The government should allocate more social welfare spending toward low-income households headed by individuals in their 30s to 50s — which have significantly increased over the past two decades — and away from retirees, the welfare ministry argued in its annual white paper released Tuesday.
According to the Health, Labor and Welfare Ministry, the percentage of households whose head is in their 30s with an annual income of less than ¥3 million increased to 17.5 percent in 2014 from 11.6 percent in 1994. Over the same period, those with a head of household in their 40s in the same income bracket increased to 16.6 percent from 11.2 percent, while those in their 50s rose to 16.7 percent from 13.3 percent, the ministry said.
“Among the core elements of income redistribution in our country are the public pension system, public nursing care system and medical insurance system, which charges the elderly less,” the report said.
“That has given relatively larger benefits to elderly people. … We need to keep promoting a shift to all-generational social welfare services and measures to increase income for working generations,” the ministry added.
The ministry’s conclusion and policy recommendation appear to be in line with one of the key campaign pledges made by Prime Minister Shinzo Abe in the run-up to Sunday’s Lower House election.
Abe has argued that more of the budget should be allocated to help younger families, saying the country should promote “all-generational social welfare measures.”
Specifically, Abe promised to provide free early childhood education for all children aged 3 to 5 and free higher education for those from low-income families. But during the campaign, Abe didn’t give specifics about how the program would be managed or how spending would be kept under control.
Welfare and financial experts have long argued that the nation should spend more on younger, working generations.
But it is also true that Japan is saddled with snowballing government debt amid surging social welfare spending — due in part to the rapidly aging population.
According to the Finance Ministry, as of last year, the ratio of government debt as compared to gross domestic product was over 230 percent, the highest level among major developed countries.
The white paper attributed the decline in incomes of middle-aged households to such factors as changes in family structures, the nation’s long economic slump after the early 1990s and ensuing wage restraints.
Meanwhile, during the same 1994-2014 period, the average income level of those aged 65 and older remained roughly the same, but the ratio of low-income households fell and that of middle-class households rose in the age bracket, according to the white paper. The ratio of elderly households with annual incomes of less than ¥1 million fell to 13.7 percent from 18.8 percent, and those with incomes between ¥2 million and ¥5 million increased to 48.2 percent from 42.3 percent, according to the ministry.
The government plans to raise the consumption tax from 8 percent to 10 percent in October 2019 to cover part of the swelling social security expenditures. The hike is expected to increase government revenues by ¥5 trillion a year.
Initially, the government planned to use ¥4 trillion of that every year to pay down the national debt. But on Sept. 25, weeks before Sunday’s general election, Abe promised to divert ¥2 trillion of the tax revenue for new social security and education programs,including free day care services and early childhood education.
According to Abe’s plan, all children ages 3 to 5 will be given free day care and kindergarten. This alone is expected to cost ¥730 billion a year, and the price tag could increase if more people apply for the benefits.
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