Footing for social welfare

Anational conference for social welfare reform, an advisory body based on a law enacted in August with the support of the Democratic Party of Japan, the Liberal Democratic Party and Komeito, was inaugurated Nov. 30 with 15 scholars and experts serving as its members.

The advisory body is to discuss pension, medical services, nursing care services for the elderly and ways to cope with the declining birthrate, and then submit a proposal to the government by Aug. 21, 2013. The biggest problem for Japan’s social welfare system is that while its spending rises each year, the footing for funding is weak. It may be necessary to increase people’s financial burden in the form of higher social insurance premiums or taxes, and to decrease social welfare benefits for high-income people.

The advisory body should strive to come up with a convincing proposal that will ensure the sustainability of the nation’s social welfare system while clarifying the relationship between people’s financial burdens and social welfare benefits.

According to the National Institute of Population and Social Security Research, Japan’s total social welfare benefits reached ¥103.487 trillion in fiscal 2010, topping ¥100 trillion for the first time. Benefit expenditures will continue to grow due to an increase in the elderly population and progress in medical technologies. Social welfare spending from the budget grows by ¥1 trillion every year. No time must be wasted in reforming the system.

Pension payments account for more than half of the total social welfare benefits. The nation’s financial difficulties are casting a shadow over its pension system. The government now must rely on bond issuance to pay for the portion of basic pension that it has an obligation to pay. To partially pay for pension benefits, the withdrawals from the reserve fund of the kosei nenkin pension plan, a pension plan for corporate workers, has started.

It is becoming more and more difficult for young couples to afford to have children. The long sluggish economic conditions have made it difficult for many young people to find stable employment — a prerequisite for marriage and child rearing.

The DPJ came to power in 2009 on a promise to provide a monthly ¥26,000 child allowance, irrespective of the income levels of parents. But it was unable to fully implement this promise due to the nation’s financial difficulties. Moreover, the government has not yet come up with effective labor policy measures aimed at realizing a balance between work and life that will enable young couples to continue to work if they have children, thus making it easier for them to afford to raise a family.

Other critical issues include the out-of-pocket amount that elderly people must pay for medical and nursing care services, and whether to reduce pension benefits or to introduce a minimum pension system covering all people. The advisory body needs to propose a system that will provide sufficient benefits to the needy while achieving a balance between the financial burden people must shoulder and the benefits they receive.