Resistance to bigger pension roll

The Democratic Party of Japan has been calling for incorporating irregular workers into kosei nenkin (a pension scheme originally for permanent corporate workers) as a means of helping to stabilize their life. But the plan the government and the DPJ adopted March 13 shows that they bowed to pressure from businesses required by law to shoulder half the premium, thus greatly retreating from their original goal. Irregular workers usually take part in the kokumin nenkin pension scheme, whose benefits are lower than kosei nenkin.

The health and welfare ministry had planned to incorporate one million irregular workers into kosei nenkin first and expand the number to 3.7 million later. But businesses which hire large numbers of part-time and other irregular workers, such as restaurant chains and distribution firms, strongly opposed the plan. DPJ lawmakers representing the interests of these enterprises also put up resistance.

The DPJ and the government’s final plan will incorporate only some 450,000 irregular workers into kosei nenkin. If irregular workers meet the following conditions, they can join kosei nenkin. Their weekly working hours must be 20 hours or longer — shorter than the current condition of 30 hours or more — and annual income must be ¥940,000 or greater. They also must be employed by a company that has more than 500 employees.

Regrettably the DPJ did not discuss in detail what types of irregular workers should be newly covered by kosei nenkin, focusing only on the number of irregular workers to be covered by the new plan. The businesses that opposed adding irregular workers to the plan said they cannot bear the financial burden of paying half the premium in the midst of economic stagnation. It is estimated that incorporating 450,000 irregular workers into kosei nenkin will require enterprises to pay a total of ¥80 million in yearly premiums. They should realize that their social insurance-related burdens are much smaller than in European countries.

The ¥940,000 floor may have an adverse effect because if housewives earn more than ¥1.03 million yearly, their husbands will lose a special deduction from their taxable income.

The desire to avoid risking the loss of this tax privilege as well as the resistance by employers to pay half the premium may combine to encourage many housewives to choose part-time jobs that bring in less income.