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The government on Tuesday proposed raising the monthly employment insurance premiums 0.2 percentage point to 1.6 percent to help rebuild the deteriorating national unemployment benefit system.

The Health, Labor and Welfare Ministry asked the Labor Policy Council, an advisory panel to the labor minister, to study the proposal so it could be implemented in June, according to labor ministry officials.

Half of employment insurance premiums collected under a set rate are paid by employers.

Under the proposal, a worker with a monthly salary of 400,000 yen would see a monthly premium rise to 3,200 yen from 2,800 yen.

A rate hike would likely draw protests from workers and trade unions because the government just increased the premium rate to 1.4 percent from 1.2 percent in October, citing shrinking unemployment benefit reserves due to an increasing number of jobless.

“Our forecast regarding the economy was insufficient,” labor minister Chikara Sakaguchi admitted during a regular news conference Tuesday. “It all comes down to the fact that the economy has been in a bad situation for a longer period than we had foreseen.”

The government plans to draft bills by the end of November for submission to the ordinary Diet session convening in January, ministry officials said.

National employment insurance funds have deteriorated due to increased benefit payments following rising bankruptcies amid the prolonged economic slump.

The rate hike will boost the government’s revenue by 280 billion yen, which ministry officials reckoned would stabilize the employment insurance system at least until fiscal 2007.

In addition to the 0.2 percentage point increase, the ministry is also calling for changing the current flexibility clause, which allows the premium to be changed by 0.3 percentage point without legal revisions, to be expanded to 0.4 percentage point. The October hike was made possible through this clause.

The ministry also plans to expand an existing “trial employment program” for young and disabled people so that it covers middle-aged workers.

Firms that employ workers with employment insurance coverage who are aged 45 or older would be able to receive subsidies after a trial period.

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