The data showing that people 65 or older account for more than half of the nation’s households living on welfare — topping the 50 percent mark for the first time in March — represent only a part of the financial difficulties confronting the nation’s growing ranks of senior citizens. Some estimates show that 1 out of 4 to 5 senior citizens lives on income below the poverty line, though their savings and other assets do not figure in these calculations. There are warnings that poverty of the elderly generation will become more serious in the future — given the problems that many of today’s younger generation face. The government should grasp what the figures imply and quickly explore policy responses.
The total number of welfare-dependent households hit a record 1.63 million in March, with the number of welfare recipients reaching 2.16 million, or 1.71 out of every 100 people in this country. But the households led by those 65 or older that live on welfare program under the Livelihood Assistance Law numbered 826,656, or roughly 6 percent of the nation’s estimated 12.21 million elderly households. About 90 percent of the welfare-dependent elderly households consisted of a single member — meaning senior citizens living alone, possibly with no relatives they can turn to for help.
The number of welfare-dependent elderly households rose 1.7 times over the past decade. The trend of an increase in senior welfare recipients pushing up the total figure — offsetting the fall in recipients among the working-age generations due to improving employment conditions — is deemed likely to continue. The growing ranks of the elderly on welfare may reflect a rise in the number of people who receive either little or no public-pension benefits, with little or only meager-paying job opportunities available to them. The problem may also represent a collapse of the traditional pattern of working-age people providing economic support for their aging parents — because younger people are too hard pressed financially to help their parents.
The economic problems of the working-age population threaten to translate into poverty of the elderly when they get older. Irregular workers such as part-timers, those on term contracts and temporary dispatch workers — whose ranks have steadily expanded to account for about 40 percent of the nation’s employed workforce — not only face unstable employment prospects today but expect post-retirement uncertainties if their current jobs mean they cannot count on corporate pension coverage or retirement allowances enjoyed by full-time regular corporate employees.
A 2013 report by the OECD showed that the relative poverty rate of Japanese 65 or older — the ratio of such people living below the poverty line, or half of the median income — fell from 21.7 percent in 2007 to 19.4 percent in 2010, although Japan’s rate was still the eighth-highest among 34 OECD members and roughly double that of many advanced European economies. Meanwhile, a recent study by Ritsumeikan University professor Naoyoshi Karakama, quoted in media reports, estimated the number of the elderly in this country who live on income below the levels of welfare benefits at 8.93 million in 2014 — or about a quarter of the nation’s elderly population and an increase of some 1.6 million over 2009.
Focusing on annual income alone may not draw the whole picture of the financial situation of the nation’s growing elderly population. About 60 percent of the nation’s individual financial assets, estimated at ¥1.741 quadrillion as of the end of 2015, are reportedly owned by senior households. However, a 2014 edition of the Health, Labor and Welfare Ministry’s annual survey of people’s basic living conditions shows that 16.8 percent of elderly households have no savings at all, while such households with savings of less than ¥5 million account for 26.8 percent of the total. About 33 percent of the elderly households — higher than the national average of 28.5 percent — have more than ¥10 million in savings.
These data point to the steep gap between the haves and have-nots among the elderly population, and show that large numbers of senior citizens who live below the poverty line do not apply for welfare benefits.
The government in recent years has been reducing the standards of welfare benefits and cracking down on illicit receipts of benefits to tame the increase in the cost of the livelihood assistance program, which hit ¥3.8 trillion in the fiscal 2016 budget. But there is criticism that the government has not reviewed the program despite the changing economic circumstances of the elderly population, including support from relatives.
Shortcomings of the public pension system are also highlighted as a key factor behind the problem of elderly poverty. According to the welfare ministry survey, public pension benefits account for 67 percent of the annual income of elderly households, and 56 percent of the pensioners say they have no other means of income. But the amount of pension benefits is set to decline as the number of working-age people who support the system shrinks with the aging of Japan’s population and fewer births.
The financial hardships will be even harder for people who rely solely on benefits from the national pension program. Those who subscribe only to the national pension program used to be mainly self-employed workers who face no mandatory retirement age and are counted on to have sufficient income in their old age, but there are growing ranks of irregular workers such as part-timers who are solely covered by the basic pension, whose monthly benefits can hardly cover their living expenses. Furthermore, a 2007 estimate by the now-defunct Social Insurance Agency showed that some 420,000 elderly people do not receive pension benefits at all because they had failed to pay the premiums for the minimum required 25 years, although the government plans to reduce the minimum period to 10 years to address part of the problem.
The data concerning welfare-dependent elderly households should serve as a reminder of these and other problems that are behind the poverty of senior citizens and encourage more discussions about what the nation can and should do to provide a safety net for them.
IN FIVE EASY PIECES WITH TAKE 5