The ruling Democratic Party of Japan and the two main opposition parties, the Liberal Democratic Party and Komeito, on Friday reached a basic agreement on raising the consumption tax. Although the tax raise is coupled with reform of the social security system, the agreement has failed to present a clear path to make Japan's social security system sustainable. Prime Minister Yoshihiko Noda dubbed his plan unified reform of the tax and social security systems. But the reform on the social security side is so weak that the agreed plan does not deserve to be called unified reform.
For example, under the pressure of the LDP, the DPJ agreed to weaken a plan to increase the number of irregular workers to be covered by the kosei nenkin system, a pension system for corporate workers. The DPJ's original plan envisaged covering some 450,000 irregular workers. But the agreed plan will cover only less than 300,000 irregular workers. A plan to reduce pension benefits for high-income people was also postponed.
Since Japan is facing serious economic difficulties, it is important to build a social security system that not only serves as a reliable safety net for needy people but also is sustainable. Regrettably, Mr. Noda failed to pay sufficient attention to this issue.