Hundreds of people with disabilities involved in a government-subsidized work program have been laid off, as the businesses that employed them were forced to shut their doors due to financial difficulties, sources close to the matter said Tuesday.
Over 280 employees at seven businesses run by two entities in Kurashiki, Okayama Prefecture and Takamatsu, Kagawa Prefecture, were let go in July, while another company operating similar programs in central and eastern Japan is preparing to shut down later this month, possibly affecting around 100 workers, the sources said.
The operations, including businesses in the fruit- and produce-packing industries and direct mailing services, receive state subsidies based on the number of disabled workers accepted.
The labor ministry, however, introduced tougher criteria for the subsidies in April to encourage sound financial management of such operations and to reduce the number of businesses that heavily rely on public funds.
Under a revised ministerial ordinance, operators are prohibited from using state-funded benefits to pay the workers’ wages.
Companies that offer vocational training to people with disabilities receive benefits on condition that they sign job contracts and guaranteed workers minimum wages set by prefectural governments. Over 40 percent of the workers in the program have mental disabilities.
For example, at least ¥5,000 per worker is paid to the operator of a business employing 20 people or less.
The number of businesses in the program has surged in recent years to about 3,600 in fiscal 2016 from around 700 six years earlier. But the number that closed in fiscal 2015 doubled from the previous year to 141.
While some critics point to the lack of incentives for the businesses to operate efficiently — as they rely excessively on state subsidies — an official at the Health, Labor and Welfare Ministry said it is “difficult to tell” which companies truly intend to make their operations self-supporting.
The ministry is looking into financial conditions of the businesses in the program, and is urging those that let go workers to help them find new jobs.
Even if the discharged employees are able to find new work, experts say it could take up to a year for those with mental disabilities to adapt to their new environments. The laid off workers will receive unemployment benefits while they look for new jobs, the sources said.