IV. Appendix
1. Description of the Main Terms Used
1-1 OECD Standards
Social Expenditure
According to the OECD standards, the scope of social expenditure is defined as "The provisionby public and private institutions of benefits to, and financial contributions targeted at,households and individuals in order to provide support during circumstances which adversely
affect their welfare." However, it only includes benefits provided by institutions under certain
schemes and does not include a direct payment for a particular good or service or an individual
contract or transfer. The conditions for an expenditure item to be identified as "social" aretwofold: (1) the benefits are expected to address one or more social purposes (nine policy areas)and (2) the scheme that makes the provisions of the benefits must contribute to the redistributionof income across individuals or involve compulsory participation. Based on these standards, Japan
has aggregated and provided data on public social expenditure and mandatory private social
expenditure (explained below), which include expenditure not directly transferred to individuals,
such as facility maintenance expenses.
Public social expenditure and mandatory private social expenditure are two categories of social
expenditure used by the OECD. The distinction between public and private social protection
is made based on whoever controls the relevant financial flows public institutions or privatebodies. The Financial Statistics of Social Security of our country cover the range of these twotypes of expenditure.
Public Social Expenditure
Public social expenditure is social spending with financial flows controlled by the general
government (different levels of government and social security funds), as social insurance andsocial assistance payments.
Mandatory Private Social Expenditure
Mandatory private social expenditure refers to social support stipulated by legislation but operated
through the private sector, such as direct sickness payments by employers to their absent
employees as legislated by public authorities, or benefits accruing from mandatory contributions
to private insurance funds.
Social Expenditure by Policy Area
Social expenditure is categorized into nine policy areas. The definition of each policy area is asfollows. For the specific benefits and projects included in each policy area, see Appendix 2-2.
(1) Old Age
Old-age comprises all cash expenditures (including lump sum payments) on old-age pensions.
Old age cash benefits provide an income for persons retired from the labour market or guarantee
incomes when a person has reached a ‘standard’ pensionable age or fulfilled the necessarycontributory requirements. This category also includes early retirement pensions: pensions paidi

before the beneficiary has reached the standard' pensionable age relevant to the programme.
Excluded are programmes concerning early retirement for labour market reasons which areclassified under "Unemployment." Old age also includes social expenditure on services for theelderly people, services such as day care and rehabilitation services, home-help services andother benefits in kind. It also includes expenditure on the provision of residential care in aninstitution.
(2) Survivors
Survivors comprises social expenditure programmes in the public sphere which provide thespouse or dependent of a deceased person with a benefit (either in cash or in kind). Allowancesand supplements for dependent children of the recipient of a survivors’ benefit are also recordedhere.
(3) Incapacity-related benefits
Disability cash benefits comprise of cash payments on account of complete or partial inability
to participate gainfully in the labour market due to disability. The disability may be congenital,or the result of an accident or illness during the victim's lifetime.
Spending on Occupational injury and disease records all cash payments such as paid sick leave,
special allowances and disability related payments such as pensions, if they are related toprescribe occupational injuries and diseases. Sickness cash benefits related to loss of earning
because of the temporary inability to work due to illness are also recorded. This excludes paid
leave related to sickness or injury of a dependent child which is recorded under family cash
benefits. All expenditure regarding the public provision of health care is recorded under health.
Social expenditure on services for the disabled people encompasses services such as day careand rehabilitation services, home-help services and other benefits in kind.
(4) HealthThis category includes benefits in kind for medical care spent for treatment and does not include
sickness and injury allowance.
(5) Family
Family includes expenditure which supports families (i.e. excluding one-person households).
This expenditure is often related to the costs associated with raising children or with the supportof other dependents. Expenditure related to maternity and parental leave is grouped under thefamily cash benefits sub-category.
(6) Active labour market programmes
Active labour market programmes - contains all social expenditure (other than education) which
is aimed at the improvement of the beneficiaries’ prospect of finding gainful employment or tootherwise increase their earnings capacity. This category includes spending on public
employment services and administration, labour market training, special programmes for youth
when in transition from school to work, labour market programmes to provide or promote
employment for unemployed and other persons (excluding young and disabled persons) andspecial programmes for the disabled.
(7) Unemployment
This category includes all cash expenditure to people compensating for unemployment. This
includes redundancy payments out of public resources as well as pensions to beneficiaries before
they reach the 'standard' pensionable age if these payments are made because they are out ofwork or otherwise for reasons of labour market policy.

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(8) Housing
Rent subsidies and other benefits to the individual to help with housing costs. This includes
direct public subsidies to tenants earmarked for support with the cost of housing.
SOCX also reports direct housing provision to the elderly, disabled, low income families, but
excludes mortgage relief (fiscal), (capital-) subsidies towards the construction of housing
support or implicit subsidies.
By convention, all housing benefits are classified as in-kind benefit as they are earmarked
expenditures.
(9) Other social policy areas
This category includes social benefits which fall outside the scope of the categories listed above.
Specifically, these are public assistance benefits and any benefits in kind, which cannot becategorized into other categories.

1-2 ILO Standards
Social Security Benefit Expenditure
The ILO's 18th and 19th International Inquiries on the Cost of Social Security define Social
Benefit as schemes and services that meet the following three criteria:
1. The objectives of the schemes must be to grant benefits for at least one of the following risks
and needs: (1) Old age, (2) Survivors, (3) Invalidity, (4) Employment injury, (5) Sickness andhealth, (6) Family, (7) Unemployment, (8) Housing, and (9) Social assistance and others.
2. The schemes must have been set up by legislation that attributes specific individual rights to,or-imposes specified obligations on a public, semi-public or autonomous body.
3. The schemes should be administered by a public, semi-public or autonomous body founded bylegislation, or by a private body that has been granted rights to perform legal obligations.
Japan has been tabulating social security benefit expenditures based on the ILO standards startingwith the data for the 1950 fiscal year. It has been widely used as data to understand the part ofbenefits retuning to individuals, as basic data to help formulate policies, and so on.
Social Benefit by category
Social Benefit is classified into three categories: "Medical care," "Pensions," and "Welfare andothers." While this categorization is unique to Japan, it is based on the summary table of balanceof Social Benefit from the ILO's 18th International Inquiry on the Cost of Social Security.
(1) Medical CareOn the statement of revenues and expenses for social security benefits, this is the sum of medicalcare for sickness-maternity and that for employment injuries. It includes costs for the healthinsurance, medical care system for the latter-stage elderly, medical aid for public assistance,
medical services for the insured of the Workmen's Accident Compensation Insurance, andgovernment-financed medical services such as the treatment of tuberculosis and mentaldisorders.
(2) Pension
On the statement of revenues and expenses for social security benefits, this is the sum of theemployment injury pension and pension. It includes payments by public pension schemes suchiii

as Employees' Pension Insurance and National Pensions. It also includes some cash benefits
paid in the form of pensions within the scheme of gratuities for retired public employees, andthe scheme for Workmen's Accident Compensation Insurance.
(3) Welfare and Others
On the statement of revenues and expenses for social security benefits, this is the sum of items
other than “medical care” and “pension.” It includes expenses for social welfare services orlong-term care, public assistance other than medical services, cash benefits for child allowance,and sickness and injury cash benefits within the health insurance schemes leave compensation
benefits paid by the Workmen's Accident Compensation Insurance and unemployment benefits
from Employment Insurance. In addition, long-term care includes Long-term Care Insurance
benefits and long-term care services of public assistance and co-payment of Long-term Care
Insurance for atomic bomb victims.
Social Security Benefit Expenditure by Function
Functional categories of Social Benefit are based on ILO's 19th International Inquiry on the Costof Social Security. For the specific benefits and projects included in each policy area, see
Appendix 2-4.
(1) Old Age
All benefits paid to persons who have withdrawn from the labor market due to retirement.
(2) Survivors
Benefits paid to dependents of a protected person arising from death of this protected person.
(3) Invalidity benefits
Benefits arising from partial or total inability of a protected person due to a chronic condition.
(4) Employment injury
Benefits paid by a work injury program for work-related injury, diseases, incapacity, or deathof a protected person.
(5) Sickness and health
Benefits paid to a protected person for disease, injury, childbirth, etc., with a view of maintaining,restoring, or improving the health of the protected person (also provides benefits for earning
losses during periods of absence from work due to disease or injury).
(6) Family
Benefits provided to assist families (households) with children and other dependents.
(7) Unemployment
Benefits provided to a protected person arising from the loss of gainful employment.
(8) Housing
Any means-tested benefit provided in order to directly help a household meet the costs ofhousing.
(9) Social assistance and others
Benefits in cash or kind provided to individuals or certain targeted groups who require specificassistance in order to obtain a defined minimum level of income and meet minimum subsistence
requirements.
Social Security Revenue
Revenue refers to the overall revenue including operational losses and other expenditures (e.g.,iv

facility maintenance expenses, etc.) in addition to benefit payments. At the major classificationlevel, they are divided into three categories: social contributions, taxes, and other receipts.
(1) Social Contributions
This is divided into employers and insured individuals. In the case of the public service
personnel system where the employer is the national government, the amount the national
government contributed as an employer is listed as an employer contribution even if it is anational expenditure (the same applies to the local public service personnel system).
(2) Taxes
These are divided into national government and local governments (other public contributions).
(3) Other Revenues
These are divided into investment and other receipts. Income from investment includes interestand dividends, and others include receipt from reserve funds, etc.
Transfers between Institutional Schemes(1) Transfers from other schemes
Transfers from other schemes include the following expenses: transfer payment among thehealth insurance schemes for early-stage elderly; transfer payments from all health insurance
schemes to the Medical Care System for the Elderly in the Latter Stage of Life; transfer
payments from all health insurance schemes to the Medical Care Service Program for Retired
Employees in National Health Insurance; contributions to special schemes for persons employedon a daily-wage basis in the Association-Kenpo Health Insurance and National Health
Insurance; transfer payments from the National Pension to other schemes for the payment ofuniversal Basic Pensions; transfer payments from Employees' Pension to Mutual AidAssociation Pensions; transfer payments from all health insurance schemes to Long-term Care
Insurance, etc.
(2) Transfers to other schemes
Transfers to other systems include the following expenses: transfer payments from the otherhealth insurance schemes to special schemes for persons employed on a daily-wage basis, forretired employees, for the early-stage elderly, and for the Medical Care System for Latter Stage
Elderly; transfer payments from other pension schemes to the National Pension for universal
basic pensions; transfer payments made by the National Pension to the other schemes for theuniversal basic pension; transfer payments from Mutual Aid Association Pensions toEmployees' Pension; transfer payments from all health insurance schemes to Long-term CareInsurance, etc.

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