New Trends in Japanese Social Policy

Social security systems are largely designed to balance the conflicting objectives of social adequacy and individual equity. Pension systems have two functions corresponding to these two objectives: to guarantee a minimum income and redistribute wealth, and to promote savings and insurance. In general, pension models recognize this dual purpose by promoting multi-pillar systems, in which each pillar follows one objective. This presentation argues that the Japanese pension system fails to adequately balance these objectives due to its ambivalent design. It focuses in particular on the limited effectiveness of the minimum income and redistribution function of the Japanese basic pension (kokumin nenkin).

The Japanese government has implemented two major income support measures for people between the ages of 60 and 65. One is the partial pension called the Old-age Pension for Active Workers beyond the age of 60. The other is an employment subsidy for elderly employees from the employment insurance system called Employment Continuation Benefit for the Elderly. In this paper, the effects of these measures are examined from the perspective of social insurance financing and labor market measures.
 The uniqueness of Japan’s social and employment measures is that the system puts emphasis on promoting work among the elderly. The Japanese people and the Japanese government do not find early retirement measures to be attractive under the circumstances of a declining population and an aging population in the early twenty-first century. There are two phases of these measures: the labor market and the social security scheme. Examples include extending the average retirement age among employees by promoting working opportunities and extending the statutory pensionable age from 60 to 65. In this paper, the background to such measures as well as their effects are described and analyzed. Current policy discussions underway in Japan until the first half of 2000 are also presented.

In the mid-1990s, the Japanese government planned and enacted public, mandatory long-term-care insurance (LTCI, kaigo hoken). Actually, the key commitment to “socialization of care” for the frail elderly was the 1989 Gold Plan, which took a Scandinavian approach. LTCI represents a switch to German-style social insurance, but compared to Germany, the Japanese system is much more generous, and it provides only formal services with no allowance for family caregiving. These counter-intuitive provisions were approved with surprisingly little real debate, due to the political situation of the time. Debate did erupt before the start of the program in April, 2000, with fundamental criticisms of its financial and social effects. The program was launched with only mild reforms, however, and despite much attention to a variety of problems, it seems to be well under way.

Distributing the costs of healthcare reform is a question facing healthcare systems worldwide. As in other sectors, the outcomes of healthcare reform may be influenced by old or new conceptions of the goals of policy, fighting among different interest groups over protecting benefits, or by the state on behalf of those interests for long-range or short-range purposes. In Japanese health care, fighting over the shape of major reforms has taken place over the goals of the system, among interests with a strong stake in the system, within the bureaucracy, and between the Liberal Democratic Party and officials in the Ministry of Health and Welfare. Although popular opinion and mass-media coverage of these events is limited, major reforms have been under discussion since 1995. The most recent minor revision of the health insurance law, on December 1, however, reveals that the system continues to protect the elderly and raise the costs on the working-age population. This paper argues that healthcare policy reform outcomes are best explained by long-standing political commitments to the elderly, rather than a particular concept of social policy, a balance of power among interest groups, or long-range consideration of the costs for society.