dealings of Social Insurance Agency in spotlight

While the ordinary Diet session that adjourned Wednesday will probably be remembered for the high-profile clash between the ruling and opposition camps over pension system reforms, this tug-of-war generated an interesting sideshow.

In the course of deliberations, various practices that are undertaken by the Social Insurance Agency and are financed by pension funds came to light, such as the construction of health resorts and houses for agency employees and monetary offerings at funerals.

Although these practices are not illegal, they have drawn fire from the public, already disgruntled over pension reforms that will reduce future benefits while hiking premiums.

Sensing the volatile atmosphere, both the government and the ruling parties are rushing to hammer out plans to overhaul the agency ahead of next month’s House of Councilors election.

This is proving easier said than done, largely due to the agency’s massive and complex organizational structure comprising about 17,500 employees, mostly members of organized unions.

The agency has presented its own reform plans, but a senior member of the ruling coalition scornfully described the proposals as “a list of items that should be a matter of course, such as ‘dealing with visitors during lunch breaks’ and ‘strengthening the system of supervision for inquiries about insurance policy membership records.’ “

At a meeting of the ruling parties’ pension system reform council on June 10, agency head Akira Mano was roundly criticized when he presented the reform plans.

“Can you possibly think that it is good to go out for lunch while there are people waiting?,” a panel member was quoted as telling Mano. “Agency employees need to change their way of thinking so they realize they provide services for the public.”

As for the failure of scores of Diet members — including Prime Minister Junichiro Koizumi — to pay premiums for or be properly enrolled in the National Pension System, panel members maintained that these problems would not have occurred if the agency had explained the system properly.

The humiliating revelations of missed payments were one reason why Diet deliberations on the government-proposed pension reforms became bogged down, forcing the ruling bloc to railroad the bills through the Upper House on June 5.

At the meeting of the ruling coalition panel, one member went so far as to tell Mano, “Unless the agency can reform itself from within, it should be turned into a private entity.”

As a result, the agency’s reform plans were axed.

Despite the hardline stance taken by the ruling bloc, its own efforts to draw up agency reform plans have not yet been successful either.

“There is a gulf between (the mentality of) career and noncareer employees, and another between them and local-level employees,” a Liberal Democratic Party lawmaker said.

The top-tier officials, the so-called career-track employees of the agency, which is a subdivision of the Health, Labor and Welfare Ministry, are dispatched by the ministry.

The “noncareer-track” employees form the core of the agency staff and are those who have passed Level 2 civil service exams. Employees at local offices, meanwhile, are chiefly those who have passed the lower Level 3 exams.

Even if reforms are implemented, “They would be nothing but pie-in-the-sky without any mutual understanding or trusting relationships” among the employees, the LDP lawmaker said.

Another potential obstacle for reform is the fact that nearly 90 percent of the agency’s employees are members of unions affiliated either with the Japanese Trade Union Confederation (Rengo), Japan’s largest, or with the National Confederation of Trade Unions (Zenroren).

“Talks with these unions (on agency reforms) are also tough going,” one panel member said.

A government source said that to break the impasse, “there remains only one card we can use as a trump: appointing an agency head from the private sector.”

At a meeting of the government’s Council on Economic and Fiscal Policy on May 19, Health, Labor and Welfare Minister Chikara Sakaguchi proclaimed that “drastic reform is required for the Social Insurance Agency,” indicating that he would examine the possibility of selecting an agency head from the private sector.

This tactic of making surprise appointments has worked many times in the past to shore up Koizumi’s government when its popularity has showed signs of waning.

An LDP source said, however, that there are rumors that those who have been covertly approached have all refused to take up the post.

Many within the government and ruling bloc fear that there is no one “noble enough” to agree to assume a post that, with the uphill battle expected of the person who takes it, would come with an annual salary of only about 20 million yen, the source said.