The labor ministry is planning to raise jobless insurance premiums to avert a further deterioration in the finances of the unemployment insurance system, ministry officials said Wednesday.

The ministry will probably seek to increase the premium in two stages, the officials said.

The premium currently stands at 1.2 percent of a worker’s monthly wage, which is split evenly between the worker and his or her employer.

Some 2.03 million firms are covered by the insurance program, according to the ministry.

The Health, Labor and Welfare Ministry is initially looking to raise the premium rate to 1.4 percent by the end of the year. It may do so under an emergency clause of the unemployment insurance law that permits a premium hike without legal revisions.

The ministry plans to implement a further hike after winning the Diet’s approval to revise the relevant legislation.

The ministry will submit a plan to this end to the Labor Policy Council, an advisory panel to the labor minister that is scheduled to convene shortly.

This maneuver is expected to provoke furious opposition among workers and employers, with the premium rate having already been raised from 0.8 percent to 1.2 percent in April 2001.

The proposal would especially hurt smaller businesses, which are already suffering as a result of the protracted economic downturn, according to critics.

But with the nation’s jobless rate still up at the 5 percent level, unemployment benefit payments continue to exceed premium revenues.

Reserves in the scheme, which at one stage totaled 4.7 trillion yen, are expected to drop to 143.7 billion yen in fiscal 2002.

Nevertheless, some opponents of the labor ministry’s proposals believe the onus is on the state to fund any shortfalls in the unemployment insurance scheme.

Observers say this is unlikely, however, as the government’s overall plan is to reduce its burden with regard to the insurance system’s finances.

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