The revelation that the Health, Labor and Welfare Ministry has been using improper methods to collect job and wage data for the past 15 years, thereby underpaying unemployment insurance and other benefits for nearly 20 million people by billions of yen, is yet another problem that threatens to undermine public trust in administrative service. Such data serve as key components of the government’s economic estimates and forecasts, which are used to formulate policies. While the government plans to provide retroactive compensation for the underpaid benefits, it also needs to take steps to rebuild the credibility of its statistics.
The ministry’s monthly labor survey covers jobs, wages and work-hour data on businesses establishments across the country, serving as a key indicator of the nation’s employment conditions. While it is a rule to survey all companies that hire 500 or more employees, the ministry since 2004 has in fact collected data from only about one-third of the roughly 1,400 firms in Tokyo that meet the criteria. Since the survey resulted in excluding many of the big companies located in Tokyo where wages tend to be higher, the average wage quoted in the statistics was calculated lower than it would have been had the survey covered all relevant companies.
Because the amount of benefits paid in unemployment insurance and labor accident insurance programs is reviewed in accordance with the fluctuations in the average wage, the government says the faulty wage data resulted in underpaying benefits by ¥53.7 billion to a total of 19.73 million people over the past 15 years. While some 19 million were underpaid a total of some ¥28 billion in unemployment insurance benefits, roughly 720,000 others failed to receive some ¥24 billion in benefits under the labor accident insurance program that they could have gotten had the labor data been collected in accordance with the rule.
How and why the data collection method was altered has not been made clear. Some media reports speculated that labor ministry officials may have skipped surveying all the business establishments meeting the criteria because there were too many such firms in Tokyo. But that would not justify secretly changing the survey method — and sowing the seeds of confusion years later. Chief Cabinet Secretary Yoshihide Suga said he instructed all government ministries and agencies to check if statistical surveys under their jurisdiction are conducted properly. He also indicated that the government will rework the fiscal 2019 budget, approved by the Cabinet in late December, to include compensation for the underpaid benefits. It is extremely rare that a draft budget already endorsed by the government is changed even before it is submitted to the Diet for deliberations. Some of the government-released economic statistics that use the monthly labor data may also need to be revised.
Labor minister Takumi Nemoto, who apologized for the scandal, denies there was an organized attempt to cover up the improper practice. While the fiasco came to light after the Internal Affairs and Communications Ministry raised a flag, the labor ministry said some of its officials in charge of the survey had earlier been aware of the problem but did not share the information within the organization or take any action to correct it. But in January 2018, the ministry reportedly started using specialized software to adjust the survey data closer to one that would have been obtained if all the relevant business establishments had been surveyed. That indicates that the ministry was aware at that time that the survey was being taken in ways that did not conform to the rule — but did not disclose the fact. Nemoto was informed of the whole problem in late December, but the matter was not promptly disclosed, and the ministry released the final results of the October survey, again without revealing the problem.
The labor ministry came under fire for releasing erroneous work-hour data in connection with the bill to expand the scope of the discretionary labor system, which was submitted to the Diet as part of the government’s work-style reform legislation last year. Facing criticism from the opposition camp, the government was eventually forced to withdraw the bill from the work-style reform legislation package.
These statistics serve as the foundation of the government’s policies, and policies formulated on the basis of faulty data that do not reflect the real situation cannot address the issues they’re aimed at. This time real damage was done in the form of underpaid unemployment insurance benefits that affected millions of people. To regain the public’s trust in the government’s statistics, how the officials erred in its survey method needs to be exposed and measures taken to ensure such problems are not repeated.