ISSN 2186 – 0297

Social Security
in
Japan

２０１４

Preface

Japan has entered the phase of population decline and the proportion of the elderly is the highest
in the world. Yet the life expectancy of Japanese is high and the health expenditure per capita is low
compared to other industrialized nations. The social security plays an important role to maintain theJapanese society as it is.
This booklet aims to provide foreign researchers and specialists with an introductory explanationof aspects of the social security system in Japan: pensions, health and long-term care insurance, public
assistance, family policy, policy for people with disabilities and labor insurance. The first edition was
published in March 2000, and this is the sixth version updated as of January 2014.
Along with evolving needs and challenges, the social security system in Japan has been, and will
be constantly revised and reformed. The complexity of the system needs clear and concise explanation tofacilitate international comparison and provide some hints for ameliorating existing institutions elsewhere.
We sincerely hope that this booklet will be useful for those who care for the welfare of people andbetterment of the society.

Akira Morita
Director-General
National Institute of Population and Social Security Research

Contents

1.

Overview of Population Trends in Japan

1

2.

Overview of Social Security in Japan

5

3.

Pensions

11

4.

Health Care21

5.

Welfare for the Elderly

33

6.

Public Assistance41

7.

Family Policy

47

8.

Policy for People with Disability

53

9.

Labour Insurance57

Social Security in Japan 2014

Chapter 1

Overview of Population Trends in Japan

1.1 Total population and change of age structure
As of September 1st 2013, the population of Japan counted 127,263,000, shrunk by 224,000 from theprevious year. Population decline has become a reality1. In 1920 when the first population census was
carried out, the population of Japan was 56 million. The population growth continued until around 2010,
and then it would decline almost at the same pace as it increased, according to the population projection of
IPSS2. Japan is the most aged society in the world, with 25.0% of the population aged more than 65 years
old in 2013, and this rate would further increase to 40% in 2060, and the increase of “oldest-old”, namely
aged 75 and more would be more than double from 11% in 2010 to 27% in 2060. Naturally, the young
people (aged 0-19), comprising 40% of the total population in 1960 is shrinking to 18% in 2010, and 13%
in 2060.

Figure1.1 Population trend by age group in Japan (1920-2060)
140,000

128,057
14,072(11%)

120,000

15,173(12%)

93,419Population in 1,000

100,000

20-64 years old

80,00055,96360,000

Projection

50,694(54%)

86,73723,362(27%)
74,968(59%)

11,279(13%)

40,00041,050(47%)
20,00037,375(40%)

0-19 years old

022,867(18%)

11,045(13%)

Year
Source : For data up to 2010, Census data by Statistics Bureau of Ministry of Internal Affairs and Communication(http://www.stat.go.jp) . For data from 2015, “Population Projections for Japan”, IPSS (see footnote)

1.2 Vital statistics trend
The change of Japanese population is the result of the fertility and mortality evolution. Before the endof the World War II (in 1945), the level of fertility and mortality was high. The total fertility rate was ashigh as 5.11 in 1925, but steadily decreased until 1937, followed by significant fluctuation due to the war
1“ Monthly Report” of Result of the Population Estimates, Statistics Bureau, Ministry of Internal Affairs andCommunications, http://www.stat.go.jp/english/data/jinsui/tsuki/index.htm
2“Population Projections for Japan (January 2012), IPSS, http://www.ipss.go.jp/site-ad/index_english/esuikei/gh2401e.asp

1Chapter 1 Overview of Population Trends in Japanand population policies. As for the mortality, the improvement since 1920 is notable especially for the levelof infant mortality and maternal mortality. The extension of life of the Japanese continues up to now andthe life expectancy is one of the highest in the world at 79.94 for males and 86.41 for females in 2012.

Infant Mortality Rate - Life Expectancy

200

600

180
500

160
140

400

120
100

300

80
200

60
40

100

20
0

0
1890 1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020
Year
Infant Mortality Rate (Left scale)Life Expectancy (Left scale)
Maternal Mortality Rate (Right scale)

Maternal Mortality Rate - Total Fertility Rate x 100

Figure 1.2 Trend of mortality and fertility in Japan

Total Fertility Rate x100 (Right scale)

Source : Statistics and Information Department, Ministry of Health, Labour and Welfare (http://www.mhlw.go.jp/)

A sharp decline of total fertility rate was observed in 1966, which was due to the Year of the Fire
Horse. The traditional belief that girls born in this year would eat up the husband refrained parents not tohave babies this year. Customs, superstition, tradition still dominated the reproductive behaviors ofJapanese even during the latter half of the 20th century.

1.3 Population distribution – centralization and decentralization
The Japanese archipelago consists of the main island (Honshu) and the three major islands (Kyushu,
Shikoku, Hokkaido) with 6,848 lesser islands, totaling 377,960 km2 in area. Administratively it is divided
into 47 prefectures (都道府県 To-Do-Fu-Ken) and subdivided into 1,742 municipalities3 (市区町村
Shi-Ku-Cho-Son) as of 1 Jan. 2013. In 1889 when municipality was institutionalized by law, there were
13,386 municipalities, but due to population urbanization along with domestic migration, the number ofmunicipalities has been reduced. The population concentration proceeds and now the three Major
Metropolitan Areas namely Kanto (around Tokyo), Kinki (Around Kyoto, Osaka), and Chukyo (around
Nagoya) contain 51 % of total population of Japan.
The level of population aging is different from municipality to municipality mostly due to3

Local Authorities Systems Development Center, https://www.lasdec.or.jp/cms/1,19,14,151.html

http://www.ipss.go.jp
2Social Security in Japan 2014

emigration of younger people to urban areas. As shown in Figure 1-3, municipalities in urban areas havemuch less proportion of the aged than in rural areas.

1.4 Family structure
The Japanese family structure changes through history. As an agrarian society in 19th century,
when 88% of the working population were in the agricultural, forestry, and fishing sectors 4, a family
was a production unit, and normally large, with more than two generations. The Civil Code enacted in
1898 institutionalized ie (family) system and authorized the head of the household, mostly the eldest
male sibling, to be fully responsible for the family affairs. After the WWII, the ie (家) system wasgradually transformed to the nuclear family, with fixed role of the husband at work, the wife at home
to take care of the children. Along with the global trend of empowerment of women, the Equal
Employment Opportunity Law was enacted in 1986 and roles of women and men were transformed toa direction of individualization of family. Recently, even though the total population is decreasing, thenumber of households is still increasing due to the increase of single households, mainly with elderly
who have lost their spouse or young and middle aged people who are not married or divorced. The
average number of household members keeps on decreasing from 4.99 in 1920 to 2.46 in 2010.
1.5 International migrants
Although the proportion of foreigners is 1.6% of the total population of Japan, which is much
lower than the rate of other industrialized countries, the number of foreigners steadily increased until
2008. Since then, the total number of foreigners decreased due to the global economic crisis and theGreat East Japan Earthquake, which hit Tohoku in 2011. However, permanent foreign residents keepon increasing, to a level close to 1 million in 2011 (Figure 1.5).
1.6 Population data sources
The correct statistics on population is the prerequisite for good governance and policy
formulation. In Japan, there are three sources of population statistics, namely Population Census, Basic
Resident Registration, and Family register (戸籍 Koseki). The Population Census has been organized since
1920 and every five years, with wider range of questions asked every ten years. The registration based
population statistics is used to estimate yearly population figures. Family register, the East Asian traditional
population registration system, was re-instated in Japan since 1871 by law, and now used as personal
identification in conjunction with the family status.
As for the vital statistics, since 1872, each birth, death and marriage of people living in Japan has
been registered at the municipality level and compiled at the national level. Together with various
government surveys including those carried out by IPSS, population information is gathered, used, anddisseminated for everybody through the internet, on web sites such as ; www.e-stat.go.jp
or www.ipss.go.jp .
4Toshiko Himeoka (2008) “Changes in family structure”, in The Demographic Challenge – A Handbook about Japan,
Florian Coulmas et al. ed. Brill,

3

60

2.5

Figure 1-4 Household number by size 1920-2010

Figure 1-5 Number of registered foreigners

Source : Population Census of Japan
2.0

22.2%

18.2%
4+
30

3
2

27.2% 1
20

1.5

1.0

0.5

0.0
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015

Year

Total

Permanent residents

Non-permanent residents

10

32.4%
0
1920
1930
1950
1955
1960
1965
1970
1975
1980
1980
1985
1985
1990
1995
2000
2005
2010

in millions

40

Registered Foreigners in millions

50

Figure 1-3 Proportion of the aged
65 years and over, municpality level, 2010
Source : Population Census of Japan

Population
Aged 65+
2010
-20%
-30%
-40%
-50%
50+%

Social Security in Japan 2014

Chapter 2 Overview of Social Security in Japan
2.1 History of the social security system in Japan
2.1.1 Pre-Modern Era (before 1868)
As with other countries, the source of social security in Japan could be found in charity-oriented
communal activities for the poor in a pre-modern era. The “Shikain（四箇院）” (four institutions for the frail
elderly without family etc.) set up in 539 was an example of it. The Imperial court, Shogunate, and feudallords had provided relief to the poor. Buddhist temples also had provided relief to them. These measures
were based on the charity ethics of Confucianism and Buddhism. However, the beneficiaries had been
severely limited (ex. the poor elderly without family). It was because the mutual aid had been a principal of
the society in those days. For example, “Gonin-gumi（五人組）” (five members group in the Edo Era) might
not only be a group for the render (Nengu 年貢) payment, but also that of mutual aid in the community
during this era. This can be one form of the social capital of the pre-modern society.
As for the healthcare, during the time from the ancient to the Edo Period, traditional medicine had
been imported from the Chinese continent, with certain original development within Japan. In the latter
period of Edo, western medicine had been imported from the Netherlands through Nagasaki. Private
schools (Rangaku Jyuku 蘭学塾) had been set up in Nagasaki and Sakura (Chiba) etc. Some of them are
the origins of the notable medical faculties of the University of the present time.
Table 2.1 in page 10 lists the detailed chronological events.
2.1.2 From the Meiji Era to the End of World War II (1868-1945)
In the Meiji Era (1868-1912), Japan had started to develop for modernization. But poverty had
increased because of instability in society. The government had to cope with it. Indigent Person’s Relief
Regulation had been enacted (1884). But this regulation had a principle of “mutual aid for the poor” and thebeneficiaries were severely limited. The amendment of it to expand the beneficiaries had been discussed in
the Imperial Parliament, but we had to wait for the enactment of the Poor Relief Law (1929). It was still an
inadequate system compared to the present system.
In the Meiji Era and the Taisho Era (1912-1926), poor health and bad working conditions of thefactory workers including boys, girls, and women had been a serious social problem. It had led to theintroduction of the Factory Law (1911). This law is an origin of Labour Standards Act (1947). After that, asocial insurance scheme was introduced for workers. These were Health Insurance Act (1927), National
Health Insurance Act (1938), Labor Pension Insurance Act (1941). During this period, the Ministry of
Health and Welfare was established in 1938. Social welfare, health care, public health, and labour policy
had been transferred from the Home Ministry. Local governments also had made efforts to cope withpoverty. Commissioned welfare volunteer had been introduced in Okayama prefecture (Saisei-komon-seido
in 1917) and Osaka prefecture (Houmen-iin-seido in 1919). This system had been spread throughout Japanand has led to the present welfare commissioner and commissioned child welfare volunteers. In addition tothese, many charitable persons had set up welfare institutions like orphanages, facilities for the mentallydisabled persons, and nursing homes for the elderly.

5Chapter 2

Overview of Social Security in Japan

However, these systems were inadequate compared to the present system in terms of population
coverage and so on. (Refer to Annex Table 2.1)
In terms of medicine, the Meiji government had decided to introduce western medicine (mainly from
Germany) and had developed the medical doctor license qualification system, educational institutions, andso on. The government also had constructed the mechanism of modern public health (for example, Act on
Prevention of Infectious Diseases in 1897). Maternal and Child Health Act has been enacted in 1937. Basedon this act, “Maternal Handbook” (present “Maternal and Child Health Handbook”) had been issued from1942. The purpose of this handbook was to protect and promote the health of mother and child throughrecording the health checkup. (Refer to Annex Table 2.1)
2.1.3 After the End of World War II to present (1945-2013)
The social security system in Japan developed dramatically after the end of World War II. During thesocial turmoil just after the World War II, measures to assist the needy, to improve nutrition and to prevent
infectious diseases were implemented, along with infrastructure development related to social welfare
policies. In the Constitution of Japan enacted in 1947, Article 25 stipulates the fundamental principles ofdeveloping a social security system, and this served as the foundation for social security-related laws
created in the post war era. In 1947, the Ministry of Labour had been separated from the Ministry of Healthand Welfare to be in charge of labor policy independently (These ministries have been re-integrated in 2001
as the Ministry of Health, Labour and Welfare). In this year, unemployment insurance had been introduced.
During the rapid economic growth period that followed, the public pension and health insurance was
expanded to cover more people, and the so-called “Universal Coverage in public pension and healthinsurance” extending to all citizens was introduced in 1961. The Act on Social Welfare Service for Elderly
and the Maternal and Child Welfare Act were also enacted in 1963 and 1964 respectively, and benefits fromvarious systems were enhanced. The social security system was reviewed during the period of stableeconomic growth since the late 1970s. Meanwhile, developing a social security system in response to theaging population became an important challenge.
Since the 1990s, measures against the declining birthrate, in addition to the aging society, surfaced as
an important policy issue. Pension and health insurance system reforms were implemented. Long-TermCare Insurance Act was introduced to support the elderly with long-term care needs and their family by thesociety. Enhancement of childcare services and financial support are being promoted to assist child care. In
addition, due to changes in the employment situation and widening difference in economy, employment
policies have also become important. (Refer to Annex Table 2.1)

2.2 Social security schemes in Japan and its characteristics
A social security scheme is primarily a system that supports the livelihood of the people by providing
necessary support against conditions that lead to poverty, illness, injury, death, aging and unemployment,
and so on. There are various social security schemes in Japan. The public pension system is to provide
income security for the elderly, the survivors, and disabled persons. Healthcare systems to protect publichealth include the health insurance, public health and maternal and child health systems. Meanwhile, social
http://www.ipss.go.jp
6Social Security in Japan 2014

welfare for the elderly include long-term care insurance, while family policies include childcare services
and financial support such as child allowance, and support for single-parent households. Policies for
persons with disabilities include the provision of care services and financial support. Public assistance isavailable as part of the financial support system for the poor. As part of the system to protect workers,
employment insurance, work-related accident insurance, and others are available.
Kinds of benefits provided through these social security schemes are either in-kind or in-cash. Table
2.1 lists major social security schemes by types of benefits and in-kind/in-cash classification based on
International Labour Organization (ILO) classification standard.

Table 2.1 Schemes of Social Security
Benefit *Main Type of Function
SchemeFinance(ILO Standard)
In-kind In-cash
Social
Old Age, Survivors,
Public pension*
Insurance
Invalidity Benefits
SocialHealth Insurance*
Sickness and Health
Insurance
Public health
Tax*
Sickness and HealthSocialLong-term care insurance*
Old Age
Insurance
Services for the elderly(except for long-term care
Tax*
Old Ageinsurance)
Family Policy
Policy for persons withdisabilities

Tax

*

*

Family Benefits

Tax

*

*

Invalidity Benefits

Public assistance

Tax

*

*

Employment insurance
Work-related accident
insurance

SocialInsurance
SocialInsurance***

Social assistanceand others
Unemployment
Family Benefits
Employment Injury* Benefit does not show all kinds of benefits.

Many social security schemes in Japan adopt the social insurance system. There are five social
insurance systems, namely the public pension, health insurance, long-term care insurance, employment
insurance, and work-related accident insurance. Of these insurances, all citizens are enrolled in the public
pension and health insurance programs. This universal coverage in public pension and health insurance is amain characteristic of the Japanese social security system. Furthermore, citizens aged 40 and over arecovered by the long-term care insurance, and employees are covered by the employment insurance andwork-related accident insurance.
The social insurance systems mentioned above are financed by social insurance premiums andsupplemented by the tax revenue in forms of subsidy. The social insurance premiums is shared by all
insured, in most cases, according to their ability to pay (the level of income). Thus, the function of social
insurance is to share the risk among insured persons, and at the same time, to redistribute income among

7

Chapter 2

Overview of Social Security in Japanthem.
On the other hand, other schemes, such as public assistance (poverty alleviation measures in Japan),services/benefits for the family, children, and the disabled are paid out of the general budget of thegovernment (tax).

2.3 Administration organizations and service providers
The Ministry of Health, Labour and Welfare holds jurisdiction over the social security systems. The
Ministry sets national standards and promotes projects deemed necessary to be implemented from anational perspective. The Cabinet Office is in charge of planning the governmental basic policy plans
related to social security such as population aging and child care policy and so on. Local governments suchas prefectures and notably municipalities (cities, towns and villages) execute and implement the social
security services. Local governments have social welfare office, public health centers. In recent years,
decentralization proceeds in the form of delegating the financial resources from central to local
governments. It is based on the idea of “Local autonomy.”
Social security system has many schemes. Managements of beneficiaries and contributions has been
done separately only to lead to inconvenience for people and inefficiency in management. To solve these
problems, the Social Security and Tax Number Law was approved in 2013 and planned to be enacted in
January 2016. A unique number will be given to all persons, including foreign residents, and companies inJapan. Keeping the maximum attention to the privacy protection, this “My Number” system will be used
for service management in the tax and social security.
Service providers of social security such as hospitals and clinics for health care, day-care centers andinstitutions for the elderly long-term care, rehabilitation centers and support centers for the disabled, and soforth, can be both public and private. However, private institutions are not allowed to gain profit anddistribute it. Public and private institutions are both operated under the supervision of the Ministry of
Health, Labour and Welfare (MHLW) and the local governments.

2.4 Financial statistics of social security
Japan now collects and spends two sets of financial statistics of social security. The Social
Expenditure of Japan based on the OECD standard was 112.0437 trillion JPY in FY2011, which was
23.67% to GDP and 876,700 JPY per capita. The Social Benefit based on ILO standard, which does notinclude facility maintenance costs, pre-school education costs and so on, was 107.4950 trillion JPY in
FY2011 which was 22.71% to GDP and 841,100 JPY per capita. The ILO standard social security
statistics can grasp the flow of revenue and expenditure in social security. Fig. 2.1 shows a breakdown ofsocial security revenue and expenditure by this ILO standard. Insurance premium accounts for 52.0% of
the total revenue and the taxes for 37.6%. The expenditure for the public pension takes up around half ofthe entire expenditure, and for the medical care, around one third. As for the expenditure by function, old
age takes up around 50 %.

http://www.ipss.go.jp
8Figure 2.1 Diagram of Social Security Revenue and Social Benefit based on the ILO Standards, fiscal year 2011
[Revenue](Unit; Trillion of JPY,%)[Expenditure]
Category

Social Insurance

60.1

Pensions[52.0%]
Contribution from
Insured

31.0

Contribution from
Employers

29.0

Function

53.1

9xpenditure
except for".alance"
111.9
Social Secirity
Revenue
115.7

Other Public
Contribution

Income from Capital

Others

31.5
12.0

3.7[3.2%]

Social Benefit
107.5

Welfare and Others
Other of w hich longterm care

20.4
[18.9%]
7.9

Survivours

6.8 [6.3%]

Family Benefits

5.7 [5.3%]

Social Assistance andOthers3.9 [3.7%]

Inability Benefits

3.5 [3.3%]

Unemployment

1.8 [1.7%]

Employment Insury

0.9 [0.9%]
0.5 [0.5%]

Housing

Administrative Cost

1.5

Administrative Cost

1.5

Others

2.9

Others

2.9

8.4[7.3%]

From Reserve Fund
Others34.1

32.5[30.2%][31.7%]

43.5[37.6%]

State Contribution

51.8[48.2%]

Sickness and
HealthMedical Care

Taxes

Old Age[49.4%]

6.2
2.2

Balance

3.8

Balance

3.8

Notes
1. "Others" in the Revenue include transfers from the reserve funds, etc. Others in the Expenditure includes maintenance expenses for the facilities, etc
2. Balance refers to the difference between Social Security Revenue (115.7 trillion yen) and the sum of Social Benefit, administrative costs, operating
losess, and others (111.9 trillion yen), and does not include any transfer to and from other systems; in particular, balance represents transfers to thereserve fund and the balance carried forward to the following fiscal year.

Chapter 2

Overview of Social Security in Japan

Annex Table 2.1. History of Social Security in Japan
Period and Year
593
718
Ancient1642
to theEdo Era
1722
1791
1874
1897
The
1911
Meiji
1922
Era to
1929
the
1937
World
1938
War II
1941
1946
1947
Just afterWorld
War II

1950s to
1970s

1949
1950
1951
1958
1959
1960
1961
1963
1964
1971
1973
1974
1981
1982

1980s to
2000

1990
1991
1995
1997
2000
2001

From
2001

2003
2005
2008
2011
2012

Main Events"Shikain" was set up by Shotoku Taishi (member of Imperial Family)"Yoro Ritrsuryo" Act (showed mutual aid for the elderly etc.)"Osukuigoya" set up (Relief institution in famine)"Koishikawa Youjojo" had been opened (Medical Institute for the Poor in Edo city)"Shichibu-tsumikin" (Fund to relief for the poor, Edo city)
Indigent Person’s Relief Regulation
Act on Prevention of Infectious Diseases
Factory Law (an origin of Labour Standards Act (1947))
Health Insurance Act
Poor Relief Law
Maternal and Child Health Act
National Health Insurance Act (amended in 1958), Social Services Act
Ministry of Health and Welfare was established
Labor Pension Insurance Act (present Employees Pension Insurance Act)
Public Assistance Act (old act)
the Constitution of Japan
Child Welfare Act, Unemployment Insurance Act
Industrial Accident Compensation Insurance Act
Health Center Act (present Community Health Act)
Ministry of Labour was establishedAct for the welfare of Persons with Physical Disabilities
Public Assistance Act (present act)
Social Welfare Service Act
National Health Insurance Act (Amendment of 1938 act)
National Pension Act (Implemented in 1961)
Act for the welfare of persons with intellectual disabilities
Universal Coverage in pension and health insurance
Act on Social Welfare for the Elderly
Act on Welfare of Mothers with DependentsChild Allowance Act
Amended Act on Social Welfare for the Elderly (Free Medical service for the elderly)"Fukushi-Gannen" (improvement of social security benefit)
Employment Insurance Act (replacement of Unemployment Act)Act on Welfare of Mothers with Dependents and Widows (Amendment of Act on
Welfare of Mothers with Dependents)
Health and Medical Services Act for the Aged (New scheme for the finance of thehealth care costs for the elderly)
Major amendments of eight acts about social welfare
Act on the Welfare of Workers Who Take Care of Children
Basic Law on Measures for the Aging SocietyLong term care Insurance Act (Implemented in 2000)
Social Welfare Act (Amendment of Social Welfare Service Act)
Ministry of Health, Labour and Welfare was established (re-integration of Ministry of
Health and Welfare and Ministry of Labour)
Basic Act for Measures to Cope with Society with Declining Birthrate
Services and Supports for Persons with Disabilities Act
Late-stage medical care system for the elderly (New Scheme of the health insurance
for the persons aged 75 and older)"Kodomo Teate" (Child Allowance) under the Democratic Party Government
Child Allowance (present system by Liberal Democratic Party Government)

http://www.ipss.go.jp
10Social Security in Japan 2014

Chapter 3 Pensions
3.1 History of pension in Japan
Like other advanced countries, the Japanese pension system was first introduced by the Army, the Navy,and the authority for the civil servants. At the end of the 19th century, the Imperial Army’s Pension wasstarted in April 5th 1875, followed by the Imperial Navy’s Pension in Aug. 24th 1875, which were united in1890 and abolished in 1945. The pension of white color workers started later in 1884, and the pension ofblue color workers’ in public fields started in 1919. The military pensions required no individual
contributions and was completely financed by general revenue of the national government. The scheme wasthen expanded to civil servants. In those days, the pension (the old-age benefit 恩給) for military and civil
workers was based on the salary just before the retirement, and its level was generous. The disparity
between the civil workers’ pension and private sector workers’ pension had been large, and this will becompletely corrected only when the private sector workers’ pension (EPI: Employees’ Pension Insurance)and civil workers’ pension (Mutual Fund) will be united in Oct. 2015.
The private sector’s employee’s pension started in 1942. In those days, the pension premium andbenefit was in proportion to the wages. In the beginning, the name of the private sector’s employee’s
pension was Labour’s Pension Insurance（労働者年金保険） which covered only male blue collar workers.
However, after only one year, the name changed to the Employees’ Pension Insurance（厚生年金保険）
which covered female and white collar workers too. In those days, the contribution rate was 11% based on
the perfect funding system. The contribution rate was then reduced from 11% to 3% after WWII as poverty
prevailed.
Why did the Japanese Government introduce the pension system for private sector’s workers during
wartime? The reason is clear. During wartime, the government needed controlled and stable manpower tomaintain steady production and to control inflation by reducing the household purchasing power throughimposing pension premium. The EPI was reformed in 1954 shifting from an earnings-related pension to a
two-tier benefits system including flat-rate benefits. As for the rest of the population, in 1961, National
Pension was introduced for the self-employed, fishermen/farmers, unemployed, house wives, and so on,thus the Japanese pension system achieved Universal Coverage. In terms of the payment of contribution
and the receipt of the benefit, National Pension has not changed from how it was started.

3.2 Pension system overview
Nowadays, the Japanese pension system is multi-tiered, consisting of public and private pension
schemes (Figure.3.1). In this booklet, the distinction between public and private pension is whether the
insurer of the pension is the government or not. The first tier is the Basic Pension (基礎年金), which
provides the flat rate basic pension of a universal coverage. As a non-income-related pension, it aims toprovide a basic income guarantee for old age, and the participation is mandatory to all residents of Japan.
The second tier, the Employees’ Pension Insurance (厚生年金保険) covers most employees and isincome-related in both premium and the benefit structure. Its provision is mandatory to all corporations
over a certain size, and the premium is shared by employers and employees. The first and the second tier11

Chapter 3 Pensions

pensions are both operated by the government and thus are public.
The third tier is an optional scheme. It is provided either by private corporations (employers) for theiremployees (Employees’ Pension Funds), or by the National Pension Fund for the self-employed, for which
the government is the insurer. The Employees’ Pension Funds are operated by employers, but has a large
portion of financial resources from the Employees’ Pension Insurance and thus has a quasi-public character.
There are also personal pensions operated by organizations such as private insurance corporations and trustbanks, but these are not covered here, as they do not fall under the category of a social security system.

Figure 3.1 Pension System in Japan

Note: 1) Shaded boxes indicate optional Defined-Contribution pensions.
2) Numbers in ( ) are the number of subscribers in millions. All numbers are as of March 2012.
Source: Web-site of Ministry of Health, Labour and Welfare (MHLW)(http://www.mhlw.go.jp/topics/nenkin/zaisei/01/01-01.html in Japanese Access Aug. 25th 2013)

Similarly, the Basic Pension for the self-employed, farmers, and other non-employed (Category No.1
Insurer) is called the National Pension (国民年金), which is now operated by the Japan Pension Service(日本年金機構) under the responsibility of the government. The pension system for civil servants is called
Mutual Aid Pensions (共済年金), which covers both the Basic Pension portion and the income-related
portion. Thus, the entire adult population, in principle, is insured either by the Employees’ Pension
Insurance, the National Pension, or the Mutual Aid Pensions.
The coverage of the Basic Pension is universal, i.e. it is intended to cover all residents 20 years old or
above in Japan including foreigners. For the National Pension, the eligibility to receive pension benefit
requires a minimum of 10 years of premium payment, and the maximum enrollment period is 40 years.

3.3 Pension system financing
There are three resources for financing pension; the premium, the government subsidy, and thereserve.
Concerning the premium, in case of the Employee’s Pension Insurance, the premium is paid by both
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12Social Security in Japan 2014

employees and employers, and is set at a fixed rate of the salary (see the table on pp. 20-21). The premiumalso covers the dependent spouse who earns less than 1.3 million yen per year (called No.3 insured). In caseof the National Pension, the premium is paid by the insured only, and is a flat rate for all. Both husband andwife have to pay the premium if he/she is not working as employees.
As for the government subsidy, for the first tier (Basic Pension), 50% of the benefits and all ofadministrative costs are paid from the general budget of the government. For the second tier (Employees’
Pension Insurance and Mutual Aid Pensions for central and local civil servants), the administrative costs
are paid by the central government. For the third tier, there is no subsidy from the government.

3.4 Pension system by scheme
3.4.1 The National Pension
As described above, all residents in Japan between ages of 20 to 60 are eligible and required to
become a subscriber of the Basic Pension. The amount of pension payment varies depending on theenrollment period and can be calculated as follows.
¥792,100 × ( (insured months + 1/2 ×

exempt months ) / 480 )Whereas employees who are covered by the Employees’ Pension Insurance are automatically enrolled
in the Basic Pension, those who are not employees are covered by the National Pension. A fixed amount(¥15,040 per month in 2012) is levied on each subscriber to the National Pension as a premium (41.4% ofCategory 1 subscribers are fully exempted and 2.6% are partially exempt from paying premiums as Japan
Pension Service Statistics). Current benefits are paid out of currently collected premiums (pay-as-you-go
system), but as much as one half of the benefits are subsidized from the general budget of the government.
The benefit is flat rate to all, and the scheme is a defined-benefit scheme.
Due to the impact of the recent economic downturn, the National Pension is facing an issue ofcontribution evasion, especially among younger people. However, with the introduction of a multi-level
premium exemption system in 2002, some subscribers can prepare for future pensions by using a partial
waiver program. As a result, the average monthly pension benefit by the National Pension amounts to¥54,612 in 2011, which is around 83% of the full amount. As the system becomes more mature, thisamount may increase.
3.4.2 The Employees’ Pension Insurance
The Employees’ Pension Insurance forms the core of the income security for retirees. All workplaces
with more than five employees and their employers are required to participate in this scheme. Bothemployers and employees contribute 7.5% 1 of employee’s monthly salary as premiums (including apremium for the National Basic Pension), and the pension benefit is income-related. There is no discountsystem for low-income persons/household (or his/her employer), but employers of those who are onmaternity leave (up to 1 year) are exempted from paying premiums 2.
1

The premium rate applies to monthly salary as well as bonus.

2

Employees who are on maternity leave typically do not receive salary, except unemployment benefits (40% of their pay), and thus do not13Chapter 3 Pensions

The average monthly pension benefit by the Employees’ Pension Insurance is about ¥149,334, whichamounts to 49.0% of the average monthly salary of subscribers (2011).
3.4.3 National Pension Fund
The National Pension Fund is an optional pension for the self-employed (Category No.1), and isdesigned to give additional pension coverage to the self-employed who do not have the third-tier pension(Employees’ Pension Insurance). However, only about 3% (0.61 million) of Category No.1 subscribers (20million) are currently subscribing to the Fund.

3.5 Pension system reforms
3.5.1 Change of third-tier pension schemes since 2000
In line with the introduction of international accounting standards in 2000, the third-tier pension
schemes underwent a major reform. The Employees’ Pension Fund was streamlined, and instead, theDefined-Benefit Corporate Pension (2001) and Defined Contribution Plan (2002) were newly established.
The principal reason for the introduction of these schemes was to accurately reflect a firm’s outstanding
pension liabilities in the financial statements. The Defined Contribution Plan, in particular, facilitates theportability when changing jobs and responds to changes in the employment situation.

Figure 3.2 The transition of Employee’s Pension Fund,
Defined Benefit and Defined Contribution member
12,000

Employee's Pension Fund
Defined Benefit

Thousand persons

10,000Defined Contribution

8,000
6,000
4,000
2,000
0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Source: The Data on Corporate Pensions (企業年金に関する資料), Pension Fund Association, 2012

As shown in Figure 3.2, the number of subscribers to the Defined-Benefit Corporate Pension andDefined Contribution Plan (corporate type) are on the increase, while that of the Employees’ Pension Fundneed to pay a premium. The duration of maternity leave is counted as insured months in calculating a benefit level.

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14Social Security in Japan 2014

has steadily been decreasing.
The defined-contribution (DC) pension schemes have two types: individual-based andcorporation-based. The individual-based defined-contribution scheme is for self-employed persons(Category 1 subscribers) and is designed to give optional pension coverage to the self-employed. It is
operated by the National Pension Fund Association, and its premium is paid by the subscribers themselves.
The second type of the defined-contribution pension schemes, the corporation-based DC pension, is a typeof corporate pensions. Corporations may provide this type of pensions to its employees. The premium isentirely borne by the employer.
Corporations welcomed the introduction of DC schemes and many have shifted from theDefined-benefit (DB) corporation pension to the DC corporate pension. This is because corporations are
realizing a huge burden of future pension payments, which is now labeled as liabilities under the new
accounting system. Suffering from low-returns on their funds, corporations are eager to convert their DB
pension schemes to DC schemes, in which future payments are related to the investment performance offunds, as opposed to the current system in which future payments are fixed at the beginning.
However, in the UK, there was a noticeable trend to convert to DC schemes in recent years, byclosing the DB plan and providing the DC plan to new subscribers. But because a DB scheme is of value tothe employees, and could serve a firm to differentiate itself from others when hiring new employees,
business owners are shifting to a stance to maintain the DB scheme while also pursuing a more economical
approach. As shown in Table 3.1, the DB and DC schemes both have their advantages and disadvantages,
and it is desirable for both management and labor to consider which to adopt.

Table 3.1 Comparison of Defined-Benefit (DB) and Defined-Contribution (DC) Plan
Characteristics
DB PlanParticipants have no control over theinvestment of pension money.

DC PlanUsually participants make their investment
decisions

Dominant Plan
DC

Investment Risk

Participants do not need to bear investment
risk.

Participants have to bear all investment risk.

DB

Investment Returns

Participants can only collect the benefits
defined in the DB formula even if theinvestment has favorable returns.

Participants are entitled investment returns.

Not Clear

Termination Portability

Participants leaving their job forfeit futureParticipants could rollover and keep investing DC
indexation of benefits already accrued.
investment savings.
Participants have greater incentive to sustain a Participants have less incentive over theirDBhigh level of effort over the entire career inentire life than in the DB plan since their DC
order to achieve high career-end salary.
benefits depend upon the wage trajectory overtheir entire life.

Investment Choices

Incentives

Wage-Path Risk

Benefits tied to wage used in the formula,mostly the final wage.

Benefits tied to career average earnings.

Life Annuity

Usually offers life annuity with favorable
mortality rates

Most DC plans’ distribution is lump sum.
DB
Participants might face unfavorable mortality
rate when purchasing annuity in market due toadverse selection problem.

Source:Not Clear

Tongxuan (Stella) Yang(2005), "Understanding the Defined Benefit versus Defined Contribution Choice," Pension ResearchCouncil Working Paper, Pension Research Council

15

Chapter 3 Pensions

3.5.2 Consecutive pension reforms
Aggravated by rapid aging, a low rate of economic growth, and near-zero interest rates, the National
Pension and the Employees’ Pension Insurance are facing difficulty in securing enough funds to meet the
future burden of pension benefits. Various reforms to guarantee the sustainability, including the cuttingback of future benefits, raising of premiums, or raising the pensionable age had taken place in order not to
put too much burden on the future generations.
Recent reforms were made in 2004, 2009, and 2012. The reform of 2004 was as follows,○Reviewing the benefit payment and contribution(Introducing the insurance premium level fixation method and the macro-economy indexation,utilizing the pension reserve as resource funds, and raising the proportion funded by the national
subsidy for the Basic Pension to 1/2. (* This will be implemented gradually as specified in thelaw.)○Reviewing the system of the Old-Age Pension for Active Workers(Reviewing the system of the Old-Age Pension for Active Workers who are in their early 60s,
introducing the system of delaying pensionable age for those who are 65 years or over, andadjusting the amount of benefit payment of the Old-Age Employees’ Pension for those insured
employees who are 70 years and older.)○Enhancing measures for the insured who engage in childcare(Exempting premium payment for those who are on child-care leave and adjust the standard
monthly remuneration during the childcare period)○Reviewing the Survivors’ Pension system○Introducing the division of benefit payment and of the duration to be No.3 insured category in casessuch as divorce.

Due to the political confusion, the reform of 2009 remained minimal and only the national subsidy
proportion of the basic pension is raised to 1/2. Instead, the reform of 2012 was a major one and thecontents were as follows,
Implementation
from

Reform details○The minimum requirement period for the premium payment is reduced from 25
years to 10 years○The national subsidy ratio is set permanently 1/2 for the basic pension○Expanding the application of Employees' Pension Insurance to part-time workers○Premiums are exempted during maternity leave○The survivor's basic pension is paid to the motherless family○The employee pensions(EPI, Mutual Aid Pensions) is made to be uniform one○The pensioner support benefit is paied to the lower pensioner

Oct.. 2014
Apr. 2014
Oct. 2016
Apr. 2014
Apr. 2014
Apr. 2015
Apr. 2015

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16Social Security in Japan 2014

3.6 Current issues of pension system
3.6.1 Non-compliance and difficulties of the National Pension
As noted before, one of the biggest problems of the National Pension is that there are a growing
number of eligible and required persons who have not paid the premium in full. According to the survey in2009, as much as 0.33 million persons have not subscribed to the National (Basic) Pension at all. In
addition, in 2009, the ratio of persons who fully paid the monthly premiums was only 60.0%. The unpaid
premium is especially found among the younger generation. To raise the compliance, the government had
put in place a mechanism to exempt paying premiums for low-income persons. In 2006, the four-level
exemption status was introduced, where previously there were only two levels. However, the number ofpeople fully exempted from premium payment reached 5.21 million, and partially exempted was 0.52
million people. Of these people, if we exclude students (1.65 million people) and the legally exempted suchas the disabled (1.14 million people), about 11.9% of persons required to pay a premium are exempted,
which is placing a heavy burden on National Pension finances. Every effort is being made at central,
prefectural, and municipal government levels to increase the premium payment rate.
3.6.2 Financial pressure on corporations
At the same time, corporate pension schemes are also facing a number of problems. The first problem
is financial. Not only did the continuing recession of the Japanese economy and a very low interest rate
make it difficult for corporations to keep defined-benefit corporate pensions, but it has also made it difficult
for some corporation to keep paying the employers’ contribution for the Employees’ Pension. It is requiredby law to participate in the Employees’ Pension Insurance for corporations of certain sizes and over, butsome corporations have taken a drastic measure to dissolve their Employees’ Pension Insurance, and maketheir employees subscribe to the National Pension, which does not require employers to share a part of thepremium.
3.6.3 Accommodating various employment arrangements and life-styles
As mentioned before, the traditional Japanese working pattern of life-long employment with a single
employer has been gradually diminishing. Many people now switch jobs and thus their pension status;
therefore, change over the life-course. The pattern is more evident among women who tend to leave andre-enter labor force during raising children. Thus, it is becoming increasing harder to put in the required
payment period for pension premiums. For the National Pension, to get the full benefit, one has to pay thepremium for 40 years, and the Employees’ Pension Funds also have, albeit shorter, required premium
paying periods. Many people, especially women, are unable to put in the required duration, and are notqualified to get the full amount.
There has been also a big shift of employment arrangements from full-time to part-time, especiallyamong women workers. However, the Employees’ Pension does not include part-time workers, and many
women adjust their working style in order to remain as Category No.3 (dependent spouse of subscribers of
Employees’ Pension). The 2004 Reform did not actually implement measures to correct this, but it has
mandated the government to review and take necessary action within five years.
17

Chapter 3 Pensions

The 2004 Reform implemented the following changes to accommodate the changing life-styles: 1)
extending the period of premium exemption for those taking maternity or paternity leave from one year to
three years, 2) making it possible to divide the pension benefit of the Employees’ Pension between husband
and wife if they divorce, and 3) putting a time limit of five years for survivor’s pension benefit for widows(widowers) younger than 30 years old and with no children.
Currently, 83.9% of all Japanese corporations offer retirement packages for their employees. A
retirement package can be either a one-time lump-sum retirement allowance, or a life-long or limited
duration pension, or both. The breakdown shows 26.8% of corporations combine lump-sum payment andpension, 10.7% offer pension only, and 46.4% offer lump-sum payment only. Even though the pension is
gradually spreading its share, the traditional style of the lump-sum allowance is still the mainstream, andmost employees choose to take a part or the entire amount of the retirement money as the lump-sum
payment. In any case, it will be important for the private and public sectors to work together to offer
pension and retirement benefit schemes that respond to increasingly diverse lifestyles.
3.6.4 Pension system adaptation to the globalized world
Due to the increasing number of foreigners living and working in Japan, or Japanese abroad, theinternationalization of the pension system is required. The minimum requirement period for the premium
payment was shortened from 25 years to 10 years in August 2012. Also, Japan had concluded social
security agreements with other countries with an aim to resolve issues related to dual-enrollment in social
security systems and international calculation methods of pension enrollment period. Currently in 2013,
Japan has signed the social security agreement with 17 countries and is under negotiation or preparing tobegin negotiation with 8 countries, as listed in Table 3.2. The number of countries entering the agreement is
expected to increase in line with developments in the economy, globalization, and implementation of social
security systems in developing countries.

Table 3.2 Status of International Social Security Agreements
Implemented

Germany, U.K., Republic of Korea, U.S.A., Belgium, France, Canada,
Australia, Netherlands, Czech Republic, Spain, Ireland, Brazil,
Switzerland

SignedItaly, India, Hungary

Under negotiation

Luxembourg, Sweden, China, Philippines

Under preparatory negotiation

Austria, Turkey, Slovakia, Finland

Source: Ministry of Health, Labour and Welfare website at;
http://www.mhlw.go.jp/topics/bukyoku/nenkin/nenkin/image-shakaihoshou-gaiyou4.html accessed 25 Nov.2013

Source for Table 3.3 (next page)
The Data on Corporate Pensions ( 企業年金に関する資料), Pension Fund Association, 2012
Web-site of Ministry of Health, Labour and Welfare (MHLW)
http://www.mhlw.go.jp/topics/nenkin/zaisei/01/01-01.html in Japanese Access Aug. 25th 2013

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18

Table 3.3 Outline of the public pension system in Japan(All numbers are as of 2011, unless otherwise noted)
Semi-Private Pension

Public Pension
Basic Pension

Employees' Pension
Insurance

Mutual Aid Pension

Employees' Pension
Funds

National Pension
Funds

Type of Insurance

Basic
1st Tier
M andatory

Supplemental
2nd Tier
M andatory

Supplemental
1/2/3 Tier Combined
M andatory

Supplemental
3rd Tier
Optional
Employers of more than 500
employees

Supplemental
3rd Tier
Optional

Insurer

Government

Government

M utual Aid Associations

All residents(categories 1-3)

Category 2 private-sector workers
under 65 who work at workplaces
with more than 5 employees

National and local civil servants,
teachers, etc.

Employees of above

Category 1

72.72
90%
69.43
95%

34.41
43%
31.98
93%

4.44
6%
4.29
97%

4.11
6%
2.68
65%

0.61
1%
0.42
69%

Flat rate

Fixed % of salary

Fixed % of salary

Fixed % of salary

Subscriber's choice

-None

7.50%
7.50%

6.04～7.754%
6.04～7.754%

1.2 ～ 2.5%
1.2 ～ 2.5%

-None

⑤

¥15,020(for Category 1 & 2),¥0(Cat.3)(including premium for National
Pension)(including premium for National
Pension)¥5,500～¥16,910⑥

Not Available¥304,589¥415,227

Not Available

ExemptExemptExemptExemptExemptExempt% of subscribers exempt from paying premium

16.8%

0%

0%

Benefit (Old Age) Type

Flat rate

Note

Eligible persons①

Number of subscribers (millions)

②
②/pop

% to all residents(20-59years)

Number of current pension recipients③③/②% to all subscribers

Premium Type
Average contribution (% to total salary) Employee
Employer
Average contribtion (¥)

Average monthly salary of subscribers
Tax exemption

Employee
Employer

Income-related
Income-related
Income-related(M onthly income * 0.55% * insured (M onthly income * 0.55% * insured Average monthly salary during\792,100 x ((insured months +months * slide rate)+ dependants
months* slide rate)+ dependants
insured months * fixed rate +1/2 x exempt months)/480)
allowance
allowancealphaCalculation method
Average monthly benefits
Replacement ratio (average)
Starting age
Benefits (Disability) TypeCalculation method
Average monthly benefits
Benefits (Widow/Widower) TypeCalculation method
Average monthly benefits

ExemptExempt⑦¥54,612⑦/⑥

Not available

years

65
Flat rate¥990,100 (1st degree) or¥792,100 (2nd degree) +dependents allowance¥73,882
Flat rate¥792,100+ children allowancefor wives w/children¥64,927¥149,33449.0%
65¥264,011
64%
65

Income-related
Income-related
1st degree old age pension * 1.25 + 1st degree old age pension * 1.25 +dependents allowance, 2nd degree: dependents allowance, 2nd degree:
old age pension + dependents
old age pension + dependents
allowance, 3rd degree: old age
allowance, 3rd degree: old age
pensionpension¥100,139
Income-related
Income-related
3/4 of old age pension for spouse or 3/4 of old age pension for spouse or
close familyclose family¥73,490

Government

Exempt up to ¥68,000

Premium-related
Depending on premium &age at the time of entry¥40,658
Not available

Not available

65

65

Social Security in Japan 2014

Chapter 4 Health Care
4.1 Introduction
The health care service system in Japan is delivered by mandatory, non-profit public health insurance
systems, and not by the service providers for profit. Japan’s public health insurance system is composed ofthree types of health insurances: occupation-based, municipality-based, and a separate system for persons
75 years old and over. Every resident in Japan must belong to a public insurance as an enrollee. All healthinsurers are not-for-profit organizations. Health services are provided not only by public providers, but alsoprivate ones which satisfies the “non-profit” principle. Patients enjoy “freedom of choice,” which assurespeople can select and contact the physicians in any medical institutions. The cost of medical care isfinanced through insurance premiums, tax revenues, and copayments. Elderly, infants and low income
people are completely or partially exempted from copayments. Other people must pay copayments whichare 30% of the total medical cost when they use medical services. According to income level and age ofpatients, the maximum amount of copayment is determined. Sustainability of the system depends onwhether the inter-institutional redistribution of the burden can work or not, and whether enough humanresources are available for service provision to elderly.

4.2 Public Health Insurance
4.2.1 History
Health insurance system in Japan has been continuously developing since the 1920s. At first, theHealth Insurance Act was enacted in 1922. While occurrence of the Great Kanto Earthquake in 1923 madethe enforcement of the law delayed until 1927, this public health insurance covered “blue color” workers in
the factory and the mine. Secondly, the National Health Insurance act was enacted in 1938. This law
widened the coverage of public health insurance not only to farmers, but also to the general public notcovered by the Health Insurance Law. The National Health Insurance Law prescribed that municipalities
could be insurers of the national health insurance for the people living in their regions. However, the law
permitted that municipalities could choose not to establish the national health insurance, and that people
could enroll the public health insurance by their decision. Hence there remained non-insured people. From1939 through 1941, other public health insurance law started to cover the “white color” workers, including
government officials. Furthermore, the public health insurance system also started to cover seaman by
Seamen’s Insurance Act in 1940. In summary, before WWII, the public health insurance system in Japan
gradually developed by enacting different health insurance laws for each sub-group in the whole society.
Public health insurance developed further after WWII. Laws on public health insurance which
had been enacted before the end of the WWII were consecutively used after the war. Hence the publichealth insurances had been taking over the characteristics before. Each law of public health insurance
regulated its own financial budget, therefore their managements had been independent from each other.
More importantly, lack of the law for comprehensive health insurance coverage implied that there remained
the possibility that non-insured people existed. This defect was improved by the enforcement of the new
National Health Insurance Act in 1961, with which Japan attained universal coverage. The new National

21

Chapter 4 Health Care

Health Insurance Act mandated all residents in Japan to enroll in the national health insurance, except in thecase that they have already enrolled in other public health insurances.
The next issue of development of the public health insurance was the improvement of the insurance
benefit, and improvement of the inequality in insurance benefit among different schemes. In the early 1960’,
expensive antibiotic drugs some steroid drugs and drugs for chemotherapy had been prohibited to use inpublic health insurance system. This restriction was abolished in 1962. It raised the health care cost, but the
expanded cost was absorbed into the expanded financial surplus in the public health insurance system,
owing to the high rate of economic growth.
In the early 1960’, copayment rate was 50% for all of enrollees in the national health insurance, while
it was 0% for the head of the household (principal enrollee) of the Society-managed Health Insurance andAssociation-managed Health Insurance. Thus the amount of the subsidy from the government to theinsurers in the national health insurance was increased, in order to lower the copayment rate for theenrollees in the national health insurance.
The burden of copayment tended to be lager for patients with severe diseases or with chronic diseases.
In 1960s, the municipalities started to subsidize the elderlies (over 70 years and older) so that their
copayment rate became 0%. This subsidy to copayment for the elderly became universal in 1973. For
people less than 70 years old, the High-cost Medical Care Benefit System was introduced also in 1973 tocap the burden of copayment.
In early 1970s, the oil crisis hit the Japanese economy. To prevent the rapid price increase, thegovernment implemented policies to control economic activities, such as cutting public spending. These
policies were successful, and then the recession came next year. It reduced the financial revenue of thegovernment as well as the premium revenue of the insurers of the public health insurance system. The
government started to fill the annual financial gap by issuing the national bond, and the governmental
spending started to be reduced. Social security spending also started to be contained, along with thegovernmental subsidy to it.
In spite of the reduction in social security spending, the health care expenditure for elderly had
been rapidly increasing. One of the reasons was the governmental subsidy to the copayment for the elderly.
The health care cost for the elderly increased from 40 billion yen in 1973 to 67 billion yen in 1974, and to87 billion yen in 1975. After 1975, the growing rate was very high. To contain the rapid cost increase, the
new health care system for the elderly was needed. But the cost increase was not the only reason for the
introduction of the new system. At that time, the elderly had only medical care services, not the services forthe health promotion, preventive measures such as health check-ups, rehabilitation or nursing care. These
services in collaboration with the medical care were needed to be supplied in a more integrated manner.
Hence in 1983, the Health Service System for the Elderly was introduced. Per-diem basis copayment was
introduced for medical care utilization.
The Health Service System for the Elderly is a part of inter-institutional fiscal adjustments withrespect to health care cost for elderly. Since the mid-1980s, cost containment policies had been employed.
Inequality of copayment rates between the different public health insurances were equalized to 30% in
2003. Inter-institutional fiscal adjustments with respect to health care cost for elderly had been strengthened,22

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Social Security in Japan 2014

and it developed to the Medical Care System for Elderly in the Latter Stage of Life in 2008.
4.2.2 Public health insurance system: TodayAs stated before, Japan’s medical services are financed through a public mandatory health insurance
system, which is composed of three types of public health insurances: occupation-based,municipality-based, and separate health insurance for persons 75 years old and over. The elderly aged 75 orover enroll in public health insurance, which is called Medical Care System for Elderly in the Latter Stageof Life. Those who are below 75 years old enroll in occupation-based public health insurance or National
Health Insurance. There are three types of occupation-based public health insurance. One is the healthinsurance for workers at firms of a certain size which are called the Society-managed Health Insurance.
Each Large company has a duty to establish each firm based non-profit public health insurers to provide
public health insurance coverage to their employees. For those who work at smaller firms, the Japan Health
Insurance Association, which is the public association for the health insurance, provides a collective healthinsurance, which is called the Association-managed Health Insurance. In addition, special professions suchas civil servants, private school teachers and employees, day laborers and seamen, form separate
nation-wide professional associations.
Those who are below 75 years old and not covered by occupation-based public health insurance arecovered by a National Health Insurance. The insurers of National Health Insurance are the municipalities,
the local government which are closet to the community. This scheme covers self-employed people,
workers engaged in agriculture, forestry and fisheries, workers of small businesses, the unemployed andpensioners.
These public health insurances provide universal coverage of the population in Japan. The outline ofeach system is shown in Table 4.1 (located at the end of this chapter). The National Health Insurance covers
31% of the total population, 27% for the Association-managed Health Insurance, 24% for theSociety-managed Health Insurance, and 11% for the Medical Care System for Elderly in the Latter Stage of
Life.
Insurance benefits are standardized throughout all public health insurance schemes. As shown in
the Figure 4.1. The extent of the medical services covered by the public health insurance is discussed in theCentral Social Insurance Medical Council, which members are consisted of representatives of clinicalphysicians and hospitals, of insurers in public health insurances, and of the general public. The council also
discusses about the official tariffs of medical services. Based on the suggestions from the council, theMinistry of Health, Labor and Welfare decides the coverage and prices of the medical services.

23

Chapter 4 Health Care

Figure 4.1 The structure of the health care coverage by and beyond the public health insurance
Advanced medical research

Advanced medical care
Hospital facility fee

Medical checkup
Cash benefits(sickness and injury,
childbirth allowance,
etc..)
Prevention/
HealthMaintenance

Meal expense
duringhospitalization

Medical Services

Massage, acupuncture, etc.

Special room fee

co-payment

High Quality
Environment

Uninsured dental
care, etc.

OthersNon-prescription

Special meals

Health service facility fordrugs

the elderly, Medical cost

Facility fee

Co-payment
Medical services at home

NursingLong-term
medical care

Nursing AttendantsLong-Term Care/Welfare= Medical costs covered by public health insurance= Other medical costs

4.2.3 Financing of health insurance
Generally speaking, the individual’s health care expenditure is higher as her/his age is higher.
This is also true in Japan. Hence the average health care expenditure per enrollee is highest in the Medical
Care System for Elderly in the Latter Stage of Life (¥844,382 /year), because individuals more than 75
years old enroll in it, as we have already explained. Most of individuals aged between 65 and 74 enroll in
the national health insurance, so that average health care expenditure per enrollee is ¥168,658/year,

higher than the ones in other occupation- based health insurances. The costs of the health benefit in publichealth insurances reflect this difference of enrollees’ age structure as shown in the upper part of the Table
4.2.

Table 4.2 Financial situations of public health insurances (year 2009)

Insurance benefit expenses
Late-stage elderly support coverage
Levies for early-stage elderly
Contributions for retirees
Others
Total
Premium (tax) revenue
State subsidy
Late-stage elderly subsidy
Early-stage elderly subsidy
Others
Total
Balance of ordinary
revenue and expenditure

Government-managed
Health Insurance/ JHIA- Society-managed Health National Health Insurance(municipalities)
Insurance
managed Health
Insurance
122,646
111,423
168,658
41,51941,105
31,10230,20135,949
89
7,555
9,238
3,700
19,242
36,734
205,621
216,954
236,584
164,090
193,360
55,112
26,666
126
57,657

Seamen's Insurance
159,873
40,76429,936
7,643
238,217
221,656
19,108Late-stage medical caresystem for the elderly
844,3824,367
848,750
65,507274,126
361,262

1,380
192,1396,504
199,994

52,61859,191
224,576

240,764

151,717852,620-13,482-16,960-12,006

1,911

3,862

Unit: yen per enrollees
Source: Ministry of Health, Labor and Welfare (MHLW), “Annual Health, Labor and Welfare Report 2012”24

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Social Security in Japan 2014

The public health insurance schemes are financed by premiums, subsidies from the general budget of
the government, and co-payment from patients. Insurance premiums are one of the main financial resources
for the public health insurance. Their methods of premium collection are different among the public healthinsurance schemes. Insurers of occupation-based public health insurance collect the premium by deducting
the salaries. The lower and upper limits of the premium are set at 30/1000 and 120/1000, respectively. The
premium of the National Health Insurance is collected through the direct payment to the municipality
government by the subscribers on household basis. The premium consists of a proportional part based on
the income, assets, and number of people in the household and a fixed part per household. Insurers in
Medical Care System for Elderly in the Latter Stage of Life collect the premiums mainly by deducting thepension paid to the elderly.
Central, prefectural, and municipal governments subsidize the insurers of the National Health
Insurance for their running cost. Central government subsidizes the 41% of the health care benefits, and theprefectural governments subsidize 9% of that. This amounts to ¥57,657 per enrollee as shown in Table 4.2.
In case the insurance finance faces a deficit, the managing municipality will bear the cost as a form ofsubsidy to the insurer. This amount is included in the category “others” in revenue in Table 4.2.
We can see in Table 4.2 that insurance benefit cost is higher in the National Health Insurance and the
Medical Care System for Elderly in the Latter Stage of Life, but premium revenue is lower in these two
insurances. This causes a fiscal imbalance in these two insurances. To adjust the fiscal imbalance,inter-institutional fiscal adjustments have been introduced. Under this scheme, burdens of the health carecost for the elderly aged between 65 and 74 are reallocated among the insurers of public health insurance.
The amount which the National Health Insurance receives from this fiscal adjustment is ¥52,618 perenrollee.
The Medical Care System for Elderly in the Latter Stage of Life for those aged 75 and older itself canbe regard as a scheme for inter-institutional fiscal adjustments. The elderly aged 75 and over enroll in thissystem, and they must pay premiums. This premium finances 10% of the medical costs. Of the remaining
90%, 50% is covered by central and local governments’ subsidies and 40% by contributions from insurersof other insurance programs. The amount which the medical care system for elderly in the latter stage oflife receives from this fiscal adjustment is ¥361,262 per enrollee.
Table 4.2 does not show the co-payment but the total amount of copayment is not negligible, as theco-payment rate is basically 30% for public health insurance systems in Japan. Payment is made every timea visit is made to a medical institution. Co-payment rate varies according to patients’ age and income, suchas 20% for children below school age, or 30% for the high-income elderly more than 70 years old, whoearn the same level of income as the working generation, 10% for most of the elderly more than 75 years
old. The statutory co-payment rate is 20% for the elderly aged between 70 and 74, whose income levels are
not so high. However, the co-payment rate for these people is temporally at 10% mobilizing a budgetarymeasure.
The High-cost Medical Care Benefit is applied to all public health insurance. This system aims tohold down the co-payment amount by setting a cap according to age and income, and the insurer bears the25Chapter 4 Health Caredifference between the cap and the payable co-payment amount. The cap amount is set lower for
low-income earners. For example, the monthly cap for a low-income earner aged under 70 is ¥35,400, andunder the Medical Care System for Elderly in the Latter Stage of Life, low-income earners only pay up to¥8,000 for outpatient treatment, and up to ¥24,600 for hospitalization.
4.2.4. Problems in the public health insurance financing
As the aging of the population is still proceeding, the health care costs for the elderly will
increase accordingly. This automatically increases the occupation-based insurances’ burden of subsidy to
the Medical Care System for Elderly in the Latter Stage of Life. The increased burden should be covered byincreased amount of insurance premium in those insurances. However, the insurers’ financial situations
vary and it may be too heavy burden for some insurers. To make the burdens more equitable, the policy haschanged to determine the amounts of subsidy by the total amount of enrollees’ income. By this policy,
insurers of occupation-based health insurances raise the premium rate only when their premium level is too
low for the income level of their enrollees.
The National Health Insurance has a larger number of lower income subscribers and elder
subscribers than the occupation-based health insurances. As a result, the relatively poorer enrollees areconfronting the relatively higher premium rate. This leads to an increase of the unpaid insurance premiumin the national health insurance. In 2011, the amount of unpaid insurance premium was 10.6% of the total
amount of levied premiums. In social insurance system, the unpaid insurance premium means they lose theeligibility, and moral hazard occurs. To avoid this, target groups of the premium payment exemption havebeen enlarged. Also, extremely poor households are guaranteed access to medical services without thepayment of premiums, based on the Public Assistance system.

4.3 Service provision
4.3.1. Overview
The fundamentals of the medical care provision systems were constructed before WWII.
Management of the medical institutions satisfies the “non-profit” principle while owners of the medical
institutions include the public and the private. Medical doctors are educated with a six years university
education program and trained with five years training program after graduation. They can educate
themselves to deepen their clinical specialties. General practice has not been explicitly recognized as oneof clinical specialties, so that there are no general practitioners as clinical specialists. There has been nogate-keeping system. Patients can choose the medical institutions they want to visit. Therefore, the roles ofcommunity clinic and specialized hospitals have not been clearly separated. A patient can choose for theirfirst contact the specialist in hospital outpatient department. In the mid-1970s, the copayment rate for
elderlies was set at 0%. Evidently, it had inflated the usage of medical care among the elderlies. However,this was a precarious measure taken due to the scarcity of long term care facilities in those days. The 0%
copayment rate was abolished in 1983 and together with the policies of increasing the long term carefacilities, the efficiency in provision of the inpatient care services for elderly has been improved by thepolicies amendment of the medical institution law, and the policy inducement by the changing tariff for26

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Social Security in Japan 2014

medical care services. Introduction of the Long Term Care Insurance created many alternatives for elderly
who need life support services other than inpatient care in hospitals. Now the issue is how to coordinate themedical care and the long term care.
4.3.2 Healthcare service provision: History
Before the Meiji era, physicians existed in Japan who were called “Kusushi” based on theoriental medicine at that time. They made diagnose, decided the prescription, and sold the pharmaceuticals
to the patients. However, they were excluded from the practice by the certification regulation which
replaced them by the physician educated by Western medicine introduced in the Meiji era.
Medical doctors sold pharmaceuticals to patients while they were educated on Western medicine.
This was because there were few pharmacists at that time. Pharmacists hoped to achieve the separation of
medical practice and drug dispensing, but it could not be attained, because of their weaker political power.
Hospitals based on Western medicine were first established at Nagasaki in 1861. The number ofhospitals increased to 106 in 1878. Hospitals were established by the central government, local
governments, and private citizens and organizations. In those days, there was no public health insurance.
Hence poor people could not access medical care services. Japan Red Cross was established as the
Hakuai-sha in 1878, and Social Welfare Organization Saiseikai Imperial Gift Foundation (The Saiseikai)
was established in 1911. They constructed hospitals and started to provide the medical services to the poor.
In those days, physicians could start their private practice where they preferred (free-entry).
Hence medical institutions were located densely at the urban areas because the medical doctor as the
manager of medical institution wanted to keep their financial status better. This made accessibilities to the
medical care unequal among geographic areas. In rural areas, for example, physicians could not earnenough bread because farmers were relatively poorer than other people, and could not pay the fee of the
medical care services. On the other hand, it was said that physicians were so competitive in urban areas thatthey also could not earn their enough bread in those areas.
After WWII, the hospitals and clinics lost their functioning, personnel working in them, and even
their buildings due to the results of the war. To increase the supply of medical care services, various
policies were employed. Medical institutions controlled by the Department of the Navy and by the
Department of War were merged into the Ministry of Health and Welfare, and those medical institutions
were made available for utilization of the general public as the National Hospitals. The central governmentof Japan decided to make financial subsidy to private (but not for profit) medical institutions for theirinvestment to hospital/clinic construction and/or medical equipment. Because of these policies and theeffects of the long-lasting economic booms, the number of private hospitals and clinics expanded.
Local governments, as before WWII, established their hospitals and clinics. The Japan Red Cross,
the Saiseikai, and other non-profit organizations also established medical institutions. These newinvestments contributed partly to the gradual improvement of the distribution of medical institutions.
However, there has been no effective method to cure the geographical inequality of medical institutions
distribution. In the mid-1980s, it was pointed out that regional variations of the inpatient care costcorrelated to the supply of the inpatient beds. The medical institutions law was amended so that the27

Chapter 4 Health Caregovernment could specify the area where the inpatient beds were over-supplied relative to the number of
population in 1985.
Among the amendments of the medical institutions law since then, the second amendment of the law
introduced the hospital categorization of Special Functioning Hospitals and the bed type categorization of“Long-term Care-type Beds” in 1992. Special Functioning Hospitals is a classification of the hospitals
which provided high-technology and intensive inpatient care. The bed type categorization of “Long-termCare-type Beds” was introduced because the utilization of the beds was not necessarily based on the
medical needs. In those days, as we have seen in section 4.2.1, the copayment rate for the elderly was 0%.
This policy made the patients who needed support for living rather than medical care, utilize theunnecessarily inpatient care.
The Long Term Care Insurance law was enforced in the year 2000. Since that time, utilization of mostlong-term care beds was reimbursed not by the public health insurance, but by the Long Term Care
Insurance. By the introduction of Long Term Care Insurance, the patients who had relatively less need for
inpatient medical care were induced to use life support services.
The acute inpatient care was also reformed so that the services could be more efficiently supplied. In
2003, Diagnosis Procedure Combination (DPC) was introduced for trial as the classification tool of
diseases. The reimbursement system for the acute inpatient care started to use the DPC in 2006.
Reimbursement based on DPC is per diem basis. Hence it has no direct effect to shorten the average lengthof stay.
4.3.3 Healthcare service provision: Today
One of the characteristics of the Japanese health care system is the availability of beds and the long
duration of stay in medical facilities. By definition, in the medical institution law, clinics can have less than
20 beds, while hospitals must have 20 beds or more. In 2012, there were 8,565 hospitals, 100,152 clinics,
and 68,474 dental clinics in Japan. The number of beds in hospitals is 1,578,254 (12.4 beds /1,000 people),and the number of beds in clinics is 125,599 (0.99beds / 1,000 people). The average length of stay in thehospital is 31.2 days for hospitals and 17.5 days for clinics, which is much longer than 8 days for OECD
countries.
Secondly, there exists no explicitly defined general practitioner, so that we have essentially nogate-keeping system. Medical doctors are educated for medicine in six year undergraduate courses. They
must pass the National Medical Practitioners Qualifying Examination. After passing the examination, they
are trained as a medical doctor in a five year post-university education course. After finishing thepost-university education course, they are educated as specialists in their clinical specialty. The total
number of medical doctors working in medical institutions is 288,850 (2.4 persons /1,000 people), 188,306
working in hospitals, and 100,544 in clinics. There are few foreigners who are working as clinical medical
doctors; 1,580 in hospitals and 828 in clinics.
Thirdly, there is no nationally qualified nurse practitioner, who can practice nursing care
independently, while the number of registered nurses who are working in hospitals is 725,560. They canwork as registered nurses after a minimal three years education, and passing the national nurse qualifying28

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Social Security in Japan 2014

examination. In recent years, nurse-education is transferred from the vocational school to the university.
Nurse education in the university takes 4-years. Graduation of the university nurse education course gives
the eligibility requirements for the national nurse qualifying examination, not only for the nurse, but also
for the public health nurse. Eligibility requirements for the national nurse qualifying examination for the
midwife are given by finishing the university nurse education course with additional education courses for
midwives. A nurse profession association issues the certificates of specialties of nursing in some areas;
emergency nursing, cancer chemotherapy nursing, and so on. These may be seen as the same as clinicalnurse specialists in other countries.
Fourthly, freedom of choice to utilize any medical institution is guaranteed by laws for all
enrollees in the public health insurances. By this, patients by their decision can select a clinic or an
outpatient department of hospitals. The free access is assured but it might cause inefficiency in thefunctioning of clinics and hospitals differentiated. Hospitals with high clinical functioning charge patientsfor extra fees in addition to the price based on the tariffs for medical care services. This charge is legallypermitted. The amount of the surcharge varies from hospital to hospital.
Fifth, the tariffs for medical care services are determined in the Central Social Insurance Medical
Council. The Council consists of the representatives of clinical physicians and hospitals, of insurers inpublic health insurances, and of public interest. Once in two years, the Council determines and updates thetariffs for medical care services as publicly regulated prices. The updates were made by evidences using
the results of the Survey for the Financial Situation of the Clinics and Hospitals, and the results of theSurvey for the Medical Care Utilization. The update is also the result of the political negotiation, and it isa political inducement tool. When the committee recognizes that there is need for expanding theutilization of some services, but that the low profitability inhibits the provision of the service, then thecommittee determines to increase its price to induce more medical institutions to provide it. The Ministryof Health, Labor and Welfare decides coverage and tariffs of the medical services, based on suggestion
from the council.
Lastly, the medical institution must be non-profit. The notion “non-profit” means that financial
surplus from running the medical institution cannot be shared to capital subscriber and/or investor.
Financial surplus, if any, must be used for investment to the medical equipment, facilities, etc. or reserved
as internal reserves. Exceptionally, private companies own the medical institutions, in order to promote
employees’ health. In these cases, the management of those medical institutions must obey a non-profit
principle.
4.3.4 Current Issues in Healthcare service provision system
4.3.4.1 The lack of physicians
Aging implies that the number of elderly is increasing, who will need not only care for chronic
diseases, but also acute care. Since the 1970s, at least one university with a department of medicine wasestablished in each prefecture. It is thought in those days that this policy would satisfy the future need forphysician services. However, the increase in medical doctors may not have caught up to the growing needdue to rapid aging. As we have seen in section 4.3.2, the total number of medical doctors working in

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Chapter 4 Health Care

medical institutions is 2.4 persons/1,000 people. This figure is relatively smaller than the ones in OECD
countries (Figure 4.3).

Figure 4.3: International comparison of the number of physicians by OECD Health Data(in year 2010)

This problem is serious in the Tohoku area, which was hit by the Great East Japan Earthquake in 2011.
Even before the earthquake, there were relatively few physicians in the Tohoku area. The earthquake hit
not only people, but medical personnel and medical institutions as well, so that the number of physicians
was decreased after the earthquake. Now it is under the discussion whether a new medical school should beestablished in the Tohoku area or not.
4.3.4.2 Establishment of an integrated community care system
Elderly people need medical care services and long term care services to support the independent
living of the elderly. It is natural to think that both services are supplied to users with good coordination. In
this point of view, the establishment of an integrated community care system is needed. To succeed in theestablishment of it, communication should be promoted between the personnel in the long term care sector,
and the ones in the medical care sector when their services are provided. Section 5.3.2 further explains
other points on this.

30

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Social Security in Japan 2014

Table 4.1 Outline of the Health Insurance System in Japan
Health Insurance
1)

Name

2)

Eligible subscriber

3)

Number of subscriber(millions) Dependents
Insurer (number of organizations)

4)

Association-managed
Health Insurance

6)7)

Premium rate:
Subscriber
Employer

Employees of Small- Employees of Large
firms
Medium firms
15.90614.43119.49615.2109)3.582% (avg)
4.358% (avg)

SeamenNational Govt Civil
Servants

0.062
0.082

1.077
1.234

Government

Mutual Aid associciationof each ministry (21)

4.55%
4.90%

3.14 ～ 5.16%
3.14 ～ 5.16%

Gov't Subsidy to:
All
All
All
All
Administrative cost
Fixed amount-Fixed amount
Medical cost
13%
Contribution for the health care---16.40%
for elderly
Co-payment:
30%
Subscriber
30%（Children below school age 20％)
Dependents
Inpatient meal expense\260/meal (for low-income family \210/meal for first three months, \160/meal after 3 months,

Maximum amount of
copayment(inpatient care)

8)

4.75%
4.75%

National Govt
Employees' Mutual Aid
Association

Society- Health
Insurance

Japan Health
Health Insurance
Insurance Association Associations (1,497)

5)

Seamens' Insurance

For patients under 70 years old;
\150,000+(total cost of medical care services - 500,000)*0.01 (for high-income people)\80,100+(total cost of medical care services - 267,000)*0.01 （General)\354,6000（Low-income people)\15,000（Very low-income people)※2

Allowance:
Childbirth allowance
Funeral expense
Fun.exp. for dependents
Unemployment benefits:

Due to sickness

Due to childbirth¥420,000¥50,000¥50,000¥420,000¥50,000¥50,000¥420,000¥50,000¥50,000

Standard daily remuneration * 2/3 per day

Standard daily
remuneration * 2/3
per dayStandard daily
remuneration * 2/3 perday

Up to 18 months

Up to 3 years

Up to 18 months (except
for TB 3 yrs)

Standard daily remuneration * 2/3 per day

Standard daily
remuneration * 2/3
per dayStandard daily
remuneration * 2/3 perday

42 days before birth, 56 days after
Due to unemployment--

Unemployed days
42 days before birth, 56
before birth, 56 days
days after
after
--

50% of avg. salary--

1 month of avg. salary10) Disaster Relief:
For deathFor death of a family member----

70% of monthly avg.
salaryFor disaster----

0.5 to 3 months of avg.
salary, due to severness

Source: Ministry of Health, Labour and Welfare (MHLW) "Annual Health, Labour and Welfare Report 2009", National Institute ofPopulation and Social Security Research (IPSS) "Shakai Hosho Tokei Nenpo, 2009"31

Chapter 4 Health CareAll numbers are as of March 2009 unless otherwise noted.
Local Govt Employees' Private School Teachers
Mutual Aid Association & Employees' MAA

Local Govt Civil
Servants

Private School Teachers& Employees

6.027
2.944

0.507
0.348

Self-employed, farmers,etc.

35.97

Municipality(1,788)Mutual Aid associciationof each local govt (55)

Medical Care System for Elderlyin the Latter Stage of Life

National Health Insurance

Retired

3.522
National HealthMunicipality
Insurance(1,788)
Associations(165)

Avg.premium per family \164,679
---

6.08%
6.08%

3.84%
3.84%

All (by local govt)--

Partial
--

All
43%

All
32～55%

All
--

--

--

--

--

--

¥420,000¥50,000¥50,000¥420,000¥50,000¥50,000

Amount of "Standard
Amount of "Standard
daily remuneration * 2/3 daily remuneration * 2/3
per day" multiplied by a per day" multiplied by aconstant coefficientconstant coefficient

standard amount \420,000
Set according to the law
--

10%

All
90%（※1）

10%（※2）Same as left
\80,100+(total cost of medicalcare services - 267,000)*0.01(for high-income people)\44,400 （General)\24,600（Low-income people)\15,000（Very low-income
people)※2※1
Public funds approx. 50%
Contributions approx. 40%※2Co-payment rate is 30% for
those earning the same level
income as the working generation

Standard not set

Up to 18 months (except Up to 18 months (except
for TB 3 yrs)
for TB 3 yrs)
Amount of "Standard
Amount of "Standard
daily remuneration * 2/3 daily remuneration * 2/3
per day" multiplied by a per day" multiplied by aconstant coefficientconstant coefficient

Extended associations for the
Medical Care System for Elderlyin the Latter Stage of Life
(managing entities)--

30% （Children below school age 20％)---, or for most low-income family (70～74 years old) \100/meal)

For patients aged 70-74 years old;
\80,100+(total cost of medical care services - 267,000)*0.01 (for high-income people)\62,100 （General)\24,600（Low-income people)\15,000（Very low-income people)

Elderly aged 75 or over, andpersons aged under 75 with acertain level of disability
13.458Co-payment limit\80,100＋(Medical expenses\267,000) * 1%Standard not set

42 days before birth, 56 42 days before birth, 56
days afterdays after
60% of salary

60% of avg.salary--

1 month of avg. salary

1 month of avg. salary--

70% of monthly salary

70% of monthly avg.
salary--0.5 to 3 months of
0.5 to 3 months of avg.
salary, due to severness salary, due to severness--32

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Social Security in Japan 2014

Chapter 5 Welfare for the Elderly
5.1 Overview of the Welfare for the Elderly
Before the enactment of the Act on Social Welfare for the Elderly in 1963, welfare for the elderly had
been mainly to accommodate frail elderly persons in asylum under the public assistance system. The Act of1963 aimed to maintain physical and mental health of the elderly and to stabilize their livelihoods, andvarious welfare services for the elderly including intensive care homes and home help services weredeveloped during 1960s. As free healthcare for those who were 70 years old and over was introduced in
1973, healthcare expenditure for the elderly expanded, and increased a financial burden on the government.
The Health and Medical Service Act for the Aged in 1982 started to impose copayment for healthcare on
the elderly, and also emphasized the importance of health promotion from the middle aged over 40 years
old.
Around the same time, more people were getting aware of the problem of “social hospitalization” andbedridden elderly, which means that the elderly tended to be hospitalized even after their conditions nolonger required medical care, because long-term care facilities and services were not enough andco-payment of these facilities were more expensive than that of the hospitals. In order to tackle thisproblem, in 1989 the Ministry formulated the Gold Plan (10-year strategy for the promotion of health andwelfare for the elderly) so as to promote urgent development of care facilities and in-home services, and it
was revised in 1994 as the New Gold Plan (new 10-year strategy for the promotion of health and welfare
for the elderly), which enhanced home based care and led to argument of new long-term care system for theelderly.
Starting in April 2000, Japan introduced the Long-Term Care Insurance. This social insurance systemcovers the long-term care of the elderly, which was previously provided partly through the health insurance
system and partly by the welfare measures for the elderly. The Long-Term Care Insurance grew out of therecognition that, due to changes in the society such as weakened community ties, increase in small-sizedfamilies, and increase of working women, financial and psychological burden of family facing the care forthe elderly has become unbearably large. Furthermore, there was the limit of service provision under the
existing health and welfare system because of increasing number of the elderly requiring long-term care forlonger periods. The Long-Term Care Insurance is designed to share the burden of caring for the elderly
among all members of the society.

5.2

Long-Term Care Insurance System

5.2.1 Principle of the Long-Term Care Insurance System
There are three basic principles for the Long-Term Care Insurance; support for independence,user-oriented system, and social insurance. Firstly, the system does not intend to simply provide personalcare to the elderly who need long-term care, but emphasizes supporting the independence of them.
Secondly, service users can receive comprehensive health, medical, and welfare services from diverse
agents based on their own choices. Thirdly, those who are 40 years and over are compulsorily insured, andthereby the relationships between benefits and contributions are made clear, and the stigma of welfare

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Chapter 5 Welfare for the Elderly

services is removed.
5.2.2 Insurer
Municipalities and special wards (hereinafter referred to as simply “municipalities”) are the insurers,
because they have been engaged in health and welfare services for the elderly, and were expected to deliver
services in harmony with community values. Insurers collaboratively work with the national government,
prefectures, medical care insurers, and pension insurers, and take the role of (1) collecting insurance
premiums, (2) managing fund, (3) assessing care needs, and (4) paying remuneration to service providers
through a prefectural health insurance organization. For the sake of fiscal stability and administrative
efficiency, some smaller municipalities organize an extended association as a regional insurer.
5.2.3 Insured
The primary insured persons are those who are aged 65 and over (Category I), and the subscribers ofhealth insurance whose age are 40 to 64 years old are the secondary insured persons (Category II).
Currently, about 29.86 million persons are subscribed as Category I and about 42.99 million persons, as
Category II (as of the end of FY 2012). The premium is collected through municipality and deducted frompensions for the Category I, and through additional premium to be paid to health insurance for the Category
II. Premium amount of the Category I is determined by each municipality, and thus differs from amunicipality to another. Premium is income-related, and there will be measures to moderate the burden for
low-income persons.
Those eligible to receive long-term care are all persons in Category I who are certified as requiringsupport or long-term care based on the Certification of Long-Term Care by the Certification Committee.
Meanwhile, for Category II persons, care is limited to those requiring long-term care or support due toage-related diseases (=specified diseases) such as dementia and cerebrovascular disorder.
5.2.4 Service provision
Services provided by the Long-Term Care Insurance are mainly divided into two categories,
preventive services and care services. Preventive services are provided for those certified as Support Level
1 or 2, and care services are for those certified as Care Level 1-5.
Types of preventive services include home-visit care, outpatient rehabilitation service, and short-term
stay at a care facility. Types of care services include in-home services such as home help service and day
care, and facility services such as intensive care home, long-term care health facilities, and sanatorium-typecare facilities, and community-based services such as home-visit at night, day care for dementia patients,and small-sized multifunctional in-home care. According to the level of care needs, users can choose thetype of services and providers, either publicly or privately managed.
5.2.5 Source of financing
The cost incurred in the Long-Term Care Insurance is financed by premiums, public expenditure, andco-payment of users. Apart from the co-payment of the users, the cost is financed 50% by premiums (21%http://www.ipss.go.jp
34

Social Security in Japan 2014

by Category I, 29% by Category II) and 50% by public expenditure (for in-home services 25% by nationaltreasury, 12.5% by prefectures, and 12.5% by municipalities, and for facility services 20% by nationaltreasury, 17.5% by prefecture and 12.5% by municipalities). Within this framework the municipality candetermine the rate of premium for the insured of Category I. The premium for Category I is charged based
on total income of the insured, and reviewed once every three years. It was around ¥2,900 per month on
average in 2000-2002 then the amount increased to ¥4,972 in FY2012-2014. For the Category II insured
the rate will be 1.55% of salary and annual bonus in case of the Japan Health Insurance Association.
As a fiscal support for municipalities, prefectures set up the Fiscal Stability Foundation (financed fromnational treasury, prefecture and municipality) to give a temporary loan or grant when insurance budget
deficit occurs because of more-than-expected service increase and unpaid premiums.

Figure 5.1 The overview of the Long-Term Care Insurance

5.2.6 Assessment of the care-needs
The users are classified into seven categories (“Support Level 1 and 2” and “Care Level 1 to 5”),depending on the severity of the care need. The limit of services provided is determined according to thesecategories. The user must be assessed by the municipality into one of the categories before applying for theservices. For example, when a person faces a condition requiring support or care, the person or a family
member must first submit an application for a long-term care requirement certification to the municipal
office. Upon receipt of this application, a municipal investigator visits the applicant’s home for an interview
on the physical/mental state, and aspects of daily life. The interview results are analyzed based on computer
system so as to generate a preliminary assessment.
This assessment and opinion letter of the primary physician are then reviewed by the Certification
Committee of Long-Term Care Needs, comprised of health, medical, and welfare experts. This Committee
conducts a secondary assessment and decides the required care/support level. The municipality notifies the35

Chapter 5 Welfare for the Elderly

applicant about the decision. Applicants who are not certified as requiring preventive or care services
covered by the long-term care insurance can be eligible to receive long-term care prevention services under
the community-support project conducted by the municipality.
5.2.7 Care Management
Once the care (support) level is decided, a personal Care Plan is created, which combines packages ofcare and support within the limit of services for each category. The creator of the Care Plan varies
depending on the category. The Care Plans for those eligible to receive care services and requiring carelevel 1 to 5 are created by Long-Term Care Support Specialists (Care Managers) at in-home long-term care
support businesses or care facilities. The Care Plans for those eligible to receive preventive services andrequiring support level 1 to 2 are created at Integrated Community Care Support Centers (地域包括支援セ
ンター).
The Integrated Community Care Support is a scheme created in line with the emphasis on thepreventive services when the law was revised in 2005. It serves as the center for elderly care, and is
responsible for care management to prevent long-term care, creating Care Plans for preventive long-termcare services, providing consultations to the elderly and their family, protecting elderly rights and early
detection of abuse.
5.2.8 Remuneration for services
When long-term care providers deliver preventive or long-term care services for recipients, theyreceive remuneration for services based on the official price list of the Long-Term Care Benefit Expense,
which is decided by the Minister of Health, Labour and Welfare according to a recommendation of Social
Security Council. The price list consists of in-home long-term care/preventive services and facility services,
and is revised every three years. 90% of a price is paid to a provider through a prefectural health insuranceorganization, and 10% by recipients as the co-payment.

5.3 Current Issues in the Long-Term Care Insurance
5.3.1 Financial Strain and the Reform of FY 2011
Soon after its enactment, it has become evident that the initial financial arrangement was not enoughto meet the cost of the long-term care. As shown in Figure 5.2, the number of persons certified for the
long-term care increased by more than 140% from 2000 (2.18 million) to 2013 (5.64 million). The numberof care recipients also grew from 1.49 million (0.52 in facilities and 0.97 in-home care) in September 2000
to 4.80 million (0.88 in facilities, 3.56 in-home care and 0.35 in community-based services) in September
2013. The financial outlay grew steadily from ¥3.6 trillion (2000) to ¥8.2 trillion (2011).

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Social Security in Japan 2014

Figure 5.2 The number of persons certified for the long-term care by care/support level (in 1,000)
5,643
5,330

4,348

4,408

465

489

4,108
3,874
3,484
3,029

414

2,582

381

424

2,182

341

394

431

290

365

394

339

358

317

709

551

479
492
595

891

497
527
614

547

525
560

652

651

756

500
579
711

806

4,690
515
590
738

823

641

571

490

394

455

465

4,548

1,070

1,252

1,332

291

320

398

505

601

674

2000

2001

2002

2003

2004

2005

Support Level
Transitional Care Level
Care Level 3

2006

564
630
713

854

612

5,076
593
641
700

901

910

609
696
670
747
724

952

970

993

1,052

788

852

629

662

654

669

712

527

551

575

604

662

692

773

2007

2008

2009

2010

2011

2012

2013

1,387

655
45
59

4,870

876

769

40
521

1

Support Level 1
Care Level 1
Care Level 4771

Support Level 2
Care Level 2
Care Level 5

Source: Report on the Status of Long-term Care Insurance, etc.
Notes: Data are of April each year. Due to the Great East Japan Earthquake, 11 and 3 municipality’s data are not included in
the data of 2011 and 2012, respectively.

With such circumstances, the long-term care insurance was reviewed and several reforms were put in place.
The recent reforms in 2011 aimed to construct an integrated community care system which provides
seamless supports comprised of healthcare, long-term care, prevention, housing, and livelihood support
services, and to achieve sustainability of the system with a balanced relationship between contributions andbenefits. The Act for Partial Revision of Long-Term Care Insurance refers to (1) enhancing collaboration
between health and long-term care, (2) securing human resources for long-term care and improving qualityof services, (3) improving housing for the elderly, (4) promoting measures to support people with dementia,(5) enhancing functions of insurers and promoting their autonomy, and (6) mitigating increase of insurance
premium.
5.3.2 Establishment of an integrated community care system
The long-term care insurance system initially aimed to support the independent living of the elderly,
and even if the elderly entered a state that required long-term care, it aimed to develop an environment
where the elderly could receive treatment in the community with which they were familiar. To this end, the2005 revision in the law established community-based care services and Integrated Community Care

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Chapter 5 Welfare for the Elderly

Support Centers to ensure enhanced services and coordination at the municipality level.
However, the target has not achieved, as many issues remain such as elderlies having to enter a carefacility even if they requested in-home care due to non-availability of proper service providers in thefamiliar community, lack of collaboration between medical institutions, care facilities, and in-home service
providers, and insufficient number of elderly-friendly housing.
The integrated community care is defined as a community-based system that can appropriately
provide various support services including healthcare, long-term care, prevention, housing, and livelihood
support within daily living spheres in order to ensure safety, security, and health of people. The area ofcommunity is generally regarded as that accessible within 30 minutes, which are almost as large as juniorhigh school districts. To establish this system, the following five aspects of action were set up: (1)enhancing collaboration with medical facilities, (2) improving and enhancing capacity and flexibility oflong-term care services, (3) promoting prevention, (4) ensuring advocacy and livelihood support services
such as meals provision service or housework assistance, (5) constructing and improving elderly-friendly
housing. Central and local governments are involved in coordinating all the related programs to realize
people living in the familiar community independently as long as possible.
5.3.3 Securing human resources of long-term care
The number of care workers has increased since the start of the Long-Term Care Insurance System,
and it reached approximately 1.33 million workers (head count) in FY2010, increased sharply from 0.55
million (head count) in FY2000. Although the number has grown, long-term care providers always suffershortages of long-term care human resources, as the demand for services continuously increase. It isregarded as a big challenge to secure the necessary personnel, and to improve their working environment.
Basically, a majority of workers are female in the long-term care services, and most of them work part-time
especially for in-home services, while most workers in facilities are full-timers.
In order to raise their wages, the Ministry took several measures such as additional payments forlong-term care providers to improve working conditions. Providers can receive additional payments, if they
could meet the requisite of improvement programs including a pay raise plan.

5.4 Welfare for the elderly other than the Long-Term Care Insurance
5.4.1 Housing for the elderly
Table 5.1 shows the outline of housing services for the elderly; 1) intensive care home, 2) group homefor dementia person, 3) nursing home, 4) moderate-fee home, 5) fee based home, and 6) elderly housingwith care services.
Intensive Care Home for the elderly is a day-care facility for persons aged 65 years and over who
require constant nursing care services due to serious physical or mental disabilities. This service is provided
mainly by the Long-Term Care Insurance benefits. Group homes for the elderly with dementia is a small
facility in which dementia patients live together and receive care and supports with a homely atmosphere
under the Long-Term Care Insurance. The capacity of a group home is defined as 5-9 persons.
However, based on the conventional system defined by the Act on Social Welfare Service for Elderly,
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Social Security in Japan 2014

institutional services for the elderly are still provided. The nursing homes for the elderly are admission-type
facilities for economically deprived elderly. In addition, moderate-fee homes for the elderly (care houses)
provide residence and support services including meal services at low-cost.
In recent years, there are more fee-based homes for the elderly run by the private sector. These areconsidered as housing facilities rather than social welfare facilities for the elderly. When the elderly enters acontract with a service provider of fee-based home, they must pay the full expense by themselves, whichsometimes causes financial trouble between a provider and a resident. The in-home service provided by thelong-term care insurance can be used at these facilities.
Elderly housing with care services introduced in 2011 are run by the private sector, and required toregister with the prefecture. The criteria for registration are (1) dwelling floor area 25 m2 or more perdwelling unit in principle and barrier-free design, (2) provision of services including safety confirmationand daily life consultation, (3) extra consideration on contract to secure residence in case of longhospitalization, etc. There are subsidies to promote elderly housing with care services, and 3,478 buildings
comprised of 111,966 units are registered by May 2013.
Alternatively, Silver Housing has been developed jointly by the Ministry of Health, Labour andWelfare and the Ministry of Land, Infrastructure, Transport and Tourism since 1986. It is a collective
housing for single-person and married-couple households aged 60 years old and over, and usually Life
Support Advisors are attached on site for counseling, consultation, safety confirmation, temporary homehelp, and emergency response. There is also public housing for low income households, and some of themare purpose-built for the elderly or disabled persons.
Table 5.1 The outline of housing service for the elderly
1) Intensive carehome for the elderly

Legal basis

Act for Welfare of
the Aged, LongTerm Care
Insurance Act

BasicCharacters

Facilities for theelderly requiringconstant long-term
care2) Group home forthe elderly withdementia
Act for Welfare of
the Aged, LongTerm Care
Insurance Act
A shared house forthe elderly withdementia

4) Moderate-fee
3) Nursing home for5) Fee-based home
home for the elderly
the elderly
for the elderly(care house)6) Elderly housingwith care service

Act for Welfare of
the Aged

Act for Welfare of
the Aged

Act for Welfare of
the Aged

Act on Securementof Stable Supply ofElderly Persons'
Housing

Facilities forenvironmentally andeconomicallydeprived elderly
persons

Housing for theelderly with low
incomeHousing for theelderly

Housing for theelderly

Business
corporations

Business
corporations

13 ㎡

25 ㎡

EstablishedbyLocal governments,
special welfare
corporations

Business
corporations

Local govenments,social welfare
corporations

Local governments,social welfare
corporations,
corporations
approved by
prefecture

Area perdwelling

10.65 ㎡

7.43 ㎡

10.65 ㎡

21.6 ㎡

Source: Ministry of Health, Labour and Welfare (2013), The current situation and the future direction of the Long-term Care
Insurance System in Japan: with a focus on the housing for the elderly.
(http://www.mhlw.go.jp/english/policy/care-welfare/care-welfare-elderly/dl/ri_130311-01.pdf)

5.4.2 Five-year plan to support for people with dementia
In 2012 the Ministry of Health, Labour and Welfare published “Future Directions of Dementia
Support,” and announced the five-year strategic plan to support people with dementia. This plan aims to39

Chapter 5 Welfare for the Elderly

create a society that respects dignity and makes people able to live in a familiar environment in thecommunity as long as possible, even if they have dementia. In order to achieve the goal, the Ministry
positively pursues new programs to change the conventional culture of care which often treats people withdementia to be in a psychiatric hospital or facility. The programs include newly developed standard carepaths for dementia, early diagnosis and treatment, appropriate health and long-term care services to support
living in the community, enhanced livelihood support for the persons with dementia and their family
members, and personnel training.
5.4.3

Prevention of elderly abuse

Act on the Prevention of Elder Abuse, Support for Caregivers of Elderly Persons and Other Related
Matters was enacted in 2005 for respecting the dignity of the elderly, preventing abuse, protecting thoseabused, and supporting caregivers. The Act defines that the elderly abuse includes abusive behavior by bothfamily members and care workers. It specifies that municipalities are primarily responsible for
implementing abuse prevention programs, while prefectures take the role in liaison and coordination ofmunicipalities, collection and provision of information, and construction of facilities.
The following items are emphasized as the fundamental perspectives of abuse prevention program;(1) seamless supports from prevention of abuse to recovery from abuse (2) respect for the elderly persons’own decision making, (3) positive approaches to abuse prevention, (4) early detection and protection, (5)support for the elderly and their caregivers, (6) collaboration and cooperation of related organizations.
5.4.4

Relationship with other public care and support services

In regard to the relationship between the long-term care insurance and elderly services under theServices and Supports for Persons with Disabilities Act or Public Assistance, benefits of the Long-term
Care Insurance Act have priority according the principle of placing priority on insurance. The services suchas hearing aid, prosthetic hand/leg which are not covered by the long-term care insurance, are provided tothe elderly with disabilities according to the Services and Supports for Persons with Disabilities Act. With
regard to Public Assistance, for the extreme poor elderly, the benefits of the long-term care insurance are
given priority, and the co-payment portion is covered by the Public Assistance system.

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Social Security in Japan 2014

Chapter 6 Public Assistance
6.1 Re-emergence of poverty in Japan
Until recently, it was widely believed that Japan had solved the poverty problem. The notion thatJapan had achieved economic growth and achieved an egalitarian society has sunk deep into the Japanesepublic consciousness so much so that it has become a source of national pride and identity. In fact, alreadyback in the 1960s, the living standard of people was rising rapidly and problems of food shortage afterWorld War II had become things of the past. The term “a middle-class nation” was coined to describe Japanin the 1970s and it was believed that all people, even the most disadvantaged, had benefited from theeconomic growth. The government stopped collecting and publishing statistics on poverty in the 1960s, andpoverty dropped from the policy discourse.
However, Since the 1970s, Japan’s poverty rate has been rising steadily. As in Figure 1, the relative
poverty rate of Japan has increased 4 percentage points from 1985 to 2009, making Japan one of the top
five countries among the OECD countries with a high poverty rate.

Figure 6.1 Relative Poverty Rate of Japan
17.0
15.7

16.0

15.3
14.9

14.6

15.0

(%)

16.0

14.0

13.2

13.5

13.7

13.0
12.0
12.0
11.0
10.0
1985

1988

1991

1994

1997

2000

2003

2006

2009

Note: relative poverty rate was calculated as percentage of population who fall below 50% of medianequivalised household income.
Source: Ministry of Health, Labour and Welfare (2011).

The government has finally recognized the problem of poverty in the late 2000’s. In 2009, theMinistry of Health, Labour and Welfare announced the relative poverty rate and a number of measures toassist the poor started in late 2000’s and in 2014, the Law on Measures to Counter Child Poverty wasenacted.
In this section, the Public Assistance program which still serves as the pillar of Japan’s policy against
poverty will be described.

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Chapter 6 Public Assistance

6.2 The Public Assistance program
6.2.1 General characteristics
The root of Japan’s Public Assistance program goes back to poor relief before World War II. Today’s
Public Assistance program has its legal basis on the Public Assistance Act enacted in 1950. The Law
stipulates four fundamental principles: (1) public assistance to the people in need is a responsibility of thestate, (2) all citizens 1 have a right to claim public assistance without discrimination of sex, social
background, and reasons for falling into hardship, and only the economic condition is the criteria ofreceiving assistance, (3) the state guarantees to all citizens a minimum level of healthy and cultural life, and(4) public assistance is a supplement to all resources available and the best efforts exerted by the applicant.
The Public Assistance is provided upon a receipt of an application from a household in need, and after
a careful examination of the application. The assistance is calculated by subtracting the household’s final
income from the minimum cost of living (See Figure 6.2). In case the minimum cost of living exceeds the
final income, the difference is given as the assistance. The minimum cost of living is calculated from sevencategories of expenses: livelihood, housing, educational, medical, maternity, occupational, and funeral
expense. The calculation of the minimum cost of living takes into consideration the differences in living
costs among different regions of the country, and household members’ age. All assistance is provided as
cash transfers, except a few such as medical costs, which are provided as in-kind.

Figure 6.2 Determination of Monthly Minimum cost of Living
Livelihood
individual

Livelihood
householdper personby ageby region

by numberof household
members＋

Additional
if applicable

Housing

per disabled
persons＋byregion＋Others*

Education

MedicalOthersper children
by grade＋ (elementary ＋
and middle
school)averagecost
requiredfortreatmentasrequired＋bythehousehold* Others include children under age of 3, pregnant women &sick persons being treated at home requiring special meals.
Items seen as One-Time Requirements and is provided in addition to monthly expense
1 Bed (if not in possession), clothes for new-born, diapers, etc.
2 Expenses for entering school
3 End-of-year expenses
4 House maintenance for electricity, water, etc.
5 Others

6.2.2 Means test
The principle (4) of Public Assistance states that Public Assistance must be a supplement to the1

The Public Assistance Law (New) excludes foreigners from this right, but currently, by order, legal foreigners are given“equal treatment as citizens”. Illegal foreigners are not covered.

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Social Security in Japan 2014

person’s best efforts and available resources. In other words, the person is required to use all available
resources, including assets, ability to work, as well as assistance from those who are required to support theperson by law. Assets such as land, houses and farms must be sold, except in the case where the person is
actually living or utilizing it and the value of the assets is higher when it is utilized than when it is sold.
Household goods such as TVs are allowed if more than 70% of the population in the region possess theitem.
As for the ability to work, the person will not be able to receive assistance if he/she is judged ascapable to work. If the person has a will and ability to work, but is unable to find work, it is unlikely thathe/she would be given assistance.
The civil law states that certain relatives and family members are required to support a person in need.
Thus, public assistance is given only after it is judged that this support is not available. In practice, spouses
and parents of a minor (less than 20 years old) have strong responsibility to support the person.

6.2.3 Statistics of recipients of Public Assistance
As of July 2013, 1,581 thousand households or 2,159 thousand persons (1.7% of the population)
received some types of public assistance (monthly average). The share of the population receiving theassistance had declined until 1995, but since then there has been a continuous rise. Among those receiving
assistance, elderly household make up the largest share, accounting for 45.2% of all recipient households,
and has been increasing for some years. The share of households with a disabled or sick individual is also
large, at 29.4%. About 7.0% are single-mother households, and the rest, 18.3%, are classified as “othertypes of households.” The large share (87.5% in 2010) of households who receive Public Assistance have
no working household members.
By age, those above 70 years old comprise the largest share (28.0%). Those between 60 and 69 yearsof age also consist 22.9% of the recipients. The elderly in general have high coverage rate (i.e. % of those
who are recipients of Public Assistance among the general population of that age group). Little more than
2.0% of the elderly above 60 years old are the recipients of the assistance, where only about 0.88% of thechildren aged less than 5 and 0.39% of those aged between 20 to 29 years old were the recipients (Table
6.1).

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Chapter 6 Public Assistance

Table 6.1 Break-down by age, Public Assistance Recipients (2010)
Coverage rate
Age
Share (%)(‰ in Assistance)
3.0
8.78
<5
4.9
13.30
6 to 113.2
16.92
12 to 14
4.2
12.85
15 to 19
2.9
3.85
20 to 29
6.9
7.05
30 to 39
9.9
11.02
40 to 49
14.2
16.20
50 to 59
22.9
21.40
60 to 69
28.0
23.41
70+
100.0
14.67
Total
Source: Ministry of Health, Labour and Welfare (MHLW) "National Survey on Public
Assistance Recipients"
Note: Data are compiled by National Institute of Population and Social Security
Research (IPSS).

Figure 6.3 shows the number of recipients by age groups. The number of recipients dropped sharply
after the 1960s in all age groups, reaching an all-time low in the mid-1990s, and increased again from thelate 1990s to 2011. The sharpest increase in the number of recipients was seen in the 65 to 69 age bracket.

Figure 6.3 Percentage of those receiving Public Assistance, by age (1960-2011)

45
40
35

(‰)
0-5

6-11

12-14

15-19

20-29

30-39

40-49

50-59

60-64

65-69

70+

30

65-69
70+
60-64

25
20

12-14
50-59
6-11
15-19
40-49
20-29
30-39
20-29

15
10
5

1960
1965
1970
1975
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

0

Source: National Institute of Population and Social Security Research, “Official Statistics on the Public Assistance
System” http://www.ipss.go.jp/site-ad/index_Japanese/securityAnnualReport.html, based on the data of Ministry of
Health, Labour and Welfare 2011

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44Social Security in Japan 2014

Figure 6.4 shows the duration of receiving the assistance, and while those who have been receiving forless than a year comprise nearly 17% of recipients, those who have been receiving for more than 10 years
also comprise nearly 25%. The duration tends to be long because the majority of the recipients are elderly
and there is not much prospect of them finding work.

Figure 6.4 Duration of Receiving Public AssistanceLess than 6months8.2%

6 months to 1
year
8.7%

More than 10
years
24.6%

1-3 years
20.5%

5-10 years
25.4%
3-5 years
12.6%

Source: Ministry of Health, Labour and Welfare (MHLW) "National Survey on Public Assistance
Recipients"
Note: Data are compiled by National Institute of Population and Social Security Research (IPSS).

45

Chapter 6 Public Assistance

6.3 Current Issues
6.3.1. The 2013 Reform of the Public Assistance
The Public Assistance is one of the oldest programs among social security system in Japan. The recent
upward trend in the number of recipients and expenditure of Public Assistance has become controversial,
and the Public Assistance program has become one of the main targets for budget restraint in the policy
debate. One of the criticisms of the program was that the benefit level is too high, compared to the income
level of people who do not receive Public Assistance benefits. For example, the benefit level forsingle-mothers was pointed out to be higher than many single-mothers who are “managing on their own.”
While many scholars argue that this is not the problem of the benefit level, per se, the problem is the factthat many people do not receive the benefit even though their income level is so low (i.e. the take-up rate of
the program is rather low. The take-up rate is the percentage of those who are actually receiving the benefit
among who are eligible to receive the benefit.). The government had demolished the additional benefit
which was previously given to single-mothers and elderly households by March 2007. However, the benefit
for single-mothers was reintroduced in December 2009. From August 2013, the government decided toreduce the amount of Livelihood assistance, the major component of the minimum standard of living, by asmuch as 10% for some households, to compensate for the declining consumer price index. There is a wide
spread outcry against this measure.
6.3.2 Emerging policies toward poverty alleviation
There have been a number of policy initiatives which target the poor in recent years. One of which, theLaw to Assist those Experiencing Hardship (生活困窮者支援法), was debated extensively in 2012 and2013, and was enacted in 2014. This law aims to establish comprehensive welfare service offices
throughout the nation. It is intended as a one-stop service provider for those in need. Another initiative isthe enactment of the Law on Measures to Counter Child Poverty as previously mentioned. It mandates theJapanese government to plan comprehensive policy to combat child poverty and to implement the plan. It
states as the guiding principle that the aim of policies to combat child poverty is to realize a society inwhich a children’s future is not influenced by circumstances in which they are born into. The law calls forbasic policy framework to be enacted by the Committee on Combating Child Poverty which will beassembled within a year after its enactment, and mandates the government to announce the state of childpoverty and policies every year.

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Social Security in Japan 2014

Chapter 7 Family Policy
7.1 Family policies in Japan
Japan has faced a rapid aging of the population, which is caused by both a decrease in the fertility rate
and an increase in life span. In order to stop the trend toward a society with few children, it is necessary tocreate an environment favorable to child rearing.
The major reason behind the rapid fall in the birthrate is the situation whereby women have to choose
between either continuing to work or quitting working and having children, and are not able to choose
various working styles. The increase in temporary employees and long working hours made it very difficult
for the Japanese to achieve the lifestyle and the working style they wished for. 1
Due to criticism against the pronatalist policy during World War II, the Japanese policies at present totackle low fertility are oriented towards promotions for gender equality, life-work balance, and support forfamilies with children. The Gender Equality Bureau of the Cabinet Office is in charge of the family policy
together with related policies run by other ministries such as the Ministry of Health, Labour and Welfare or
Ministry of Economy, Trade and Industry.
Japan ratified various international conventions related to human rights. The Convention on the
Elimination of All Forms of Discrimination against Women in 1985, and the Convention on the Rights of
the Child, 1994 were ratified. As a member of the international community, Japan improves various social
measures for families.

7.2 Income support for families with children
7.2.1 Universal Child Allowance
Under strong political initiatives, a new Act of Child Allowance was enforced in April 2010, and soonafter in April 2012 it was amended and an income threshold was reintroduced. The amended childallowance is paid to households with children up to 15 years old, with the income threshold as listed inTable 7.1. The amount varies from 5,000 yen to 15,000 yen according to the age of children and the income
level of the households.

Table 7.1 Income Threshold for Child Allowance (2012)
Number of
Dependents1)None
1 person
2 persons
3 persons
4 persons
5 personsMore than 6 persons

Household income
threshold (in 10,000 yen)after tax deduction (A) 2)
622
660
698
736
774
812
+38.0/person

Household income
threshold (in 10,000 yen)
before tax deduction (B)3)
833.3
875.6
917.8
960.0
1,002.1
1,042.1“White Paper on Society of Declining Birthrate 2013” (少子化社会対策白書 平成 25 年), Cabinet Office, Government of
Japan
1

47

Chapter 7 Family Policy

1) The number of Dependents include a spouse and other family members who can be eligible to receive
income deduction under the tax act.
2) Annual Income of previous year (unit: ¥10,000)
3) (A) +tax exemptions = (B)

7.2.2 Child Rearing Allowance (for single-parent households)
The Child Rearing Allowance is given to a single-parent with limited income who is rearing achild/children of 18 years old or younger. The monthly allowance is ¥41,430 in the case of one child,¥5,000 for the second child, and an additional ¥3,000 for each child including the third and subsequent
children (2012). Before August 2010, only single-mother households were eligible for this allowance, but
now both single-mothers and fathers can receive the allowance. The income threshold for the Child Rearing
Allowance is calculated according to the number of children in a household. The income of family
members other than the parent are also taken into consideration.
7.2.3 Special Child Rearing Allowance (for parents of children with disabilities)
Special Child Rearing Allowance is given to parents who look after their children with disabilities athome. The monthly allowance of child under the age of 20 is ¥50,400 for first degree, and ¥33,570 forsecond degree disabilities. In addition, the Welfare allowance for children with heavy disabilities is given to
parents who take care of them at home. The monthly allowance is ¥14,280. On the other hand, the monthly
allowance is ¥26,260 for those children who are over 20 years old. Children over 20 years old receive
entitlements to the national disability pension according to their degree of disability.

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Social Security in Japan 2014

Table 7.2 Family Allowances (2011)

Persons eligible

Special child care allowance

Mothers who take custody of and bringup a child who does not live with his/herfather due to the divorce between
his/her parents (a child is defined as aperson who has not reached the year of
his/her 19th birthday or a person who is
younger than 20 years of age and has adisability) or other persons (e.g.,grandfather or grandmother) who bringup such a child.
Fathers who take custody of and lives
with a child who does not live withhis/her mother due to the divorce
between his/her parents.

Fathers or mothers who take custody ofa child younger than 20 who has mental
or physical disabilities or other persons
who bring up such a child (persons wholive with, take custody of, and support
such child).

i. Special allowance for persons withdisabilities
Persons with severe disabilities of 20
and older who are at home and are
regularly in need of special nursing carein their daily life.
ii. Welfare allowance for children withdisabilities
Persons with severe disabilities younger
than 20 who are at home and are
regularly in need of special nursing carein their daily life.

First child:First child:

Income under \1.3 million:

Grade 1 (in serious conditions):i. Special allowance for persons withdisabilities:¥41,720
Income \1.3 million or more but under\3.65 million:
Monthly amount ofallowance(Fiscal 2010)

Special allowance for persons withdisabilities, etc.

Child care allowance¥50,750
Grade 2 (in moderate conditions):¥26,440
ii. Welfare allowance for children with

¥33,800 disabilities:\41,710 to \9,850¥14,380(Monthly amount reduced in units of \10depending on the income of the persons
eligible)

Welfare allowance by interim measures:

Second child:¥14,380\5,000 added.

Third child and after:\3,000 added.

Income limits(Income basis)(Fiscal 2010)

Persons eligible:

Persons eligible:

Persons eligible:(Two-member households)(Four-member households)(Two-member households)\3.650 million\7.707 million\5.656 million

Supporters, etc.

Supporters, etc.

Supporters, etc.

(Six-member households)(Six-member households)(Six-member households)\6.100 million\9.542 million\9.542 million

Sources: Japanese Social Security Statistics DB, http://www.ipss.go.jp/ssj-db/e/ssj-db-top-e.asp

7.3

Services for families with children

7.3.1 Day care centers for children
Municipal governments are required by the Child Welfare Law to provide day care centers for children
whose parents are not capable of taking care of them for reasons such as work, illness, and care of othermembers of the family. Day care centers for children typically provide 8 hours of care for children aged
from 0 to the age of kindergarten or primary school, but the demand to extend the hours has been increasing.
The staffing and other quality measures are tightly regulated by the municipality. Fees for day care centers
for children varies from 20,000 to 50,000 yen per month, according to municipality, the age of children,and the income level of the parents.
A long waiting list to enter day care centers for children is one of the urgent issues to be solved by thegovernment, especially at the municipality level. To tackle the shortage of facilities, the municipality49Chapter 7 Family Policy

governments are introducing new schemes of child day care at home by women with child rearing
experience or who possess a license. On the other hand, as the total number of children is decreasing, thegovernment has been integrating kindergartens and day care centers for children since 2006.
The Cabinet Office set a special task force to solve the shortage of nursery care service in October2010. Approximately 2.2 million children are taken care of at the day care centers for children in April
2012, an increase of 36,000 since 2011. There are approximately 25,000 children who are on the waiting
list in April 2012 according to the government estimation. That number has been decreased by 731 between
2011 and 2012. However, there are still long waiting lists, especially in urban areas in relatively big cities.
7.3.2 Foster homes (for Children of DV victims and without parents or guardians)
There have been increasing numbers of children suffering from domestic violence during the past
decade, from 26,569 in 2003 to 66,701in 2012. Younger children are more likely to be victims (Table 7.3).
There are 58 facilities for protecting and supporting children in Japan where approximately 1,600
children were supported in 2011. An additional 4,3000 children were supported by foster parents in 2011.

Table 7.3 The number of Abuses against Children cases taken care by foster homes between
April 2012 to March 2013
Total
Total
Age 0-3Age3-5Age6-12Age 12-15
Age 16 and over

66,701
12,503
16,50523,4889,404
4,801

Physically
23,579
3,517
5,412
8,864
3,777
2,009

Sexualy

Mentary

1,449
47
189
449
409
355

22,423
4,612
6,161
7,738
2,613
1,299

Negrecterd
19,250
4,327
4,743
6,437
2,605
1,138

Abandand
Left behind(republished)(republished)
44
209
21
69
13
64
7
59
3
13
4

Source; “Report on Social Welfare Administration and Services” of the Ministry of Health, Welfare and Labour, 2012

7.3 Work Life Balance
Japan as an “Ageing Society” was a consequence of a long declining fertility after World War II.
Japanese women have a tendency to leave the labor market when they are rearing children. However, thefemale labor participation rate of those aged 30 to 34 increased from 74.8% in 1990 to 82.4% in 2012, andaged 25 to 29 increased from 79.0% in 1990 to 85.8% in 2012. However, there is a gap between marriedand single. The increase of single women’s labor participation contributed largely to raising the labor
participation rate of those age groups. More women postpone their marriage in order to avoid cuts inopportunity cost by quitting their job. Therefore, the Work Life Balance measures supporting women to
take both work and family responsibility became an important part of policy.
Besides promoting daycare service for pre-primary school children as well as low grade pupils inprimary school, parental leave is the major support for households with children. 87.8% women takeparental leave in 2011, however, among those who had the first baby between 2005 and 2009, only 38.0%
of those stayed in the labor market in 2011. There are many women who quit their job after child birth andtook parental leave. On the other hand, only 2.63% of men took parental leave in 2011. Therefore, the
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Social Security in Japan 2014

government enforces measures to promote Work Life Balance by encouraging fathers to take leave. In
principle, those who have children under age one can take parental leave (see the Table 7.4).

Table 7.4 The Continued employment benefits
As of September 2012

Eligibility

AmountPayment
periodParental leave
Insured persons who took a maternity
leave to care for their infant under one
year had, during the two years before
such a leave started, 12 or more of amonth which included 11 or more days
used as the basis of wage payment.
Generally, 50% of the wage before theleave (30% during the leave and theremainder after employed for six
months after reinstatement).
If the child-care leave started on orafter April 1, 2010, the benefits will be
integrated and the total amount will be
paid during the leave.
The period during which the individualcare for an infant under one year
(under one year and six months if it isconsidered that there are special
needs).

Family-care leave
Insured persons who took a family-care leave
to care for a family member had, during thetwo years before such a leave started, 12 ormore of a month which included 11 or moredays used as the basis of wage payment.
Generally, 40% of the wage before the leave.

Three months from the day the family-careleave started (93 days in total if the prescribed
requirements are met).

7.4 Public health measures for mother and children
Mother and child are protected by the Maternal and Child Health Act enacted in 1965. Healthcheck-ups and counseling are provided by local governments to expecting mothers from the 23rdweek-pregnancy and up-to three year old children free of charge. The Mother and Child Health Notebooks,
called “Boshitecho（母子手帳）” in Japanese, are given to all expecting mothers. Japan's infant mortality
used to be as high as 150-160 per thousand births until the early 20th century, but declined sharply since the1920’s and attained an extreme low level below 10 in 1975. Japan's current figure of 2.3 (2011) is one of
the lowest even among developed countries. This may well be regarded as a triumph of Japan's MCH
policy.
Right after the end of World War II, due to the post-war baby boom together with prevailing poverty,
the health condition of mothers and children deeply worsened. Under such circumstances, the Eugenic
Protection Act was enacted in 1948, which authorized certified doctors to perform induced abortion on
women pregnant 21 weeks or less, under the condition that the pregnancy or delivery is likely to jeopardize
the pregnant woman’s health either physically or economically, or the woman became pregnant as a resultof rape. The certified doctors are required to report the number of abortions performed, and if the aborted
fetus is 13 weeks or older, it must be registered as still birth. The law has since been amended, and is now
called the Maternity Protection Act, and the practice continues although induced abortion is and should be
regarded as a last resort to terminate the pregnancy.

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Chapter 7 Family Policy

7.5 New perspectives for Family Policy in Japan
There were 241 children who lost both their parents, and 1,483 children who lost one parent due to theGreat East Japan Earthquake which hit the Tohoku area in Japan on March 2011. According to thegovernment report, the counseling needs were high among victims of the disasters due to the difficulties
they faced during evacuation. An act for supporting children and victims of disaster2 was enacted in June
2012. This act was focused on the victims of nuclear power plants accidents.
The measures for improving the birth rate are implemented not only in the fields of social measures
but also of health services. For instance, financial support for couples suffering from infertility started in
2006, which would grant the twice a year 150,000 yen operation cost of in vitro fertilization with amaximum duration of 5 years. A new scheme of compensation for delivering accidents was introduced in2009. Lump sum payments are given to families who raise children with heavy cerebral palsy caused bydelivering accidents.
The poverty of households with children is one of the major issues which the Japanese government istackling. In June 2013, the Law on Measures to Counter Child Poverty was promulgated.

2

Official name is “Act Concerning the Promotion of Measures to Provide Living Support to the Victims, including theChildren, who were Affected by the TEPCO Nuclear Accident in Order to Protect and Support their Lives （被災者生活再建支援制度）”

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Social Security in Japan 2014

Chapter 8 Policy for People with Disabilities
8.1 Policy for people with disabilities in Japan
Internationally, the government of Japan signed the Convention of Rights of People with Disabilities
in 2007, but it has not been ratified yet. Since the number of countries who have ratified this convention is
as many as 138 (as of October 2013), the Japanese government improves various social measures forpeople with disabilities, and is preparing conditions so that ratification of the convention may be made.
Under six welfare acts, including the Public Assistant Act, Child Welfare Act, Act on Welfare of
Physically Disabled Persons, Act on Welfare of Mentally Retarded Persons, Act on Social Welfare Service
for Elderly, Act on Welfare of Mothers with Dependents and Widows, services are provided to people withneeds of such services. The welfare system according to the type of disability (physical disability, mental
retardation, mental diseases) caused the difference that the level of the facilities accommodation and theuser-charge of the medical expense are different in each type of disability. Since the number of people withphysical disabilities, people with mental retardation, and people with mental diseases amounts to 3,663,000,
547,000, and 3,233,000 respectively in the middle of the 2000s (Table 8.1), it is necessary to unify systems
and to reduce differences between the systems by the kind of disability.

Table 8.1 The number of people with disabilities in 1,000 (2013)
Persons withphysicaldisabilities

Younger than 18 years of age
Older than 18 years of age
Total
Younger than 18 years of age

Total
98
3,564
3,663
125

Persons withintellectual
disabilities

Older than 18 years of age

410

290

120

Age unknown

12

12

0

Total

Persons withmental disorders

Younger than 18 years of age
Older than 18 years of age
Age unknown
Total

547
Total
179
3,011
11
3,201

At home
93
3,483
3,576
117

419
Outpatient
176
2,692
10
2,878

Institutionalized
5
81
87
8

128
Inpatient
3
319
1
323

Sources: Cabinet Office White Paper on People with Disabilities, 2013, Table 1“The Number of People with Disabilities(Estimated values)”. http://www8.cao.go.jp/shougai/whitepaper/h25hakusho/zenbun/h1_01_01_01.html#z1_01(in Japanese).
The data in this table are based on the following statistics: “Persons with physical disabilities” living at home: Ministry of
Health, Labour and Welfare (MHLW) “Survey on the Actual Status of Children/Persons with Physical Disabilities” (2006),
Living in an institution: MHLW “Survey of Social Welfare Institutions” (2006), “Persons with intellectual disabilities” living
at home: MHLW “Comprehensive Survey on Children/Persons with Intellectual Disabilities” (2006), Living in an institution:
MHLW “Survey on Social Welfare Institutions” (2005), "The Mental Disorder", The Survey of the Patient’s: MHLW (2011)

In order to establish the coordination between such systems classified by the type of disability, theServices and Supports for Persons with Disabilities Act (SSPDA) was enacted in 2005. Based on this act, a
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Chapter 8 Policy for People with Disabilities

mental diseases, was introduced in 2006. However, there was a strong resistance to introduce cost sharing
among people with disabilities. Under the Democratic Party, the discussion of reforming SSPDA wasstarted and the amendment bill including the reexamination of cost sharing (i.e., mitigation of user charge
according to income) was approved in the Parliament in December 2010. Finally the effort of such law
revision bore fruit, and a new law (the Act for Comprehensive Welfare for Persons with Disabilities) that
corrected various incompleteness of SSPDA was enacted in June 2012.

8.2 Various forms of support
8.2.1 Income support
The National Pension includes a scheme for adults with disabilities. It is called the Disability Basic
Pension. The pensioners include the persons who obtained disabilities in his/her childhood and those who
were born with disabilities. The Employee Pension includes a scheme for former employees who became
disabled while they were employed. Under the mutual aid associations, there are similar schemes forformer employees with disabilities including civil servants both of central/local governments andteachers/employees of private schools. Also, under the Workers’ Accident Compensation Insurance,
employees can receive pension for the loss of ability due to injury and sickness at work. There are alsosimilar workers’ accident compensation schemes for civil servants.

Table 8.2 Income support for the People with Disabilities, 2012
Pensions

National Basic Pension

Employees' Pension InsuranceType

Flat rate

Income-related

Amount(Yearlyamount)¥983,100 (1st degree) or ¥786,500(2nddegree)+dependents
allowance

1.25 * Amount of Old Age Pension(1st degree) or 1.00 * Amount of
Old Age Pension (2nd degree)

Eligibility

Over 20 years of age, who have
paid 2/3 of premium period, andthose who are under 20 at the timeof becoming disabled and who haveturned 20

For those who have become
disabled during insured months (forthose under 300 months of
insurance period, 300 is applied)

Source: Annual report on social security statistics 2009, National Institute of Population and Social Security Research (IPSS)

Other than public pension benefits, there are allowances paid under certain conditions of disability by
local authorities. However, the allowance is not a universal scheme, but an individual local authority
provides it out of its own budget.
8.2.2 Service to support people with disabilities
The Act for Comprehensive Welfare for Persons with Disabilities was promulgated in June 2012, andreorganized the scheme of service for people including children under 18 years old with disabilities. The
Act aims at three goals. The first is an inclusive policy of three types of disabilities, i.e. physical,
intellectual, and mental disabilities. The second is a reorganization of services providing schemes in order

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54Social Security in Japan 2014

to position the people with disabilities in the center. The third is enforcement of active labor participation ofpeople with disabilities.

Table 8.3 Scheme of service under the Services and Supports
for Persons with Disabilities Act (SSPDA)
Home
nursing(Home help)

care

Nursing care forseverely disabled

theSupport for activities
Comprehensive support
for the severely disabled
Day services
for children
Respite care service
Nursing careservices
Nursing care

Personal care
Nighttime care at support
facilities for the disabled(Facility
entrance
support)Care home service
Independence Training(rehabilitation, daily life
training)
Employment shift
supportTraining
services

Continuous Employment
Support(Type
A:
Employment, Type B)
Group living support(Group homes)
Transportation support

Community
life support
services

Community
support center
Welfare homes

activity

Assist with bathing, toileting, and eating at home
Assist severely disabled persons who require constantnursing care with bathing, toileting, and eating at home,
and also provide outing assistanceOuting assistance and necessary support to avoid danger
surrounding persons with disabilities who have limitations
in making personal judgments
Comprehensive program to provide multiple services
including at-home care for persons having substantial needfor nursing care
Training on basic daily activities and orientation to adjust
to group living offered for children with disabilities
Respite care (daytime and nighttime) at facilities withbathing, toileting and eating, in case family caregivers
become ill or unable to provide the necessary nursing care
Daytime assistance for persons who require medical
attention and constant nursing care including functional
training at medical institutions, medical management,
nursing care, and personal care
Daytime assistance for persons who require constantnursing care including support with bathing, toileting andeating,andprovisionofopportunities
forcreative/productive activities
Nighttime support for persons entering care facilities
including bathing, toileting, and eating assistanceNighttime or holiday support at group living residences
including bathing, toileting, and eating assistanceTraining provided for a certain period of time to improvephysical function and daily living abilities so that theperson can achieve an independent daily/social life
Training provided for a certain period of time to enhancenecessary knowledge and skills for employment, offered topersons who wish to be employed in an ordinal
corporation
Provide work place and necessary training to enhanceknowledge and abilities for persons who have difficulties
working in an ordinal corporation
Nighttime or holiday services at group living residences
including consultation and daily support
Assist disabled persons whotransporting themselves outdoors

have

difficulties

in

Facility offering opportunities for creative/productive
activities and promoting social interaction

Source: Web-site of Ministry of Health, Welfare and Labour(http://www.mhlw.go.jp/bunya/shougaihoken/service/taikei.html).

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Chapter 8 Policy for People with Disabilities

The residential service regrouped with two types, which is day activities and residential support.
Within the day activities, there are the care benefit, the training benefit, and the community based support
programs. (See the Table 8.3)
8.2.3 Promotion of vocational rehabilitation services and employment of people with disabilities
As there are lots of challenges for people with disabilities to be employed, vocational rehabilitation
services that include vocational evaluation and guidance, work preparation support, assessment of persons
with intellectual disabilities, and comprehensive employment support for persons with mental disabilities
are very important. These services are provided by Local Vocational Centers and Large Region Vocational
Centers for People with Disabilities under the Law for Employment Promotion of Persons with Disabilities.
The employment of people with disabilities in many cases requires employers to pay extra costs for
preparing special accommodation in the workplace facility, equipment, and environment modifications, andadoption of special personnel management programs. In order to promote and secure employment of people
with disabilities, the government provides the subsidy that fills up these costs of the company employing
the people with disabilities. On the other hand, the government imposes a surcharge if a company does not
attain the employment rate for the people with disabilities. This system (The levy and grant system for
employing people with disabilities) is enforced under the “Law for Employment Promotion of Persons with
Disabilities.”

8.3 Current Issues
There are similarities between welfare services for people with disabilities and long-term care for theelderly in terms of offering care to the person who has needs. The recent reform of the long-term careinsurance for the elderly greatly promoted replacing the facility centered services with the integrated
community care support coupled with home care services. A similar trend is now starting for theenvironment surrounding persons with disabilities, so that they can continue to live in the community
which they got used to. According to the flow of such reforms, the Law for Promotion of Dissolution of theDiscrimination for People with Disabilities was enacted at last in 2013. By this law, one of the conditionsof ratifying the Convention of Rights of People with Disabilities is filled, and the day of ratification isapproaching even in Japan. The welfare policy for people with disabilities in Japan is continuing to develop
along with the current improvement of global welfare, though there are remaining various tasks.

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Social Security in Japan 2014

Chapter 9 Labour Insurance
9.1 Overview
Although Japan’s unemployment rate continues to remain at a relatively low level compared to otheradvanced countries, it has gradually risen since the late 1990s. The length of job tenure that used to be
regarded as one of the characteristics of the Japanese labor market has also declined in recent years 1. As
stable jobs have decreased, there is a growing need for support for unemployed persons. This chapter lays
out two social security programs: Employment Insurance and Workers’ Accident Compensation Insurance.
In Japan, the term “Labour Insurance” is used to indicate these two social insurances. Schemes of the two
insurances are independent of each other, but both have similar characteristics in that the government is theinsurer, and the prefectural labour bureau collects the insurance premiums.

9.2 Employment Insurance
9.2.1 Basic Scheme
Employment Insurance consists of three main pillars: unemployment benefits, service for employment
stabilization, and service for developing human resources. Through the unemployment benefits, cash
benefit is provided in case an employee loses the job, which can be used as livelihood support, and for thepromotion of reemployment. The unemployment benefits include a variety of benefits such as the Job
Applicants’ Benefits, Employment Promotion Benefits, the Education and Training Benefits, and theContinuous Employment Benefits. These items are further explained below. The service for employment
stabilization is provided to support employers to prevent them from laying off their employees. The service
for developing human resources assists both employed and unemployed persons to acquire skills.
The entire scheme is shown in Figure 9.1.
Since April 2010, any employee 1) whose scheduled working hours are 20 hours or more per weekand 2) who is expected to be employed for 31 days or more, is considered as insured under the employment
insurance.
The employment insurance is funded by both insurance premium and tax revenue. The insurance
premium is paid in principle by both the employer and employee. Based on a balance of expenditure andrevenue, insurance premium is determined systematically within a defined range, with the approval of
Minister of Health, Labour and Welfare 2.

1

Japan is believed to be a country in which it is the most difficult for employers to fire their employees owing to theregulations for protecting workers, but whether the regulations are actually strict or not is still debatable.
2
The insurance premium does not vary by individual firm.

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Chapter 9 Labour Insurance

Figure 9.1 Employment Insurance
Job Applicants' Benefits
Unemployment
Benefits

Basic Allowance
Skill Acquirement Allowance

General Employees
Lodging Allowance
Injury and Sickness Allowance
Old-Age Employees
Old-Age Job Applicant Benefit
Short-Term Special
Employees

Special One-time Allowance

Daily Labor

Day-Labor Job applicant
Benefits
Employment Promotion
Allowance

Employment
Insurance

Employment Promotion
Benefits

Relocation Expenses
Wide-area Job Seeking
Activities Expenses

Education & Training
Benefits

Education and Training Benefits
Old-Age Continuous
Employment Benefits

Continuous Employment
Benefits

Childcare Leave Benefits
Family Care Leave Benefits

Service for Employment
Stabilization
Related Services
Service for Developing
Human Resources

9.2.2 The Basic Allowance for the Job Applicants
The Basic Allowance is one of the Job Applicants’ Benefit, and the most common benefit of theemployment insurance 3. The basic allowance is paid when the insured former employee lost his/her job.
The benefit payment period of the basic allowance is between 90 and 330 days 4, and varies by reason for
unemployment, insured period, and age of the beneficiary. The benefit period is basically longer if theinsured period is longer. If unemployment is due to “company bankruptcy,” or involuntary leaving such as“termination,” or “expiration of contract term,” the benefit period is basically set longer thanunemployment due to other reasons and is set longer with higher age (excluding people aged 60 or older).
The Tables 9.1 to 9.3 show the number of days the allowance is paid for each kind of recipient.
In case of job separation for his/her own reasons, benefits start approximately three months after theunemployment (if the person is still unemployed at that time). The benefit amount is 50 to 80% of theaverage wage for the six months prior to unemployment (45 to 80% for persons aged 60 and 64), and therate is higher if the wage prior to unemployment is lower.

3
4

It is often referred to simply as the “Unemployment Benefits.”
For those difficult to get employed such as disabled persons, the benefit period is between 150 and 360 days.

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58Social Security in Japan 2014

Table 9.1 Duration of Basic Allowance (for involuntary terminated employees)(unit: days)
Years of being
insuredMore than 1
year and lessthan 5 years

More than 5
years and lessthan 10 years

More than 10
years and lessthan 20 years

More than 20
years

90

120

180

-

90

180

45 ~ 60180

60 ~ 64

150

Age ofbeneficiaryLess than 1
year

Less than 30
30 ~ 34
35 ~ 44

90

210

-

240

270

240

270

330

180

210

240

Table 9.2 Duration of Basic Allowance (for those leaving jobs for reasons other than above)(unit: days)
Years of being
insuredAge ofbeneficiaryLess than 1
year

All

More than 1
year and lessthan 5 years

More than 5
years and lessthan 10 years

More than 10
years and lessthan 20 years

More than 20
years

120

150

90

Table 9.3 Duration of Basic Allowance (for those difficult to get employed)(unit: days)
Years of being
insuredAge ofbeneficiaryLess than 45
45 ~ 64

Less than 1
year

More than 1
year and lessthan 5 years

More than 5
years and lessthan 10 years

More than 10
years and lessthan 20 years

More than 20
years

300

150

360

In the fiscal year 2012, an average number of those who received the job applicants’ benefit per month
were 576,000, and the total amount of the benefit payment was approximately 930 billion yen.

9.2.3 Employment Promotion Benefits, Education and Training Benefits
Employment Promotion Benefits are paid for those who are finding regular jobs and non-regular jobs.
Those qualified to receive the basic allowance and are successful in finding employment with a certain
benefit period remaining are eligible to receive these benefits.
Education and Training Benefits are paid to those who have been covered by employment insurance
for a certain period when they attend and complete education or training that is provided by the private
sector and designated by the Minister of Health, Labour and Welfare. It compensates 20% of the educationand training expenses (up to ¥100,000).

9.2.4 Continuous Employment Benefits
The Continuous Employment Benefit has three programs: Old-Age Continuous Employment Benefits,Childcare Leave Benefits, and Family Care Leave Benefits. The Old-Age Continuous Employment Benefit

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Chapter 9 Labour Insurance

is provided to insured persons aged 60 to 64 years old who have been covered by the employment
insurance for five years or more. If a person’s wage drops to less than 75% compared to the wage at age 60,
then up to 15% of the monthly wage is paid. The benefit period is provided up to the 65th birthday.
The childcare leave benefit is a benefit for insured persons taking childcare leave to care for infants
under the age of one (or the age of one and a half if extension is permitted). They receive benefits
equivalent to 50% of the wage before taking leave (with an upper limit), assuming that the person was
insured for a certain period prior to the start of the leave. In the past, part of the benefit was paid six months
after returning to work, but the benefit is currently paid in full during the leave.
The family care leave benefit, as in the case of the childcare leave benefit, is a system for those taking
leave to provide nursing care for his/her family. The benefits are equivalent to 40% of the wage before
taking the leave (with an upper limit) for a maximum of three months.

9.3 Workers’ Accident Compensation Insurance
The Workers’ Accident Compensation Insurance is a system to provide benefits to compensate forworkers’ injury or sickness while at work or commuting to and from work. It also has programs to promote
the social rehabilitation of the afflicted worker. All employees regardless of employment type or businesssize are covered by this insurance, which is in principle funded by premiums paid by employers. The
premium rate varies greatly by industry as shown in Table 9.4. For firms with more than 100 employees,
the premium increases or decreases, based on the number of accidents caused in the firm for the past three
years.
Table 9.4 Premium Rates of Workers’ Accident Compensation Insurance by Industry(unit: ‰)Industry
Forestry
Fishery
MiningConstruction
Manufacturing
Transportation
Energy (electricity, gas, water or heat supply)
OthersPremium Rate60
20 ~ 40
5.5 ~ 88
7.5 ~ 89
2.5 ~ 26
4.5 ~163
2.5 ~50

Benefits include medical treatment (compensation) received at medical institutions, temporary
disability benefit to compensate for wages during the treatment period, injury and disease benefit or
physical disability benefit for injuries/diseases that are not cured or leave disabilities, and survivors benefit
paid to the family in case a worker dies due to a work-related reason.

9.4 Current Trends
Since the employment insurance were amended several times to expand eligibility for being insured to
non-regular workers from the relatively early days, the proportion of insured persons to all employees

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Social Security in Japan 2014

remains at approximately 70% despite the recent rapid increase in non-regular workers 5. Nevertheless, therecipient rate (ratio of those who receive unemployment benefits to all unemployed persons) has
consistently declined since the enactment of the current unemployment insurance law of 1975, and has
been below 30% in recent years. This long-term decline is attributable to the increase of the number of
those who were employed only for a short period, and therefore did not meet the required insured period
before becoming unemployed, as well as the government’s policy of aiming to reduce unnecessary claims
for benefit 6. Against this backdrop, in October 2011, the government introduced Job Seekers Support
System which offers job training and allowances to unemployed persons who are ineligible for
unemployment benefits, or whose benefit period has expired, relying on the employment insurance fund.

5

Also in recent years, expected period of employment required for being insured, which used to be one year, was shortened
to 6 months in April 2009, and 31 days in April 2010.
6
Another factor behind this decline is the increase in the number of those who have been unemployed for a long period, andtherefore have exhausted the benefits.

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Chapter 9 Labour Insurance

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62Social Security in Japan 2014

Outline of the Employment Insurance System in Japan
1)

The Insured(a) General Employees

2)
3)
4)
5)

Number of the insured
Number of employers
Insurer
Premium rate:
The Insured
Employer6) Gov't Subsidy:
Administrative cost
Benefits paid7) Unemployment Benefits(A) Job Applicants' Benefits① Basic Allowance
Requirements
Amount(General )
0.5%
0.85%

All
13.75% of benefits, none for Employment Continuation benefits (c)1）Scheduled weekly working hours are 20 hours or more and2）is expected to be employed for 31 days or more
50 to 80% of previous wage

Duration② Skill Acquirement Allowance③ Lodging Allowance④ Injury & Sickness Allowance(B) Employment Promotion Benefits

38.91 (million)
2.06 (million)
Government(for Agro-Forestry)
0.6%
0.95%

See Table 9.1-9.3(1) ¥500/day for course fee, (2) up to ¥42,500 of transportation cost
¥10,700/monthSame as the day rate of the Basic Allowance[ I ] Employment Promotion Allowance(1) Reemployment Allowance: Remaining number of payment days x 50-60% x
Basic daily allowance(2) Employment Allowance: Scheduled working days x 30% x Basic daily
allowance(3) Outfit Allowance for Regular Employment (for disabled, etc.): Remaining
number of payment days x 40% x Basic daily allowance[ II ] Relocation Expenses[ III ] Wide-area Job Seeking Activities Expenses(c) Education & Training Benefits
Requirements
Amount(D) Continuous Employment Benefits

Those who have completed the study & training designated by the Minister withmore than 3 years of insured period
20% of expense (up to ¥100,000)① Old Age Continuous Employment Benefits
Requirements

Those aged 60 to 64 year olds who have been insured for at least 5 years, andwhose wage is less than 75% of the wage at 60.

Amount15% of the wage after 60 (in case the current salary is 61-75% of the wage at
60, the rate is reduced gradually)

Duration

Until the 65th birthday (In case re-employed after receiving unemployment
benefits, 2 years if the remaining days of unemployment benefit is more than 200
days, 1 year, if 100 days.)② Child Care Leave Benefits
Requirements

AmountDuration③ Family Care Leave Benefits
Requirements

Those who have taken child care leave to raise a child of less than one year old(one-and-a-half-year old if extension is permitted), and who have worked morethan 11 days in a month for more than 12 months in the past two years
40 (currently 50)% of wage before the leave
During the child-leave
Those who has taken family care leave and who have worked more than 11 daysin a month for more than 12 months in the past two years

Amount40% of wage before the leave

Duration

Up to three months

63

Chapter 9 Labour Insurance(b) Short-term special
employees

Schemes are as of April 2013.
(c) Continuously Employed Older Persons
Day-Laborers(Over Age 65)
19 (thousand)In addition to the left items¥48～88/day¥48～88/day(for Construction)
0.6%
1.05%

All
1/3 of benefits

Has been employed since before turning 65, Paid 26 days of premiumand till after 65, and insured for 6 months inin the past 2 months
Special One-time
Allowance: 30 (currently
45 to 80% of previous wage
¥7,500～¥4,100/day40) days worth of the
For 30 days if the insured period is less than
Basic Allowance
1 year, for 50 days if insured for 1 year or
13～17 days
more
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Eligible for [ I ](3) in theleft column---

Eligible for [ I ](3) in theleft column

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http://www.ipss.go.jp
64For More Information (web-sites)

National Institute of Population and Social Security Research
http://www.ipss.go.jp/index-e.asp(Our Publication)

http://www.ipss.go.jp/site-ad/index_english/publication-e.html(Survey: Annual Population and Social Security Surveys)
http://www.ipss.go.jp/site-ad/index_english/Survey-e.asp(Japanese Social Security Statistics DB)(Population & Household Projection)

http://www.ipss.go.jp/ssj-db/e/ssj-db-top-e.asp
http://www.ipss.go.jp/site-ad/index_english/population-e.html

Government and related organizations
Ministry of Health, Labour and Welfare

http://www.mhlw.go.jp/english/index.html

Cabinet Office (Policies on Cohesive Society)http://www8.cao.go.jp/souki/index-eng.html

Statistics Bureau (Ministry of Internal Affairs and Communications)Portal Site of Official Statistics of Japan

http://www.e-stat.go.jp/SG1/estat/eStatTopPortalE.do

National Statistics Center
Japanese Law Translation (Ministry of Justice)

http://www.stat.go.jp/english/

http://www.nstac.go.jp/en/index.html
http://www.japaneselawtranslation.go.jp/?re=02

Japanese Organization for International Cooperation in Family Planning

http://www.joicfp.or.jp/en/

Research Institute (related to MHLW)National Institute of Public HealthNational Institute of Infectious Diseases
The Japan Institute for Labour Policy and Training

http://www.niph.go.jp/index_en.html
http://www.nih.go.jp/niid/en/
http://www.jil.go.jp/english/index.html

International Medical Center of Japan

http://www.ncgm.go.jp/eng/

National Institute of Health Sciences

http://www.nihs.go.jp/english/index.html

National Institute of Biomedical Innovation
National Institute of Health and Nutrition
National Cancer Center, Japan
National Rehabilitation Center for Persons with Disabilities

http://www.nibio.go.jp/english/
http://www.nih.go.jp/eiken/html/index.html
http://www.ncc.go.jp/en/index.html
http://www.rehab.go.jp/english/index.html

EditorReiko Hayashi: National Institute of Population and Social Security Research
Director, Department of International Research and Cooperation

Co-Editor
Katsuhisa Kojima: National Institute of Population and Social Security Research
Department of International Research and Cooperation

Written and revised by ;Chapter 1 (Population)

Reiko Hayashi

Chapter 2 (Overview of Social Security)

Katsuhisa Kojima

Chapter 3 (Pension)

Katsuya Yamamoto

Chapter 4 (Health)Nobuyuki Izumida

Chapter 5 (Welfare for the Elderly)

Yumika Shirase

Chapter 6 (Public Assistance)

Aya AbeChapter 7 (Family Policy)

Yukiko Katsumata

Chapter 8 (Disabilities)

Yoshihiro Kaneko

Chapter 9 (Labour)

Tadashi Sakai

We invite comments and suggestions to be reflected in future editions of this publication.
Please send them through our web site;
http://www.ipss.go.jp/mail/e_sendmail/mail.html

Social Security in Japan (2014 edition)
Published by National Institute of Population and Social Security Research (IPSS)
2-2-3 Uchisaiwai-cho, Chiyoda-ku, Tokyo 100-0011 JAPAN
Tel: +81-3-3595-2984

FAX +81-3-3991-4816

URL: http://www.ipss.go.jp/index-e.asp
ISSN 2186 – 0297
April 2014
Printed in Japan