Japan: Updating and Improving the Social Protection Index (Cofinanced by the Republic of Korea E-Asia and Knowledge Partnership Fund)

Technical Assistance Consultant’s Report

Project Number: 44152 Regional — Capacity Development Technical Assistance (R–CDTA) October 2012

Japan: Updating and Improving the Social Protection Index (Cofinanced by the Republic of Korea e-Asia and Knowledge Partnership Fund)

Prepared by Yoko Kasai Komatsubara

For Asian Development Bank

This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.)

CURRENCY EQUIVALENTS

Exchange Rate: US$ 1 = JPY 93.54 (average rate of JFY2009)

ABBREVIATIONS AND ACRONYMS

ADB – Asian Development Bank ADHD – Attention Deficient Hyperactivity Disorder FY – Fiscal Year GDP – Gross Domestic Product GNI – Gross National Income HDI – Human Development Index HIV/AIDS – Human Immunodeficiency Virus/ Acquired Immune Deficiency Syndrome IPSS – National Institute of Population and Social Security Research JPY Japanese Yen JFY – Japan Fiscal Year JEED – Japan Organization for Employment of the Elderly and Persons with Disabilities MAFF – Ministry of Agriculture, Forestry and Fisheries MCF – Micro-Credit Finance MEXT – Ministry of Education, Culture, Sports, Science and Technology MHLW – Ministry of Health, Labour and Welfare MIC – Ministry of Internal Affairs and Communications MLIT – Ministry of Land Infrastructure and Transport NEET – Not in Employment, Education or Training METI – Ministry of Economy, Trade and Industry OECD – Organization for Economic Cooperation and Development PESO – Public Employment Security Office PPP – Purchasing Power Parity PTR – Poverty Targeting Rate SMEs – Small and Medium Sized Enterprises SP – Social Protection SPCOV – Social Protection Coverage SPEXP – Social Protection Expenditure Indicator SPI – Social Protection Index SPIMP – Social Protection Impact Indicator TFR – Total Fertility Rate

CONTENTS

I. INTRODUCTION 1 A. Background 1 B. The Definition of Social Protection 1 C. Report Structure 3 II. COUNTRY OVERVIEW 3 A. Geography 3 B. Demographic Profile 3 C. Economy 5 D. Poverty and Inequality 5 E. Employment and Labor Force 7 F. Education 8 G. Health and Disability 9 III. CURRENT SOCIAL PROTECTION PROGRAMS AND ACTIVITIES 12 A. Data Collection 12 B. Social Assistance 13 C. Social Insurance Programs 21 D. Labor Market Programs 31 IV. SOCIAL PROTECTION INDEX AND ITS DISAGGREGATIONS 38 A. Basic Statistics 39 B. Social Protection Expenditure and Beneficiaries 39 V. ANALYSIS OF THE COUNTRY RESULTS 42 A. Disaggregation by SP Category 42 B. Disaggregation by “Depth” and “Breadth” 43 C. Disaggregation by Poverty 43 D. Disaggregation by Gender 44 VI. CONCLUSION AND RECOMMENDATIONS 44 A. Structure of the SPI 46 B. SPI’s Major Disaggregation 46

I. INTRODUCTION

A. Background

1. Asian Development Bank’s (ADB) development of the social protection index contributed to the strengthening of social protection programs in developing member countries (DMCs). ADB will continue its work on updating and improving the Social Protection Index (SPI). The SPI’s update will address and incorporate lessons learned from two technical assistance projects1 that developed the SPI for 35 countries in Asia and the Pacific and introduce new components and institutional arrangements to sustain the effective use of social protection indicators in policy analysis and formulation in the DMCs.

2. These initiatives will be implemented under the ADB commissioned regional technical assistance project2 that seeks to (i) improve the methodology in defining social protection for each DMC in order to ensure comparability among DMCs; (ii) improve data gathering for statistical analysis on social protection; and (iii) develop capacity of DMCs in monitoring the SPI and allow comparisons between countries and over time on implementation performance.

3. This country study provides updated information and data on social protection arrangements, legislation, and institutions and calculates the SPI for Japan in view of the revised SPI methodology. The SPI can be updated periodically to assess progress in social protection arrangements in the country and analyse deeper aspects of targeting, coverage and expenditures on various social protection programs; for example, on the breadth (coverage) of social insurance versus social assistance or labour market programs, or on the depth (size of benefit) of various categories of social protection. The revised SPI methodology also provides scope to measure the gender responsiveness of programs, and poverty targeting of programs.3

4. The primary objective of the Japan Country Report is to present the results of the research on social protection programs and policies in Japan from all related ministries, particularly the Ministry of Social Welfare; and, summarize quantitative information on these activities to enable the formulation of a national SPI.

B. The Definition of Social Protection

5. Social protection is defined as the set of policies and programs designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people’s exposure to risks, and enhancing their capacity to protect themselves against hazards and interruption/loss of income.

6. This definition categorizes all programs under the traditional components of social protection as social insurance, social assistance and labor market programs. Microfinance as a form of social protection is excluded from the calculation of SPI since it does not involve a transfer in cash or kind and beneficiaries incur loans or debt instead of transfers. Thus, by

1 ADB. 2003. Technical Assistance for Social Protection Index for Committed Poverty Reduction. Manila (TA 6120- REG); ADB. 2006. Technical Assistance for Scaling Up of the Social Protection Index for Committed Poverty Reduction. Manila (TA 6308-REG). 2 ADB. 2010. Technical Assistance for Updating and Improving the Social Protection Index. Manila (TA 7601-REG). 3 To be able to calculate with relative accuracy the poverty-targeting rate of programs, household surveys need to contain a social protection data. However, the data of the survey was not available at the time of writing this report.

2 eliminating microfinance from the coverage of social protection programs, three major programs are left: (i) social insurance (i.e. the categories of old-age insurance, programs for the disabled, and health expenditure on insurance and pensions; (ii) social assistance (i.e. the categories of non-contributory health insurance, conditional cash transfers, child protection, and unconditional cash transfers; and (iii) labor market programs as shown in Table 1.

Table 1: Social Protection Categories and Types of Programs Social Protection Category/Type of Program Social Insurance Programs Pensions Unemployment Benefits Health Insurance - but not universal health insurance Other social insurance (maternity, disability benefits) Social Assistance Assistance for the elderly (e.g., non-contributory basic allowances for the elderly, old-age allowances) Health assistance (e.g., reduced medical fees for vulnerable groups) Child protection (school feeding, scholarships, fee waivers, allowances for orphans, street children initiatives) Family allowances (e.g., in-kind or cash transfers to assist families with young children to meet part of their basic needs) – excluding any transfers through the tax system Welfare and social services targeted at the sick, the poor, the disabled, and other vulnerable groups Disaster relief and assistance Cash/in-kind transfer (e.g., food stamps, food aid) Temporary subsidies for utilities and staple foods - only if imposed in times of crisis and if targeted at particular vulnerable groups. General subsidies are excluded even if their rationale is to assist the poor Land tax exemptions Labor Market Programs Direct employment generation through public works programs – including food for work programs Direct employment generation through loan-based programs – included if loans are subsidized and/or job creation is an explicit objective of the program Labor exchanges and other employment services – if distinct from social insurance and including retrenchment programs Unemployment benefits – if distinct from social insurance and including retrenchment programs Skills development and training – included if targeted at particular groups (e.g., the unemployed or disadvantaged children. General vocational training is excluded). Source: ADB. 2011. The Revised Social Protection Index: Methodology and Handbook. Manila.

7. There is no formal definition of social protection in Japan. Instead, the term, “social security” is commonly used as a synonym of social protection. According to the Annual Report on Health and Welfare 1999, the definition of Social Security accepted in Japan until the present is clarified in the report by the Advisory Council on Social Security in 1950. The Council’s definition is:

“Social security systems mean the systems to enable every citizen to lead a worthy life as a member of cultured society. Social security systems provide countermeasures against the causes for needy circumstances including illness, injury, childbirth, disablement, death, old age, unemployment and having a lot of children by implementing economic security measures through insurance or by direct public spending. Social security systems ensure the minimum level of living to the needy by public assistance, and they also promote public health and social welfare.”

8. Despite the absence of a formal definition, Japanese notions of social protection approximate the view that social protection should be seen as primarily consisting of direct assistance to poor and vulnerable households, as well as insurance and other schemes to reduce vulnerability to risks arising from unemployment, old age and disability; although self-

3 support is considered to be the base of the social protection. Thus, labor market programs, social insurance programs, social assistance and welfare programs, and child protection are considered to be part of social protection irrespective of whose definition is adopted.

C. Report Structure

9. The Japan Country Report is structured as follows:

• Chapter II contains a brief overview of the social and economic development in Japan.

• Chapter III describes current social protection activities and programs in the country using ADB’s typology.

• Chapter IV provides an overview of the derivation of SPI and its disaggregation.

• Chapter V presents the analysis of the country results.

• Chapter VI discusses the conclusion and recommendations.

II. COUNTRY OVERVIEW

10. This chapter provides a brief overview of the socio-economic characteristics of Japan, main features of the country’s current developmental situation and recent trends.

A. Geography

11. The Japanese archipelago consists of four main islands off the Pacific coast of the Asian mainland – Honshu, Hokkaido, Kyushu and Shikoku. It is located in East Asia, between the North Pacific Ocean and the Sea of Japan and east of the Korean peninsula.

B. Demographic Profile

12. Table 2 shows that the population of Japan increased from 127.76 million in 2005 to 127.51 million in 2009; the tenth largest in the world. However, annual growth rate is significantly lower in recent years. The crude birth rate tends to decrease and the crude death rate tends to increase year by year. The rates reached 8.5 and 9.1, respectively, in 2009. As a result, the rate of natural increase records -0.6, and this figure shows that the population of Japan begun to decline. The declining crude birth rate is partly attributed to the rise of confinement age. The average confinement age for the first child is 25.6 years in 1970, rising to 30.4 in 2009. Consequently, the Total Fertility Rate (TFR) tends to decline and reached 1.37 in 2009, much less than the 2.08 needed to keep Japan’s population at a constant level. The combination of the factors has led to a rapid ageing of the population. The population aged 60 and over accounts for 30% in 2009 while the population under the age of 15 amounts to only 13%. The pace of Japan’s population ageing is much faster compared to western European countries and the United States.

13. There are 48.01 million households in Japan in 2009 with an average household size of 2.6 (Table 2). The nuclear-family households account for 60% of the total while one-person

4 households amount to 24.9% in 2009. The number of households tends to slightly increase while the average household size is slightly declining due to the increase in one-person households and the decline in extended family households. The number of households is projected to increase despite the population of Japan beginning to decrease due to the expected decline in the average size of households. The number of elderly households increased from 1.09 million (3.3% of the total households) in 1975 to 9.62 million (20%) in 2009. The number of one-person elderly households significantly increased, from 610,000 in 1975 to 4.07 million in 2005.

14. The ratio of the population living in urban areas has been increasing since late 1950s; and about 90% of the total population lives in urban areas in 2005 (Table 2). The population is concentrated in the areas within a 50 km radius of the three metropolitan areas Tokyo, Osaka and Nagoya. Tokyo has the highest population density of 5,750 per square kilometer among Japan’s prefectures, 17 times the national average.

15. Life expectancy at birth in Japan is the highest in the world. The figure sharply rose after World War II, reaching 79.29 years for men and 86.05 years for women in 2008. In Japan, every citizen regardless of gender receives equal benefits from social protection programs, including welfare services for the elderly. Therefore, the difference of life expectancy at birth by gender currently does not directly affect social and economical issues.

Table 2: Population Population (000s, mid-year) ITEM FY2005 FY2008 FY2009 FY2010 Total Population 127,768 127,692 127,510 128,056 Urban Population 115,503 116,153 Rural Population 12,264 11,902 % Urban 90.4% 90.7% By age FY2005 FY2008 FY2009 (%) FY2010 (%) 0-4 5,599 5,405 5,376 (4.2) 5,428 (4.2) 5-14 11,986 11,771 11,634 (9.1) 11,533 (9.0) 15-24 13,974 13,260 12,992 (10.2) 12,833 (10.0) 25-44 34,994 34,641 34,389 (27.0) 34,225 (26.7) 45-59 26,877 25,441 24,699 (19.4) 24,423 (19.1) 60+ 34,337 37,174 38,419 (30.1) 39,614 (30.9) TOTAL 127,768 127,692 127,510 (100) 128,056(100) Households (000s) 47,043 47,957 48,013 51,952 Average households size 2.7 2.6 2.6 2.5 Vital Rates (per 1000 ) FY2005 FY2008 FY2009 FY2010 Crude Birth Rate 8.4 8.7 8.5 8.5 Crude Death Rate 8.6 9.1 9.1 9.5 Rate of Natural Increase -0.2 -0.4 -0.6 -1.0 FY2005 FY2007 FY2008 FY2009 Total Fertility Rate 1.26 1.34 1.37 1.37 Life Expectancy at Birth FY2005 FY2006 FY2007 FY2008 Male 78.56 79.00 79.19 79.29 Female 85.52 85.81 85.99 86.05 * Including age not reported Sources: Statistical Handbook of Japan 2010, 2011.

Statistical Survey Department, Statistical Bureau, Ministry of Internal Affairs and Communications, 2011.

C. Economy

16. The Japanese economy was in good condition in late 1980s. The bubble economy collapse in the beginning of 1990 with sharp declines of stock and real state prices. Consequently, financial institutions held huge amounts of bad debts in their loan portfolio. In addition, the Asian financial crisis of 1997 caused a negative impact on the Japanese economy, recovering moderately in 1999, before returning into stagnation again.

17. The economy moved into a recovery phase from the beginning of 2002. GDP is moderately growing up to 2.3% in 2005. However, the Lehman shock of September 2008 hit the Japanese economy severely; GDP growth rates marked negative growth as -4.1% and -2.4% in 2008 and 2009, respectively (Table 3).

18. Japan’s sectoral composition in 2008 shows the share of agricultural sector in GDP has dropped to 1.6%; the share of industry and construction decreased to 28.8%, while the share of the service sector has risen to 69.6%. This trend is expected to continue. The number of business establishments and employees has increased consistently in the services sector.

19. Total budget expenditure is JPY 206.52 trillion (the budget of general account plus the budget of special account). In 2009, this is 43.6% of GDP (Table 3).

Table 3: The Economy ITEM FY2007 FY2008 FY2009 GDP (trillion JPY, current) 515.80 492.06 474.04 Real GDP growth 1.8% -4.1 -2.4 GDP per capita (thousand JPY) 4,038 3,854 3,716 GNI (PPP, US$ billion) 4,529 5,053 5,179 GNI per capita (PPP, US$) 35,452 39,574 40,610 GDP by Sector (% of GDP) Agriculture, Forestry and Fisheries 1.6% 1.6 - Industry and Construction 29.9% 28.8 - Services 68.6% 69.6 - Total Budget Expenditure (trillion JPY) 203.52 204.78 206,52 Total Budget Expenditure (% of GDP)* 39.5% 41.6 43.6 Foreign Direct Investment Foreign Direct Investment Stock (trillion JPY) 9.1 8.5 9.3 * The Amount of 2009 is original budget. Sources: Statistical Handbook of Japan 2010, 2011; Statistical Survey Department, Statistical Bureau, Ministry of Internal Affairs and Communications; White Paper on International Trade and Economy. 2010. Ministry of Economy, Trade and Industry.

D. Poverty and Inequality

20. In order to compare poverty situations with other countries, a poverty line has been established based on the OECD methodology of using 50% of the median income as the poverty threshold. However, it has not been reported in Japan. In 2009, the Japanese Government changed its policy and published Japan’s relative poverty rate. It marked the first time the Government has officially released the figures to take measures against the recent poverty issue in Japan. The relative poverty rate of Japan is 15.7 in 2007 (Table 4). The level of

6 poverty (i.e., people who live on less than half the median incomes) is the 4th highest across the 30 OECD countries. The median income is officially reported as JPY 4.37 in 2009.

Table 4: Relative Poverty Rate of Japan 2003 2006 2009 Entire Population 14.9 15.7 16.0

Children 13,7 14.2 15.7 Source: Minister’s Secretariat, Ministry of Health, Labour and Welfare, 2011.

21. The concept of poverty line was not introduced in Japan for long time and there was therefore no official poverty line, although different criteria were used to assess eligibility for means tested public assistance programs (Table 5). On this basis, the poverty line was estimated to be equivalent to an annual household income of JPY2 million (USD 21,381). This is higher than the criterion used for some programs but lower than those used for child allowances. Under these circumstances, it is considered reasonable to adopt a poverty line based on an accepted international methodology. It should however, be emphasized that the adoption of this poverty line for the specific purpose of this report does not imply its official recognition by the Government of Japan.

22. Table 5 implies the poverty rate of elderly household and single-mother households is relatively higher than other household. There are specific social assistance programs in Japan for these households.

Table 5: Samples of Monthly Standards for Livelihood Assistance (FY2010) Metropolitan Area Rural Area Model Households JPY (US$) JPY (US$) Households with Three Members (age 33, 29 and 4)* 175,170 ($2,100) 138,680 ($1,663) Elderly-Single Households (age 68) 80,820 ($969) 62,640 ($751) Elderly-Couple Households (age 68 and 65) 121,940 ($1,462) 94,500 ($1,133) Single-Mother Households (age 30, 4 and 2)* 193,900 ($2,325) 158,300 x($1,899) * Include additional assistances for a single-mother and child rearing

Sources: “Current Situation of Public Assistance”, April 2011, Ministry of Health, Labour and Welfare.

23. Table 6 presents information on current levels of public assistance, poverty levels and inequality in Japan. It also shows that the number of households with public assistance increased from 1.04 million in 2005 to 1.27 million in 2009, while the number of people with public assistance increased from 1.47 million in 2005 to 1.76 million in 2009. Both numbers increased by approximately 20% in 4 years. Population with public assistance accounts for just 1.38% of total population, but the rate of population with public assistance is increasing. Public assistance for the poor is provided in Japan in order to guarantee a minimum standard of living.

Table 6: Poverty and Inequality Poverty FY2007 FY2008 FY2009 Households with Public Assistance 1,105,275 1,148,766 1,274,231

Population with Public Assistance 1,543,321 1,592,620 1,763,572

% of Population with Public Assistance 1.20% 1.24% 1.38%

Poor Households* 9,842,999 as % of total* 20.5% Poor population* 20,670,298 as % of total* 16% Inequality 2002 2005 2008 Gini Coefficient (Initial income) 0.4983 0.5263 0.5318 Gini Coefficient (Distributed income) 0.3812 0.3873 0.3758

Human Development Index (HDI)** 2005 2010 -

HDI Value 0.873 0.884 - HDI rank 811 - * Households with annual income under JPY 2 million **Based on the new evaluation in 2010. Sources: Statistics and Information Department, Minister’s Secretariat, MHLW, 2010, Comprehensive Survey of Living Conditions, Survey on the Redistribution of Income, Consultants’ Estimates (figures in italics).

24. Table 6 also shows that the proportion of households with annual incomes under JPY 2 million is 20.5% in FY2009 and that the estimated number of poor population is around 20.7 million, equivalent to 16% of the population4. Inequality in Japan has been relatively modest because of high redistribution effect. Gini coefficient has shifted at a level of 0.38 for the past ten years. However, it is predicted that the inequality has been further widened because of the current economic situation and population structure. The Gini coefficient on initial income is 0.532 in 2008 and has been increasing year after year.

25. Human Development Index (HDI) value of Japan has stayed at 0.83 to 0.88 for the past 15 years, making the HDI rank of Japan 11th in 169 countries in 2010.

E. Employment and Labor Force

26. The number of Japan's labor force began to decline after 1998. Table 7shows that the labor force decreased from 66.50 million in 2005 to 65.90 million in 2009. There are mainly two reasons for the reduction of the labor force – population aging and tightened employment by companies to increase earnings. The unemployment rate started to decline in 2004. In 2009, the rate is 5.2%, 0.8% down from the previous year (Table 7). The number of unemployed is 3.24 million.

27. Although the unemployment rate is not very high, the employment condition in Japan has been under severe strain. The ratio of part-time staff to other non-regular workers has increased since 1995, and the number of non-regular employees reached 17.56 million in 2010, accounting for 34.4% of total employees. In addition, unemployment rate is the highest in the 15-24 age group followed by the 35-44 age group (Table 7). The severe employment condition

4 This figure is obtained by multiplying the average size of poor households, 2.1 persons by the number of poor households (9.843 million). Poor households tend to be smaller as they often involve the elderly living on their own. This is characteristic of developed countries with ageing populations but is the opposite of the situation in many developing countries where poor households tend to be larger with more children.

8 for the younger generation leads to the increase of Not in Employment, Education or Training (NEET), one of the biggest social problems in Japan.

28. Employment of agriculture and forestry sectors accounts recently for only 4% in Japan, and the remaining 96% are employed in non-agricultural sectors. Employment in the manufacturing sector and construction sector has been declining since 1998. On the other hand, employment in the service sector has been increasing, and accounts for nearly 70% of total employment in 2010.

29. Every worker in Japan is eligible for benefits from social protection programs such as the national health insurance system, the national pension program and social assistance programs regardless of employment status. The Employment Insurance in Japan is also applicable to all entities that employ workers, although the benefits are different based on the type of employment. Employment opportunity is also assumed by the Law of Equal Employment for both sexes. In the interest of increasing short term and part-time employees, the Japanese Government recently relaxed the standard for the requirement of Employment Insurance and introduced a new program for unemployment protection.

Table 7: Employment and Labour Force No. in 0000s Change 2005-2010 ITEM 2005 2009 2010 Rate Population of 15 yrs and over 110183 110,499 111,095 +0.8% Labour force 66,500 65,900 65,760 -1.1% Participation Rate 60% 60% 59% Dependency Ratio 51% 55% 56% Employed population (15+ yrs.) 6,356 6,282 6,256 -1.5% Unemployment Rate (15-24 yrs.) 10.2 9.9 8.9 Unemployment Rate (25-34 yrs.) 8.4 6.6 6.5 Unemployment Rate (35-44 yrs.) 8.4 4.8 4.6 Unemployment Rate (45-54 yrs.) 8.4 3.8 3.5 Unemployment Rate (55-64 yrs.) 8.4 4.8 4.6 Unemployment Rate (Total) 4.3 5.2 4.9 Unemployment Rate (Male) 4.5 5.5 5.4 Unemployment Rate (Female) 4.1 4.8 4.3 Female Employment: 2,633 2,31 2,33 -1.1% (in %) 41 42 42 Employment by Sector 2005 2009 2010 2005 2009 2010 Agriculture and Forestry 259 242 234 4% 4% 4% Non-Agricultural Industries 6,097 6,040 6,022 96% 96% 96% Total 6,356 6,282 6,256 100% 100% 100% Sources: Labour Force Survey, Statistical Survey Department, Statistics Bureau, Ministry of internal Affairs and Communications, 2011.

F. Education

30. Enrolment rates at primary and upper secondary school levels are nearly 100% in Japan (Table 8). Consequently, the literacy rate of age 15 and above is quite high. Most of the students who graduated from lower secondary school enter upper secondary school. In 2009, the enrolment rate of upper secondary school is 97.9%. Over 50% of students who graduated from upper secondary school proceed to junior college or university. The number of students

9 who enter junior colleges is decreasing while the number of students advancing to university is increasing. The ratio of students who enter university is 50.2% (male 55.9%, female 42.2%) in 2009; a 6.0% increase from 2005. The increase rate of female enrolment is higher than that of their male counterpart.

31. To cope with population aging, lifelong learning systems has been established in Japan by linking school education, social education, and cultural and recreational activities.

Table 8: Education Indicators % Change Net Enrolment Rates (in %) 2005 2008 2009 2010 2005-2010 Kindergarten 58.4 56.7 56.4 56.2 -2.2 Primary 99.9 99.96 99.96 99.96 -0.01 Lower Secondary 99.98 99.97 99.97 99.97 -0.01 Upper Secondary 97.6 97.8 97.9 98.0 +0.4 Male 97.3 97.6 97.7 97.8 +0.5 Female 97.9 98.1 98.2 98.3 +0.4 Junior College 7.3 6.3 6.0 5.9 -1.4 Male 1.8 1.3 1.2 1.3 -0.5 Female 13.0 11.5 11.1 10.8 -2.2 University 44.2 49.1 50.2 50.9 +6.7 Male 51.3 55.2 55.9 56.4 +5.1 Female 36.8 42.6 44.2 45.2 +8.4 Literacy 2005 2008 2009 2010 15 and above virtually 100% Sources: Lifelong Learning Policy Bureau, Ministry of Education, Culture, Sports, Science and Technology, 2010.

G. Health and Disability

32. Japan has established a public health insurance system that covers all Japanese residents. The medical insurance is composed of three types of schemes - occupation-based; region-based for those who are below 75 years old; and, separate health insurance for the elderly, 75 years old and above. According to the report of the Ministry of Health, Labor and Welfare, 5 the proportion of each scheme is that occupation-based is around 60%, region-based is around 30%, and insurance for people 75 years old and above is around 10% in 2009. The public health insurance schemes are financed by premiums, subsidy from the government and co-payment from patients. Each ratio is around 35%, 50%, and 15% in 2007 (IPSS Report)6. The premium rate is different by insurance scheme. The insured can receive equal service at any medical institute at equal price because the coverage of medical care insurance and the prices of medical services are standardized by the laws. The area covered by the insurance is medical services for any illness including medical care; hospital facility fee; health service facility for the elderly; nursing except some advanced medical and special care services like special room fee; meals; and, uninsured dental care.

33. The medical cost in Japan has increased year by year. One major reason is the aging of the population. The medical cost reached JPY 34,808 billion in 2008 (Table 9). Capital medical

5 Annual Report on Health and Welfare, Ministry of Health, Labour and Welfare, 2010. 6 Social Security in Japan, IIPS, 2011.

10 cost is different by insurance scheme. The National Health Insurance operated by municipality is around JPY 0.29 million while the Employees’ Health Insurance based on occupation is around JPY 0.15 million. The difference comes from the subscriber; the National Health Insurance has a larger number of elderly.

34. The public health insurance system contributes to provide the residents with high standard healthcare. Key indicators on health show that Japan’s health condition has been at a high level and still improving. Both the infant mortality rate and maternal mortality rate tend to decline, reaching 2.4 and 2.9 in 2009, respectively (Table 9). The death rate per 1,000 populations in 2008 is 9.9% of male and 8.3% of female.

35. In 2009, the total number of medical institutions is 176,471 in Japan; 6.9 hospitals; 78.1 general clinics; and, 53.4 dental clinics per 100,000 populations in 2009 (Table 9). The number of physicians engaged in medical care is 271,897 or 224.5 per 100,000 populations in 2008. The total number of physicians is increasing, but it is difficult to secure the sufficient number of physicians in some local areas because physicians are unevenly distributed geographically.

36. HIV/AIDS and other infectious diseases, such as avian influenza 7 began to affect Japanese people. According to the AIDS Prevention Information Network under the Ministry of Health Labour and Welfare, the number of newly infected HIV/AIDS carriers/patients reported in 2010 totaled 1,544 and the cumulative number is 18,447. The number doubled from 2000 to 2010, with the patients infected mostly in the 20s and 30s.

Table 9: Health Indicators Indicator 2005 2007 2008 2009 Infant Mortality Rate (per 1,000 births) 3.0 2.8 2.8 2.4 Maternal Mortality Rate (per 100,000 births) 3.3 2.9 Number of Institutions (total number) 173,200 176,192 175,656 176,471 (per 100,000 population) Hospitals 7.1 6.9 6.9 6.9 General clinics 76.3 77.9 77.6 78.1 Dental clinics 52.2 53.1 53.1 53.4 Number of Medical Personnel 2002 2004 2006 2008 (total number) 249,574 256,668 263,540 271,897 (per 100,000 population) Physicians 206.1 211.7 217.5 224.5 Dentists 72.9 74.6 76.1 77.9 Pharmacists 180.3 189.0 197.6 209.7 Nurses and Assistant Nurses 860.9 897.5 934.5 980.6 Total Medical cost (billion JPY) 33,128 34,136 34,808 - Sources: Statistics and Information Department, Ministry of Health, Labour and Welfare, 2010; Statistical Survey Department, Statistical Bureau, Ministry of internal Affairs and Communications, 2010.

7 It is commonly called bird flu, an infectious viral disease of birds. Most avian influenza viruses do not infect humans; however some, such as H5N1, have caused serious infections in people. ( http://www.who.int/csr/disease/avian_influenza/en/, http://www.who.int/mediacentre/factsheets/avian_influenza/en/)

37. The number of people with verification for physical disability is 5.1 million in 2009, accounting for 4% of the total population. Table 10 shows that the number of disabled 18 years old and above tends to increase year by year with an increase rate of 4.5% from 2006 to 2009. The main reason for this trend is the aging of the population. The number of people with verification for intellectual disability is 816,548 in 2009, accounting for 0.6% of the total population. The number tends to increase annually with an increase rate of 12.2% from 2006 to 2009 (Table 10).

38. According to the Ministry of Health, Labour and Welfare in 2006, there are about 3.58 million physically disabled persons in Japan (Table 11). About 49% of physically disabled populations are categorized as level 1 and 2 (severe disability), and about 39% of intellectually disabled populations is severely disabled. The estimated number of people with mental disorder is 3.23 million in 2008. The data on the disabled population is used for this report because it is considered to show more realistic numbers in disabled population than the data on numbers of people with verification for disabled.

Table 10: Persons with Verification for Physical or Intellectual Disability Physically Disabled 2006 2007 2008 2009 Change 2006-2009 Under 18 years old 108,777 109,099 109,596 108,146 -631 -0.5% 18 and above 4,786,633 4,837,332 4,922,087 4,999,801 213,168 +4.5% Total 4,895,410 4,946,431 5,031,683 5,107,947 212,537 +4.3% Intellectually Disabled 2006 2007 2008 2009 Change 2006-2009 Under 18 181,602 191,560 200,533 209,545 27,943 +15.4% 18 and above 546,251 565,283 585,187 607,003 60,752 +11.1% Total 727,853 756,843 785,720 816,548 88,695 +12.2% Sources: Outline of Report on Social Welfare Activities 2009, Statistics and Information Department, Minister’s Secretariat, Ministry of Health, Labour and Welfare, 2010.

39. For the protection of disabled people, there are several social protection programs in Japan. Typical programs are providing special facility, allowance and rehabilitation care.

Table 11: Number of Disabled Population Physically Level of Disability Total* Disabled (in 2006) Level 1 Level 2 Level 3 Level 4 Level 5 Level 6 Under 18 years old 46,100 15,200 15,200 7,700 1,500 2,200 93,100 18 and above 1,171,000 504,000 580,000 713,000 225,000 175,000 3,483,000 Total 1,217,100 519,200 595,200 720,700 226,500 17,200 3,576,100 Intellectually Level of Disability Total* Disabled (in 2005) Very Severe Severe Moderate Slight Unknown Under 18 years old 22,000 28,100 26,200 33,300 7,700 117,300 18 and above 39,800 73,700 78,700 63,000 34,300 289,600 Age unknown 600 400 1,800 1,200 8,100 12,100 Total 62,400 102,200 106,700 97,500 50,100 419,000 Mental Disorder (in 2008) Total* Under 20 178,000 20 and above 3,054,000 Age unknown 6,000

Total 3,233,000 * including persons with disabilities living in welfare facilities Sources: Statistics and Information Department, Minister’s Secretariat, MHLW; Annual Report on Government Measures for Persons with Disabilities 2008, Cabinet Office. 2010.

40. In sum, it is presumed that Japan entered into a stage of population decrease as the number of natural increase recorded negative and the total fertility rate is low in those years. Labour force has declined since 1995, and the population over 65 is likely to increase annually until the year 2042 according to the National Institute of Population and Social Security Research (IPSS). In addition, aging of population in Japan is proceeding at the highest speed in the world. Therefore, some negative impact is expected on socioeconomic and employment aspects. The size of households is becoming smaller, and the ratio of single and couple households of the elderly is increasing. Thus, the support system for elderly households needs to be considered.

41. Educational standard and healthcare level in Japan is high. Enrolment rates at primary and upper secondary school levels are nearly 100%. The literacy rate of 15 years old and above is virtually 100%. Both the infant mortality rate and maternal mortality rate tend to decline. The number of medical institutions and medical personnel are fulfilling. The national health insurance system covers all Japanese residents with people having easy access to medical consultations.

42. However, the unemployment rate started rising after the bubble economy in 1990s and reached a peak of 5.4% in 2002. The rate decreased to 4.4% in 2005, but still remains at the highest level in post-WWII. In addition, the number of full-time employees is decreasing, and the number of part time employees is increasing. Stagnation of economy and severe employment conditions might lead to an expansion of inequality among people. In addition, the aging society might cause social and economical problems. The current increase of people receiving public support shows the expanding income gap between the rich and poor.

III. CURRENT SOCIAL PROTECTION PROGRAMS AND ACTIVITIES

43. This chapter presents an overview of the data collection process, objectives, and current social protection activities in the Japan including challenges and difficulties encountered during the course of the study. The two-fold objective of this chapter is to present the main features of the social protection programs in the country and provide quantitative information that will serve as the basis for the formulation of the Social Protection Index.

A. Data Collection

44. The salient feature of this report is the particular emphasis on their annual expenditure, the number of beneficiaries, and the characteristics of the beneficiaries of social protection programs. These data provide the quantitative information needed to derive the Social Protection Index. Data and information is derived from government reports or interviews with agency officials such as the Ministry of Health, Labour and Welfare. In some cases, estimates had to be made.

45. The main ministry involved with social security activities and programs is the Ministry of Health, Labour and Welfare (MHLW). Under the MHLW, the Social Welfare and War Victims’ Relief Bureau is one of the major organizations responsible for social welfare and social

13 assistance. The Equal Employment, Children and Families Bureau is responsible for a number of child protection programs. The Employment Security Bureau is implementing various labor market programs and managing the Employment Insurance while the Labour Standards Bureau provides appropriate Workmen’s Accident Compensation through the insurance system. The Health Insurance Bureau and the Pension Bureau is responsible for medical care insurance and pension insurance, respectively. The Japan Pension Service8, one of the Ministry’s external bureaus, is also responsible for public medical care insurance and pension insurance systems.

B. Social Assistance

46. Japan’s social assistance consist of (i) income assistance to poor households, or public assistance; and (ii) social services and assistance to socially disadvantaged people such as welfare for the elderly, children, disabled and single-mother households. Public assistance is provided in the form of in-kind and in-cash assistance while social services and assistance are in the form of in-home and institutional welfare services.

1. Public Assistance

47. Public assistance is provided based on the Public Assistance Law revised in 1950. The objective of public assistance programs is to guarantee the minimum standard of living for people who are poor and provide the necessary assistance depending on their level of poverty to enable them to be self-reliant. The types of assistance fall into eight categories in Table. Most of the assistance is given as cash transfers except in some expenses, such as medical expense.

Table 12: Assistance Type of Public Assistance Type of Assistance Contents Livelihood assistance Basic living expenses for food, clothing and utilities Housing assistance Rent for house/land Education assistance School meals, textbooks, class fees, etc. until the completion of lower secondary school Medical care assistance Medical expense, cost of treatment and treatment material Nursing care assistance Cost of nursing, cost of transportation, etc. Childbirth assistance Expense of childbirth Occupational assistance Fees for vocational training, outfit allowance for employment, etc. Funeral assistance Expense for funeral

48. Provision of public assistance is decided by certified social workers with careful examination of the application regarding assets, ability to work and assistance from the legally obliged supporters. If the gross income of the household is lower than the minimum living expenses decided by the national government, the balance is provided as the assistance. The minimum living expense is calculated based on five categories of expenses – livelihood, housing, compulsory education, nursing care and medical care (taking account of the differences on living cost by region and household structure). The assistance is given on a household basis. Table 5 in the previous section shows the samples of monthly minimum living expenses for livelihood.

8 Social Insurance Agency was liquidated and rebuilt as Japan Pension Service with nongovernment officers and staff in January 2010 for improving discipline and efficient service delivery.

49. The welfare office of each municipality operates the system and provides related services. The expenditure for public assistance is covered by the general account expenditure of the national government. The total number of people receiving public assistance is 1.7 million, and total benefit expenditure is JPY 3 trillion in FY2009. The details of public assistance coverage and expenditure are as shown in Table 13.

Table 13: Public Assistance Coverage and Expenditure 2007-2008 2008-2009 2009-2010 Number of Beneficiaries* 1,543,321 1,592,620 1,763,572 Annual Expenditure (million JPY) 2,617,464 2,677,812 3,007,200 *Monthly average Source: “Outline of Report on Social Welfare Activities, 2011”, MHLW.

2. Welfare for the Elderly

50. Welfare services for the elderly have been implemented based on the Welfare Law for the Elderly enacted in 1963 and revised in 1990. With the enactment of the law, the system for the provision of special nursing homes for the elderly was established, but the service users were limited to the low-income elderly. since these services became open to all elderly people. Consequently, their access to welfare services has been considerably improved.

51. The two principal components to these services are the in-home welfare services and the welfare services at facilities. The in-home welfare services include: (i) home helper services; (ii) short-stay services; (iii) day services and day care; (iv) care services with mutual support for elderly with dementia; (v) in-home medical care management counseling; and (vi) provision or lending of welfare devices. Long-Term Care Insurance covers the first four services.

52. The facilities that provide welfare services for the elderly are: (i) special nursing homes for the elderly; (ii) low-priced nursing homes such as care houses; (iii) short stay facilities for the elderly; (iv) welfare centers for the elderly; and (v) day service centers for the elderly. Long- Term Care Insurance covers the services at special nursing homes, designated low-priced nursing homes and day service centers.

53. With the revision of the Welfare Law for the Elderly in 1990, the administrative responsibility of providing welfare services for the elderly was transferred to the municipal governments from the prefecture government. The expenditure of welfare services for the elderly, except the ones supported by Long-Term Care Insurance, is covered by national government subsidies and other public expense. The total number of elderly people who receive welfare services at facilities and in home are 574,445 and 2.28 million, respectively. The estimated total expenditure for welfare services for the elderly is JPY 2,907 billion in 2008. The details of beneficiaries and expenditure of welfare services for the elderly are shown in Table 14.

Table 14: Beneficiaries and Expenditure of Welfare Services for the Elderly

Welfare Services at Facilities 2007-2008 2008-2009 2009-2010 Number of Nursing Homes for the Elderly 958 964 932 Number of Beneficiaries 62,409 62,075 60,013 Number of Special Nursing Homes for the Elderly 6,037 6,223 6,395 Number of Beneficiaries* 418,114 429,272 439,087 Number of Less Expensive Homes for the Elderly 2.059 2,095 2,050 Number of Beneficiaries 81,218 83,098 80,976 Total Number of Welfare Facilities for the Elderly** 6,997 9,282 9,377 Total Number of Beneficiaries 561,741 574,445 580,076

In Home Welfare Services 2007-2008 2008-2009 2009-2010 Number of In Home Service Beneficiaries 2,208,509 2,282,529 - Estimated Annual Expenditure for Welfares Services for the Elderly 2,558,169 2,907,416 3,167,701- (million JPY)*** * The number of full crew. The utilization factor is around 100%. ** The Number of Charged Homes for the Elderly is not included. *** Estimated expenditure not covered by Long-Term Care Insurance (deduct annual expenditure of Welfare Allowance for the disabled from total expenditure calculated by IPSS), including expenditure of Welfare Service for the disabled and children who need special treatment. Source: Outline of the Study on Social Welfare Facilities FY2010, MHLW; Annual Report on Social Security Statistics FY2009, IPSS.

3. Welfare for the Disabled

54. Welfare services for the disabled have been provided with an emphasis on promotion of self-sufficiency and social participation of the disabled. The services for the disabled are divided into: (i) services for the physically disabled; (ii) services for children with mental and physical disabilities and adults with intellectual disability; and (iii) services for people with mental disorders.

55. The services for the physically disabled consist of in-home services and services at facilities. The in-home services include (i) alleviation/supplementation of disability and medical examination and rehabilitation counseling; (ii) provision of prosthetic and daily life appliances; (iii) in-home care; and (iv) promotion of social participation and in-home rehabilitation. The facilities providing welfare services are rehabilitation facilities, living facilities, work facilities and community facilities. These services are provided to those who have certificates of physical disability. A certificate is issued by the prefecture governor once the applicant is evaluated and corresponds to the designated level of physical disability through application screening with a doctor’s certificate.

56. The services for children with mental and physical disabilities and adults with intellectual disability also consist of in-home services and services at facilities. The former include (i) early detection and early medical rehabilitation; (ii) commuting facility program and day care programs; (iii) in-home services; (iv) social participation; (v) employment-related programs; and (vi) comprehensive services.

57. The facilities providing welfare services for children with mental and physical disabilities are facilities for children with mental retardation, facilities for autistic children, nursery centers for children with mental retardation, facilities for blind children, facilities for children with auditory and speech disabilities, nursery centers for children with hearing disabilities, facilities for children with motional disabilities and others. The facilities offering services for the adults with

16 intellectual disability include rehabilitation facilities, sheltered workshops, welfare homes, hostels for employees with mental retardation, welfare factories, and day service facilities. The national sanatoria also provide services. These services are given to those who have certificates issued to the person evaluated by the child guidance office or the rehabilitation consultation offices for mentally retarded persons as mentally retarded.

58. The services for persons with mental disorders are composed of community-based health and welfare services, and the social rehabilitation programs. These include services provided at mental hospitals, psychiatric rehabilitation facilities, mental health and welfare centers, and health centers. The services for adults with intellectual disability consist of programs implemented at social rehabilitation facilities such as daily life training facilities, welfare homes, sheltered workshops, welfare factories, and in-home services. These services are provided to those who have certificates of mental disorder. A certificate is issued by the prefecture governor if the applicant is judged to correspond to the designated level of mental disorder by screening the application with a doctor’s certificate.

59. Local governments have responsibilities to provide welfare services to the disabled. The expenditure for welfare services for the disabled is covered by national government subsidies and other public expenses. The number of welfare service recipients and expenditure for the service provision is shown in Table 15. The total number of disabled persons in welfare facilities is 246,209 and total number of persons with disabilities who receive in-home welfare services is 499,000 in 2009.

Table 15: Beneficiaries and Expenditure of Welfare Services for the Disabled Welfare Services at Facilities 2007-2008 2008-2009 2009-2010 Number of Facilities for People with Physical 4,400- 3,798 4,244 Disability Number of Beneficiaries 63,190 68,245 76,287 Number of Facilities for Children with Disabilities 885 886 854 Number of Inmates 38,458 39,830 38,671 Number of Facilities for People with Intellectual 3,873 3,315 2,567 Disability Number of Beneficiaries 175,971 151,983 119,011 Number of Facilities for People with Mental 635 935 782 Disorder Number of Beneficiaries 19,194 15,564 12,240 Total Number of Welfare Facilities for the 8,456 9,491 9,227 Disabled Total Number of Beneficiaries 296,813 275,622 246,209 In Home Welfare Services 2007-2008 2008-2009 2009-2010 Total Number of Beneficiaries 3,981,187 5,476,378 5,996,710 Estimated Annual Expenditure (million JPY) 1,031,841 822,012 895,834 Source: “Outline of the Study on Social Welfare Facilities FY2010”, MHLW; “Report on Public Administration of Social Welfare FY2010”, Information from the Department of Health and Welfare for Persons with Disabilities, MHLW.

60. In addition to the welfare services mentioned above, some social allowances are granted to the disabled or those who are supporting the disabled. Special Child Rearing Allowance is applicable to those who are raising moderately or severely disabled children under 20 years old with moderate or severe disabilities at home. Special Allowance for the Disabled is given to a severely disabled person of 20 years old and above, living at home; and Welfare Allowance for Disabled Children is paid to a severely disabled child under 20 years old, living at home. Disability pensions are provided from the Basic Pension, and the Employees’ Pension

Insurance or the Mutual-Aid Association is provided for eligible persons 20 years old and above with disability. The number of beneficiaries and the amount of each allowance is shown in Table 16.

61. The cost for outpatient psychiatric care, rehabilitative care and rearing care (i.e., care given to gain living ability) is covered by public expenditure. The maximum payment share of the households per month is set up based on the income level. The admission of provision for outpatient psychiatric care and rearing care is done by the prefecture government while the provision for rehabilitative care is admitted by the municipal government. The total number of provision cases in rearing care and medical care is 256,144 and the cost for the provision is JPY 119.49 billion in 2009 (Table 17).

Table 16: Beneficiaries and Expenditure of Allowances for the Disabled 2008 2009 2010 Number of Beneficiaries for Special Child Rearing 178,715 178,762 184,267 Allowance Estimated Amount of Special Child Rearing Allowance 85,783 85,805 88,448 (million JPY)* Number of Beneficiaries for Welfare Allowance for 63,995 64,136 65,066 Disabled Children Estimated Amount of Welfare Allowance for Disabled Children 11,043 11,067 11,227 (million JPY)* Number of Beneficiaries for Special Allowance for the 111,216 111,232 114,710 Disabled Estimated Amount of Special Allowance for the Disabled 35,287 35,292 36,395 (million JPY)* Total Number of Beneficiaries** 362,869 362,978 372,063 Estimated Total Amount of Allowance (million JPY)** 133,656 133,692 137,455 * Estimated by multiplying number of beneficiaries, monthly allowance per beneficiary and 12 (months) together. **Including Welfare Allowance for transitional measure.

Source: Report on Public Administration of Social Welfare FY2010, Statistics and Information Department, Minister’s Secretariat, MHLW

Table 17: Beneficiaries and Expenditure of Rehabilitative and Rearing Care Rearing Care Benefit for Children with Physical Disability 2009-2010 Number of Medical Care and Rearing Care Provision 256,144 Cost Covered by Public Expenditure (million JPY) 119,494 Source: Report on Public Administration of Social Welfare FY2010, Statistics and Information Department, Minister’s Secretariat, MHLW.

4. Welfare and Protection for Children

62. Welfare services for children and single-mother households have been provided based on the Child Welfare Law enacted in 1947 and revised in 1997; and the Maternal and Child Welfare Law enacted in 1964, revised into the Law for the Welfare of Fatherless Families and Widows. The welfare services consist of measures for (i) maternal and child health; (ii) child nursery; (iii) healthy child rearing; and (iv) fatherless families and widows.

63. The measure for child nursery is nursery school that receives operational authority from the municipality. There is insufficiency of child nurseries with the increase in the number of

18 working women. In 2008, new strategies as zero-waiting list for nursery schools was started in order to enhance nursing services. Municipalities are required to give higher priority to children of fatherless families. The measures for healthy child rearing are (i) establishment and expansion of community and recreation centers for children; (ii) provision of child allowance; and, (iii) nurturing facilities or foster-homes for children with nurturing needs.

64. The objective of the Children Allowance in Japan is to contribute to the financial stabilization of the households with children, and to support the health, growth, and ability improvement of the children. In consideration of a rapidly aging society with decreasing birth rate, the cabinet launched a new system called Child Allowance, instead of Children Allowance, in FY2010 to support the rearing and education of children in the next generation. In the new system, ¥13,000 is paid monthly to parents per child no older than the third year of junior high school (until March 31st of the year the children turned 15 years old). Compared with the previous Children Allowance, the amount of benefit is larger and the coverage of recipients is wider. In addition, the allowance has no income-ceiling threshold. The allowance is paid three times a year (i.e., June, October, and February). The budget of the national government is JPY147.2 billion in 2010.

65. The objective of the Child Rearing Allowance is to promote children’s welfare to support the stability and independence of single-mother families. The Child Rearing Allowance is provided to a mother or other person rearing or having custody of a child 18 years old or younger or children under 20 years old with a designated disability, not sharing a common household income with the father, and whose previous year’s income does not exceed the income ceiling threshold. The allowance is paid until March 31st of the year the child turns 18 years old. In the case of one child, the full amount of JPY 41,720 per month is paid if the annual income is less than JPY 1.3 million. The amount of allowance reduces with an increase in income. The allowance is paid if the application is approved by the prefecture or municipal government. One-third of the financial source of the allowance is from the national government; and the remaining two-thirds is shared by the prefecture government and the municipal government since 2006. The Child Rearing Allowance is given together with the Child Allowance.

66. Tables 18-20 show the beneficiaries and expenditures for welfare services of children. The total number of children nurtured in welfare facilities is 2,096,590 (including other family members staying in livelihood support facilities with the children) in FY2009. Detailed numbers on children with special needs are shown in Table 18. The number of beneficiaries for Children Allowance is 9,278,000 and the expenditure for the allowance is JPY 995.62 billion in FY2009. The number of beneficiaries for Child Rearing Allowance is 986,000 and the expenditure for the allowance is JPY 153.95 billion in FY2009.

67. The number of single mothers and widows who have received Loans of Welfare Funds for Mothers with Dependent Children and Widows is 51,000, and the total amount of public expenditure reached JPY 6.6 billion (US$ 70 million).

68. In addition, foster parent programs have been implemented for children with nurturing needs. The number of children nurtured by foster parents is 3,836 in 2009. The number of foster parents registered is 7,180, with 2,837 registered parents actually taking care of children in 2009. A person who is willing to be a foster parent submits an application to the prefectural governor through a child guidance center. The governor then makes a decision on approval based on the investigation of the child guidance center after inquiries have been made by the child welfare council. Detailed numbers on the foster parent program is shown in Table 21.

Table 18: Beneficiaries and Expenditure of Facility Services for Children with Special Needs 2008-2009 2009-2010 Number of Beneficiaries of Nursery School 2,022,173 2,040,974 Number of Beneficiaries of Homes for Infant 3,124 3,113 Number of Beneficiaries of Child Nurturing Homes 30,695 29,753 Number of Beneficiaries of Children’s Self-Reliance Support 1,808 1,706 Number of Beneficiaries of Livelihood Support Facilities for 21,771 21,044 Mothers and Children Total Number of Welfare Facilities for Children with Special Needs 23,997 23,992 Total Number of Beneficiaries* 2,079,571 2,096,590 Annual Expenditure for child nursery (million JPY)** 404,622 405,857 Annual Expenditure for other facilities for child welfare 79,867 82,221 (million JPY)** * The number includes family members staying with the children **Budget base amount. Sources: Outline of the Study on Social Welfare Facilities FY2010, Ministry of Health, Labour and Welfare; Equal Employment, Children and Families Bureau, Ministry of Health, Labour and Welfare, 2011.

Table 19: Beneficiaries and Expenditure of Children Allowance and Child Rearing Allowances 2008-2009 2009-2010 Number of Beneficiaries for Children Allowance 9,291,000 9,278,000 Amount of Child Allowance (million JPY) 998,054 995,622 Number of Beneficiaries for Child Rearing Allowance 966,000 986,000 Amount of Child Rearing Allowance (million JPY) 152,535 153,945 *Beneficiary number of children, not households

Source: “Report on Public Administration of Social Welfare FY2010”, Statistics and Information Department, Minister’s Secretariat, MHLW

Table 20: Loans of Welfare Funds for Mothers with Dependent Children and Widows 2008-2009 2009-2010 Number of Loan Recipient 49,000 51,000 Annual Expenditure (million JPY) 5,475 6,566 Source: Information from Children and Families Bureau, MHLW

Table 21: Children Raised by Foster Parents 2008-2009 2009-2010 Number of Children Raised by Foster Parents 3,870 3,836 Number of Foster Parents 2,728 2,837 Number of Registered Foster Parents 7,645 7,180 Source: “Report on Public Administration of Social Welfare FY2010”, Statistics and Information Department, Minister’s Secretariat, MHLW.

69. The protection and support measures for child abuse include function and system improvement of child welfare facilities, expansion of support after leaving the facility, and guidance and support for the parents. The annual national government expenditure for prevention of child abuse is JPY 37.5 billion in FY2008 (Table 22).

Table 22: Child Abuse Guidance and Expenditure for Child Abuse Prevention 2007-2008 2008-2009 2009-2010 Number of Child Abuse Guidance 40,639 42,664 44,211 Annual Expenditure (million JPY) 36,500 37,500 40,000 Source: Number of Child Abuse Guidance at Child Guidance Centers FY2010, Equal Employment, Children and Families Bureau, Ministry of Health, Labour and Welfare; Outcome report, 2009, Ministry of Health, Labour and Welfare.

5. Disaster Relief

70. Disaster Relief is implemented based on the Disaster Relief Law enacted in 1947. Relief services under this law are provided by the national government on an emergency basis in cooperation with local governments, the Japanese Red Cross Society, other organizations, and the people of Japan. The prefectural governor with the support of the municipal head implements relief activities when the territory in the municipality has a disaster with the magnitude specified by the prefectural ordinance. The prefectural government covers the cost incurred for the relief activities. When the cost is JPY 1 million or above, a certain ratio of the cost is defrayed from the National Treasury according to the ratio of the cost to the projected normal tax revenue. Prefectural governments are required to reserve in the prefecture’s disaster relief fund to cover the relief activity cost. The minimum fund level must be 0.5% of average tax revenues for the last 3 years.

71. In addition to relief services, a loan is provided to the person who is injured or has housing damage due to the disaster with a designated level of magnitude. The maximum amount of the loan is JPY 3.5 million with a repayment period of 10 years and an annual interest rate of 3% (zero interest for the first three years). The municipal government implements the loan program; but two-thirds of the loan funds are covered by the national government, and one- third is shared by the prefectural or municipal government.

72. Condolence money is given to the bereaved by a disaster with a designated level of magnitude. The amount is JPY 5 million for the death of the household’s main income provider, and JPY 2.5 million for the death of a family member. Additionally, sympathy money is paid to the person who suffered severe disability caused by the disaster with a designated level of magnitude. The amount is JPY 2.5 million for the main financial supporter of the family and JPY 1.25 million for other family members. Both condolence and sympathy money are provided by the municipal government, but 50% of the financial source is from the national government; and the remaining 50% is equally shared by the prefectural and municipal governments.

73. The number of disasters fluctuates year by year. As shown in Table 23, the Disaster Relief Law applies to only 7 municipalities in 2009. With the fluctuation of disaster occurrence, the amount of annual expenditure from the National Treasury for disaster relief varies year by year9.

9 Supplementary budget for rehabilitation program for Great East Japan Earthquake reached 930 Billion JPY in FY2011.

Table 23: Number of Disaster Relief Cases and Expenditure 2007 2008 2009 Number of Law Applied Municipalities 15 11 7**

Expenditure from the National Treasury (million JPY) 6,981 292 407

** In FY2009, the total population of 7 municipalities is around 0.55 million. Source: Outcome report, 2007, 2009, Social Welfare and War Victims’ Relief Bureau, Ministry of Health, Labour and Welfare.

C. Social Insurance Programs

74. Japan has a comprehensive social insurance system covering Pension Insurance, Medical Care Insurance, Long-Term Care Insurance, Employment Insurance, and Workmen’s Accident Compensation Insurance, etc. Participation to the system is compulsory. All citizens of certain age groups and their employers with a certain level of size are obliged to participate in social insurance.

1. Pension Insurance

75. Japan’s public pension system was established to provide income security in the case of old age, disability and death. The system is two-tiered. The first tier is the Basic Pension that provides a flat rate basic pension with universal coverage, and the second one consists of the Employees’ Pension or the Mutual-Aid Associations; both of which provide income based pension. Public pension schemes and premiums of each scheme by occupational categories are summarized in Figure 3.1.

76. The National Pension Act was enacted in 1959. The Basic Pension (National Pension) was introduced in 1961 with the intention of providing insurance benefits mainly for farmers, fishermen and the self-employed. After the pension system reform in 1986, all citizens aged 20 to 59, including persons covered by the Employees’ Pension and the Mutual-Aid Pension, were obliged to participate in the Basic Pension.

77. The benefits commonly covered by the Basic Pension are (i) Old-age Basic Pension; (ii) Disability Basic Pension; and (iii) Survivors’ Basic Pension. Premium payment for a qualification as a recipient is a minimum of 25 years, including the payment exempted period and complementary period. For those insured by the Old-age Basic Pension, the amount of premium is fixed at JPY 14,660 per month in 2009. Pensionable age is from 65 years old for the principal. However, if the insured prefers to receive benefits before reaching 65 years of age, they can receive payments upon reaching 60 years with reduced benefit. If the insured prefers to receive benefits after reaching 65 years, they can receive pensions with increased benefit. The amount of Old-age Basic Pension for a person with a fully paid premium for 40 years is JPY 651,840 per annum in 2009, if insured starts to receive pension at 65 years.

78. The insurer is the National Government, and the Japan Pension Service10 is responsible

10 The response to the pension problem regarding pension record is positioned as a national project where concentrated efforts are given by jointing efforts of the MHLW and the Japan Pension Service in two years (FY 2010 to 2011); and, every possible solution is taken in four years until FY 2013.

22 for the operation of the Basic Pension. The social insurance offices and local governments are the frontline organizations to execute the operation and provide related services to the insured persons. The financial sources for the Basic Pension consist of premium payment by the insured persons; contributions from insured persons of the Employees’ Pension and the Mutual- Aid Associations; and, national government subsidies.

79. The Employees’ Pension was introduced in 1942 based on the Workers’ Pension Insurance Act. This is a system that provides insurance benefits for employees working for private companies. Persons under age 70 and employed at a compulsorily covered workplace or voluntarily covered workplace are insured by this scheme. Temporary workers under the certain conditions11 are exempted from the coverage. With the pension system reform in 1986, the Employees’ Pension and the Mutual-Aid Associations, with the latter mainly for public servants and schoolteachers, were changed to the systems that provide income-related pensions adding to the pensions provided by the Basic Pension.

80. The benefits covered by the Employees’ Pension are (i) Old-age Employees’ Pension and Specially Paid Old-age Employees’ Pensions; (ii) Disability Employees’ Pension and Disability Allowance; (iii) Survivors’ Employees’ Pension; and (iv) Lump-sum Withdrawal Benefits. The amount of premium is calculated by a monthly standard income for each month multiplying contribution rate; and employers and employees equally share the amount.12

81. Persons with premium payment period of a minimum of 25 years for the Basic Pension are eligible to receive Old-age Employees’ Pension even if the participation period for the Employees’ Pension is limited. Currently, the eligible person can receive the Specially Provided Old-Age Employees’ Pension composed of income-based and fixed-amount portions from 60 years old; and the income-based Old-Age Employees’ Pension from 65 years old. The pensionable age for the Specially Provided Old-Age Employees’ Pension has been gradually raised to 65 years old.

Figure 1: Public Pension Schemes and Premiums by Occupational Categories Schemes and Premium Occupation Scheme Premium Self-employed persons, farmers, 14,660 yen per month students, etc. (those of 20 years (fixed amount) Basic Pension (National Pension) and over-under 60 years old, *The premium is increased by 280 [No.1 insured person] excluding those shown in the yen each year and finally fixed at following columns) JPY16,900. Employees under 70 15.704% of total remunerations

years old in private that combine monthly income and

sector covered by the Employees’ bonus Basic Employees’ Pension Pension Pension Insurance Insurance (Premium is evenly borne by [No.2 insured

Employees (Private company employers and employees)

person] Workers, etc.)

11 Day worker and terminable worker - less than two months; seasonable worker - less than four months; among others. 12 The rate is 14.642% for male insured persons except miners and seamen; and female insured persons as of March 2010.

Public employees The premiums vary according to

and private schools’ the Mutual Aid Associations, Basic teachers and Mutual Aid ranging from 12.230% to 15.154% Pension employees Pension of one’s monthly income and [No.2 insured bonus. (employers and employees person] bear evenly) The insured pay no premium (it Full-time housewives etc. is borne by the Employees’ Dependent spouse of the Basic Pension Pension Scheme (the Employees’ employee (wife or husband, who [No.3 insured person] Pension or the Mutual Aid Pension) make a living mainly by the in which his or her spouse has employees’ income) participated) Note: The premium rates are the standard as of October 2009.

Source: “Outline of the Japanese Pension System”, Pension Bureau, Ministry of Health, Labour, Welfare, April 2011.

82. The number of persons that participated in public pension systems is 69.34 million as of the end of March 2009; with 34.2 million participants in the Employees’ Pension or the Mutual- aid Pension13. The total expenditure of the Old Age Pension Benefits is JPY 42.15 trillion in FY2009. The number of persons that participated in disability pension and survivors’ pension are 2.1 million and 5.7 million; and the total benefit expenditures are JPY 1.83 trillion and JPY 6.26 trillion in FY2009, respectively. Detailed numbers of beneficiaries and expenditures by pension scheme are as shown in Table 24.

83. In addition to the first and second tiers of the pension system, the third tier of pension systems exists as optional schemes. These schemes include National Pension Funds, Corporate Pensions14 (e.g., Employees’ Pension Funds, Defined-Benefit Corporate Pension), Defined-Contribution Pension (e.g., corporate type pension and personal type pension) and Farmers Pension Fund. The numbers of participants for the National Pension Fund, Employees’ Pension Funds, corporate type of Defined-Contribution Pension, and personal type of Defined- Contribution Pension as of the end of FY2009 are 577,000, 4.60 million, 3.40 million, and 0.11 million, respectively. These additional pension systems are established for the goal of living a relatively wealthy life after retirement; and have therefore been excluded from the social protection activities in this report.

Table 24: Public Pension Insurance Beneficiaries and Expenditure Old Age Pension 2008-2009 2009-2010 Total: Number of Beneficiaries (Total, 000s)* 69,358 68,738 (Male, 000s) 35,300 (Female, 000s) 33,400 Annual Benefit Expenditure (million JPY) 40,927,201 42,147,517 Basic Pension: Number of Beneficiaries (Total, 000s) 30,443 30,061 (Male, 000s) 10,245 (Female, 000s) 19,815 Annual Benefit Expenditure(million JPY) 15,777,254 16,431,297 Employees' Pension: Number of Beneficiaries (Total, 000s) 34,445 34,248 (Male, 000s)** 22,137 (Female, 000s)** 12,055 Annual Benefit Expenditure (million JPY) 19,933,510 20,404,737 Mutual-Aid Associations: Number of Beneficiaries (000s) 4,471 4,429

13 Registered residents in Japan age under 20 have no obligation to participate in the Public Pensions. 14 Tax Qualified Pension will be rescinded by the end of JFY2011/12.

Annual Benefit Expenditure (million JPY) 5,211,768 5,308,306 Disability Pension 2008-2009 2009-2010 Number of Beneficiaries (000s) 2,046 2,081 Annual Expenditure (million JPY) 1,810,151 1,833,726 Survivors’ Pension 2008-2009 2009-2010 Number of Beneficiaries (000s) 5,550 5,681 Annual Expenditure (million JPY) 6,118,657 6,259,702 * Number of persons participated in pension system. Overlapping among each scheme is excluded but includes recipients of disability pension and survivor's pension. **Number of beneficiaries except miners and seamen. Source: Information from Pension Bureau of MHLW; Annual Report of Health, Labour and Welfare Report 2010”, MHLW

2. Medical Care Insurance

84. Japan’s public medical care insurance system started in 1927 when the Health Insurance Law was enacted. With the amendment of the Law, the public medical care insurance with universal coverage of all residents in Japan was established in 1961. There are two public medical care insurance systems – the Employees’ Health Insurance, which is occupation-based, and the National Health Insurance, which is region-based. 85. The Employees’ Health Insurance provides financial assistance to salaried workers and their dependent family members by paying insurance benefits in the case of illness, injury, childbirth and death. The Employees’ Health Insurance has several types of schemes. Health Insurance managed by societies is for companies with a certain level of size, while the association-managed Health Insurance covers other companies. The number of participants for the insurance managed by societies is 30.34 million and the number of association is 1,497; while it is 34.71 million for the association-managed insurance as of March 2009. The other occupation-based health insurance schemes are the Seamen’s Insurance, Day-Laborer’s Health Insurance 15 , National Government Employees’ Mutual Aid Association, Local Government Employees’ Mutual Aid Association, and Private School Teachers and Employees’ Mutual Aid Association. The Government operates the Seamen’s Insurance and the Day- Laborer’s Health Insurance while the others are operated by mutual aid associations.

86. Those that are not covered by the Employees’ Health Insurance, such as self-employed, farmers and non-employed are obliged to enroll in the National Health Insurance. The National Health Insurance is managed by each municipality except the one managed by the National Health Insurance Association. The number of participants is 39.49 million as of March 2009 and the number of participant municipalities is 1,788. A certificate of the National Health Insurance is issued per household while in some municipalities, per person.

87. All public medical care insurances are financed by the premiums paid by the insured, national government subsidies and co-payments from patients. The premium of each employee for the Employees’ Health Insurance consists of fixed rates with a standard monthly remuneration and a standard bonus amount; equally shared by the employer and employee. The average rate for the Government-managed Health Insurance is 8.2% until 39 years old. It is raised to 9.39% from ages 40 to 64 because of the added premium for long-term care.

15 Part-time workers and workers with more than 3/4 of regular workers’ working hours/days are eligible for the Employees’ Health Insurance.

Regarding the National Health Insurance, each municipality determines the legally designated formula based on income, property, and number of insured in a household based on the annual insurance premiums for each household. The head of each household is responsible for payment of insurance premiums.

88. Medical care insurances and medical treatments are given at any insurance designated hospitals or clinics when the insured and the insured person’s dependents are sick or suffer from injury by non-occupational causes. All insured persons can receive the same levels of medical services at equal prices because the coverage of medical care insurance and the prices of medical services are standardized by the laws. When receiving medical care treatment, the insured person needs to pay an amount equivalent to the cost-sharing portion of hospitals or clinics. The benefits covered by healthcare insurance include medical care, meal service, medical care expenses, transportation expenses, high-cost medical care, sickness and injury allowance, maternity allowance, midwifery expenses, and funeral expenses.

89. The number of insured persons and annual expenditures of each heath insurance scheme is shown in Table 25 In total, 113 million Japanese are covered by health insurance schemes. The number of persons covered by the National Health Insurance, the Employees’ Health Insurance (including Mutual Aid Association), and the Seamen’s Insurance are 39.49 million; 74.08 million; and 0.14 million; respectively. Total insurance benefit expenditure is JPY 17.67 trillion in 2008.

90. In addition, the independent medical care system for elderly was launched in 2008 as the Long Life Medical Care System for elderly aged 75 or older. The new system clarifies the rules for the burden of the active generation and the elderly. The cost is covered by the public fund (50%), the active generation (40%), and the elderly (10%). This system also aims to identify the operational responsibility. It is operated by regional authorities affiliated with all the municipalities in each prefecture.

Table 25: Medical Insurance Coverage and Expenditure Scheme Beneficiaries and Expenditure 2007 2008 2009 ALL Number of Beneficiaries (000s)* 126,738 113,718 127,445 Annual Expenditure (million JPY)** 17,423,572 17,741,157 18,195,638 National Number of Beneficiaries (000s)* 50,297 39,492 39,098 Health - Insurance Annual Expenditure(million JPY)** 8,776,100 8,835,300 Employees' Number of Beneficiaries (000s)* 76,243 65,059 64,796 Health 7,093,000 Insurance Annual Expenditure (million JPY)** 8,301,547 7,721,300 Mutual Aid Number of Beneficiaries (000s)* 9,374 9,023 9,118- Association Annual Expenditure (million JPY)** - 1,091,400 - Seamen's Number of Beneficiaries (000s) 198 144 141 Insurance Annual Expenditure (million JPY)** 28,984 25,400 - *The number of beneficiaries includes family members of the insured- ** Total amount of insurance benefit paid only, not including operation and management costs Sources: Annual Report of MHLW 2008-2010; Information from the Health Insurance Bureau; Ministry of Health, Labour and Welfare.

3. Long-Term Care Insurance

91. With the rapid aging of population, national medical-care expenditure began to increase rapidly and exceeded JPY 30 trillion for the first time in 1999. The cost of healthcare for the elderly, especially long-term care, imposed burdens on medical care insurances and caused sizeable deficits on some of the health insurance systems. In an attempt to improve the quality of elderly care, with the separation of the long-term care from other medical services, the Long- Term Care Insurance system was introduced in April 2000.

92. The Long-Term Care Insurance is operated by each municipal government. Fifty percent of the cost is financed by public expenditures from the national (25%), prefecture (12.5%) and municipal governments (12.5%); the remaining 50% is covered by the premiums paid by people aged 40 or older. Insured persons consist of two categories – those aged 65 years and above, and those participating in the medical care insurances aged from 40 to 64 years old. The share ratio of premium contribution between the first and the second categories is 20% and 30%, respectively. The premium for the first category is collected mainly by local governments through deductions from the pension benefit; the premium for the second category is collected together with the health insurance premium. The minimum beneficiary age is 40 years old, and the beneficiary has to pay 10% of the cost for the service received. The remaining 90% of the cost is covered by the insurance.

93. The Long-Term Care Insurance provides services to the insured meeting the criteria of “persons who need nursing care16” or “persons who need support17”. Each municipality issues certificates with the screening process by the Long-Term Care Approval Board. The services provided include home visits by home-helpers, visits to care centers and long-term stay in nursing homes. Since the cost for maintaining the insurance system is increasing, debates on reform plans have already started.

94. The total number covered by the Long Term Care Insurance is 70.78 million and the total expenditure of insurance benefit is JPY 6.87 trillion in 2009. The details of the Long Term Care Insurance coverage and expenditure are as shown in Table 26.

Table 26: Long Term Care Insurance Coverage and Expenditure 2007 2008 2009 Number of Insured with Age 65 and Over (000s) 27,512 28,317 28,917 Total Number of Insured (000s)* 69,020 69,960 70,780 Annual Expenditure (million JPY) 6,160,047 6,418,497 6,872,133 * Including insured persons ages 40 to 64 Source: Annual Report on Long Term Care Insurance FY2009-10, MHLW.

4. Health Services System for the Elderly

95. The objective of the Health Services System for the Elderly is to provide comprehensive and appropriate medical services to maintain good health. The system started in 1983 based on the Health and Medical Service Law for the Elderly. Since 2008, a new independent medical care system for the elderly has been launched as the Long Life Medical Care System for elderly aged 75 or older. Those who are 75 years old and above or 65 years old and above with a

16 Persons who are judged to be in need of continuous nursing care for six months or longer based on the basic activities of daily life due to physical and mental disabilities. 17 Persons who are in risk of falling into a condition that requires the need to receive nursing care.

27 designated level of disability, receive medical treatment. Eligible recipients are issued a health handbook and medical treatment certificate by the municipality. Health services such as health education, health consulting, health examination, functional training, and home-visit guidance, are provided to those who are 40 years old and above.

96. Ten percent of medical expenses both for outpatient and hospitalization is paid by the beneficiary (30% for those with the designated income level or higher); and the remaining 90% is covered by the system. Reimbursement is available for high medical expenses. The insurers are the national government, health insurance associations, and the municipalities. The national government, municipal government and contributions from insurers cover the operational cost.

97. The number of elderly persons whose medical care is covered by the Health Service System for the Elderly is 13.6 million, and the annual benefit expenditure is 10.9 trillion in 2009. The details of beneficiaries and expenditure are shown in Table 27. The total amount of medical cost for the elderly aged 75 or older is about 30% of the national medical care expenditure in Japan in 2009.

Table 27: Health Services System for the Elderly 2008-2009 2009-2010 Number of Beneficiaries (000s)* 13,194 13,616 Annual Expenditure A (million JPY)** 10,405,200 10,967,300 Annual Expenditure B (million JPY)*** 11,414,500 12,010,800 * Number covered by the system ** Total Amount Covered by the Health Services System for the Elderly *** Total Amount of Medical Cost for the Elderly (Targeted Age Group) Source: “Annual Report on Elderly Medical Care Affairs FY2009, MHLW

5. Employment Insurance

98. Social insurance systems for the unemployed were originally introduced in 1947 in Japan when the Unemployment Insurance Law was enacted. The law was revised several times and renamed to the Employment Insurance Law. The Employment Insurance has two functions – providing unemployment benefits to compensate for lost income until the insured person secures a job and operating activities for employment stability, skills development and employment welfare.

99. The Employment Insurance System is insured and operated by the national government, and applied to all entities employing workers18. The financial sources of the insurance are national government subsidies, and premiums paid by the employers and the employees. The subsidy of the national government covers 25% of benefits paid to unemployed workers seeking employment; 12.5% of benefits for securing continuance of employment; and, the collected premium covers the remaining expenditure. The amount of the premium is 1.2% of the employee’s total salary, with 0.6% shared by the employer, and 0.6% paid by the employee.

100. The number of persons covered by the Employment Insurance is 37.66 million; 854,000 receive insurance benefits, excluding benefits for vocational training, in 2009. The total amount of benefit expenditure is JPY 2.460 trillion. The details of the insurance coverage and expenditure are shown in Table 28. Since 2010, employees with scheduled working hours of 20

18 Businesses on agriculture, forestry and fisheries that are managed individually and come under a criteria set by the government are exempted.

28 hours or more per week and expected to be employed for 31 days or more, become eligible for employment insurance regardless of business scale.

Table 28: Employment Insurance Coverage and Expenditure 2007 2008 2009 Number of Insured 37,128,266 37,817,572 37,663,543 Number of Beneficiaries* 566,666 606,686 854,617 Annual Expenditure (million JPY)** 1,309,463 1,401,062 1,480,141 * The number of insurance benefit recipient ** Total amount of unemployment benefits paid only, not including benefits for vocational training Source: “Annual Report on Employment Insurance FY2009”, MHLW

101. The unemployment benefits are classified into (i) benefits paid to unemployed workers seeking employment; (ii) benefits for expediting employment; (iii) benefits for vocational training; and, (iv) benefits for securing continuance of employment. A person is entitled to receive basic allowance if an unemployed person is insured by the Employment Insurance for six months or longer, a year immediately before being unemployed. The basic allowance is in the range of 50- 80% of the insured person’s daily wage immediately before unemployment (i.e., the rate depends on the amount of wage); and the maximum amount is set depending on the age categories. The allowance is provided for 90 days to 360 days depending on the duration of the insurance, age, and reason of unemployment. The details of payment duration are shown in Table 29. The benefits for expediting employment include re-employment allowance, outfit allowance for full-time employment, relocation expenses and job-seeking expenses. The benefits for securing continuance of employment consist of benefits for securing continuance of older workers employment, childcare leave, and family-care leave.

Table 29: Duration of Basic Allowance Payment by Employment Insurance Period insured Less 1 year to 5 years to 10 years to 20 years than one less than less than less than and longer Beneficiary year 5 years 10 years 20 years General Employee Under 30 years old 120 days 180 days - 30-under 35 90 days 210 days 240 days 180 days 35-under 45 90 days 240 days 270 days 45-under 60 180 days 240 days 270 days 330 days 60-under 65 150 days 180 days 210 days 240 days Involuntary Terminal Employee - 90 days 120 days 120 days Person having difficulty in finding a job Under 45 years old 300 days 150 days 45-under 65 360 days

6. Workmen’s Accident Compensation Insurance

102. The Worker’s Accident Compensation Insurance was originally introduced in 1947 with the enactment of the Worker’s Accident Compensation Insurance Law. The main objective is to ensure prompt and fair protection for workers who suffer injury, disease, disability or death due to occupational cause or commutation to and from the workplace, with the provision of necessary insurance benefits. Another objective is to enhance worker’s welfare by promoting rehabilitation of workers who suffer occupational injury or disease, supporting workers and worker’s bereaved family in case of worker’s death, and securing appropriate working conditions for workers.

103. The benefits covered in this insurance are medical benefits, temporary disability benefits, disability benefits, funeral benefits, and accident and sickness pension. Details of each benefit are explained in Table 30. Medical benefit is paid to fully cover the expenses for medical treatment of occupational illness or injury. Temporary disability benefit is given to compensate for days of work suspension due to medical treatment of occupational illness or injury. Benefits equivalent to 60% of the worker’s average daily wage are given for days of absence from work starting from the fourth day the employer stopped paying salary or wages. Disability benefits consist of disability pension, disability lump-sum benefit, bereaved family pension, and bereaved family lump-sum compensation. The disability pension is paid to a qualified worker who suffers a permanent disability of levels 1-7, and the disability lump-sum benefit is paid to a qualified worker suffering permanent disability of levels 8-14. The amount of pension or benefit depends on the average daily wage and disability levels. The accident and sickness pension is paid to a qualified worker if the occupational injury or illness has not been cured after 18 months from the start of medical treatment and the condition of illness or injury falls under levels 1-3.

104. The Workmen’s Accident Compensation Insurance is operated by the national government through the MHLW. All kinds of businesses that employ workers are required to apply to this system19. The insured are business entities contributing premium payments, and the beneficiaries are their workers. The financial source is the premium paid by the business entities, and the national government subsidy covers a portion of the financial resource. The premium is calculated by multiplying the total wages the entity paid by the premium contribution rate. The rate is in the range of 0.45% to 11.8%, which differs among sectors.

Table 30: Type and Benefits Payment by Workmen’s Accident Compensation Insurance Reason for Payment and Type of Benefits Description of Payment Beneficiary To cover the expenses for Provision of medical treatment in a medical treatment of illness designated hospital and other provision in Medical Benefit or injure caused by kind; and, payment of medical treatment in industrial accident. any other medical institution than the designated hospital To compensate for days Average daily wage × 60% × days of during which a qualified absence from work worker is not able to work due to medical treatment of *Average daily wage=aggregate wages paid Temporary Disability illness or injury caused by to the worker during the 3-month period Benefit an industrial accident; to be immediately before the accident – any wage paid from the 4th day of the paid temporarily and the number of days period for which salary or included in 3 months wages are not paid by the employer To a qualified worker who Average daily wage is paid for the days suffers a permanent specified below. disability of Level 1 to 7 Level 1: 313 days Level 2: 277 days Disability Disability after the illness or injure Level 3: 245 days Level 4: 213 days Level Benefits Pension caused by industrial 5: 184 days Level 6: 156 days Level 7: 131 accident has become days stable

19 Businesses on agriculture, forestry and fisheries that are managed individually and come under a criteria set by the government are exempted.

Reason for Payment and Type of Benefits Description of Payment Beneficiary Paid to a qualified worker Average daily wage is paid for the days who suffers permanent specified below. Disability disability (i.e., Level 8 to Lump-sum 14) after the illness or injury Level 8: 503 days Level 9: 301 days Benefit caused by industrial Level 10: 301 days Level 11: 223 days accident has become Level 12: 156 days Level 13: 101 days stable Level 14: 56 days Bereaved The beneficiaries are the Average daily wage is paid for the days Benefits spouse, children, parents, specified below, depending on the number grandparents, brothers and of the bereaved family members. sisters of the deceased Bereaved worker, who shall satisfy One family member: 153 days Family certain requirements. The Two family members: 201 days Pension pension shall be paid to the Three family members: 223 days person of highest Four or more family members: 245 days precedence among the beneficiaries.

Bereaved Paid if no bereaved family Average daily wage is paid for 1,000 days Family member satisfies the Lump-sum requirement for receiving Compensation the bereaved family lump- sum compensation at the time of the worker’s death Provided to the person who 315.000 + Average daily wage for 30 days Funeral Benefit holds a funeral for the or Average daily wage for 60 days, deceased worker whichever is higher Paid to a qualified worker if Level 1: Average daily wage for 313 days the injury or illness caused Level 2: Average daily wage for 277 days by industrial accident has Level 3: Average daily wage for 245 days not been cured after 18 Accident and Sickness month from Pension commencement of medical treatment and the condition of such illness or injury falls under the levels specified below Source: Country Sources, 2011

104. The number of enterprises participating in this scheme is 2.62 million and the number of insured workers is 52.78 million in 2009. The total benefit payments are 5.2 million while the total benefit expenditure is JPY 749,648 million in 2009. The details of coverage and expenditure of the Workmen’s Accident Compensation Insurance is shown in Table 31.

Table 31: Workmen’s Accident Compensation Insurance Coverage and Expenditure 2007 2008 2009 Number of Insured (000s) 51,313 52,418 52,789 Cases of Lump-Sum Benefit Payment for Disability Compensation (a) 23,000 22,000 Cases of Pension Benefit Payment for Disability Compensation (b) 575,000 572,000 Cases of Pension Benefit Payment for Injury/Sickness Compensation (c) 62,000 61,000 Total Number of Benefit Payment Cases (a) +(b)+(c) 660,000 655,000 Total Cases of Benefit Payment (000s)* 5,480 5,504 5,264 Annual Expenditure for (a)+(b)+(c) (million JPY)** 218,728 214,780 Total Annual Expenditure (million JPY)** 775,543 770,673 749,648 Number of New Beneficiaries (000s) 607 604 535

* All cases that a benefit payment is made including minor ones ** Amount of benefits paid only, not including operation and management cost Source: Annual Report on Social Security Statistics FY2009, IPSS; Japan Monthly Statistics, Statistics Bureau and Statistical Research and Training Institute; and Ministry of Internal Affairs and Communications.

D. Labor Market Programs

105. The major labor market programs operating in Japan include the Employment Generation Program for the Elderly; Employment Support Program for the Disabled; Employment Program for the Elderly; Employment Program for Single Mothers; Subsidy Program for Employment; Public Job Introduction System; and Skills Development and Training.

1. Employment Generation Program for the Elderly

106. Silver Human Resource Centers have been established to create employment opportunities and provide temporary, short-term or jobs for the elderly. A person aged 60 and above with good health and a desire to work can become a member of the Silver Human Resource Center. The original center was established in Tokyo in 1975 and similar ones have been established in other areas. The activities of the centers became a national government support activity in 1980; legalized with the enactment of the Law for Employment Stabilization for the Elderly in 1986. There are no eligibility criteria for entry into the center. The main service provided by the center is job replacement for the member. The center assumes the role of the company to be supplied with labor, encouraging elderly employment. There are 1,332 centers with 791,859 members in March 2009. The annual expenditure from the National Government for the center activities is JPY 12.86 billion in 2009 (Table 32).

Table 32: Silver Human Resource Centre Participants and Expenditure 2007-2008 2008-2009 2009-2010 Number of Participants (Total) 754,391 764,162 791,859 Number of Participants (Male) 501,422 509,408 533,178 Number of Participants (Female) 252,969 254,754 258,681 Estimated Number of Participants Employed* 603,513 611,330 633,487 Annual National Expenditure (million JPY) 13,408 12,842 12,858 Annual National Expenditure (million US$) 113.89 124.23 137.46 * 80% of Participant Number Source: National Silver Human Resource Center Association, http://www.zsjc.or.jp; Program Review Sheet of Silver Human Resource Centre 2010, MHLW.

2. Employment Support Program for the Disabled

107. The Employment Quota System for the Disabled is introduced based on the Employment Promotion Law for the Disabled. Under this system, all employers must hire the legally required number or more of disabled persons as regular employees20. The required number is calculated by multiplying the total number of regular employees in an enterprise, excluding short-time workers, by the stipulated employment rate. The rates for private companies, special government corporations, national and local governments, and boards of education are 1.8%, 2.1%, 2.1% and 2%, respectively.

20 A severely disabled person is counted as two.

108. In the case of enterprises engaged in specific types of businesses, the number of disabled employees calculated with the specific rate is deducted from the number of regular employees, and the balance is used as a basis for the calculation of the legally required number. Employers are required to submit an annual report on the employment of disabled employees by July 15 of the same year to the Public Employment Security Office (PESO) chief. If an employer establishes a subsidiary with a special consideration for the employment of the disabled, the disabled workers employed at the subsidiary may be counted as workers employed by the parent company with the approval of the MHLW.

109. The Levy and Grant System for Employment of the Disabled was introduced in relation to the quota system. The system was established to improve the employment level of the disabled by collecting levies from enterprises that fail to fulfill the quota rate and alleviating the economic burdens on enterprises hiring a greater number of disabled than the quota rate. Employers are required to pay levies if the cumulative number of regular workers with disabilities is less than the legally required number of disabled employees. The amount of levy is calculated by multiplying the imbalance number by JPY 50,000 (US$534.53). The employers with regular employees of 200 or less are not currently charged levies. On the other hand, the employer who has been employing more disabled employees than the quota will be given JPY 27,000 (US$288.65) per month for each disabled worker exceeding the quota. Employers with regular workers of 200 or less and disabled employees more than the fixed number will receive JPY 21,000 (US$224.50) per month for each disabled worker above the fixed number.

110. Additionally, there are various grant programs under this system to support employers hiring persons with disabilities. These are (i) Grant for Provision of Workplace Facilities for Persons with Disabilities; (ii) Grant for Provision of Welfare Facilities for Persons with Disabilities; (iii) Grant for Workplace Attendants for Persons with Severe Disabilities; (iv) Grant for Commuting Measures for Persons with Severe Disabilities; (v) Grant for Provision of Facilities in Enterprises Employing a Large Number of Persons with Severe Disabilities; (vi) Grant for Skill Development of Persons with Disabilities; (vii) Grant for Employment Support Centers for Persons with Disabilities; and (viii) Grants of Continued Employment of Persons with Disabilities (i.e., Grant for Provision of Workplace Facilities for Individuals Disabled after Entering Employment and Grant for Job Adaptation of the Severely Disabled after Entering Employment). The Japan Organization for Employment of the Elderly and Persons with Disabilities (JEED) manages this system. The applicable employers are required to submit the levy declaration to the JEED through the Prefectural Association for Employment of Persons with Disabilities, Employment Development Association, Employment Promotion Association, or the Comprehensive Employment Promotion Association.

111. The number of job seekers with disabilities is 157,892 and 45,257 persons were employed through various labor market programs including the Employment Quota System and the Levy and Grant System (Table 33).

Table 33: Employment Situation of Disabled 2008-2009 2009-2010 2010-2011 Number of Disabled Persons Seeking Jobs 142,533 157,892 157,892 Number of Disabled Persons Employed* 44,463 45,257 45,257 Number of Disabled Persons Working at Private 326,000 333,000 343,000 Enterprises * Employed by private enterprises only through the Public Job Introduction System, not including those employed by public institutions Source: Employment Security Bureau, Ministry of Health, Labour and Welfare, 2011.

112. The Public Employment Security Office (PESO) registers applications of disabled persons seeking jobs and provides comprehensive services, such as vocational guidance and job referral to applicants. In addition, various facilities have been established to facilitate vocational independence of persons with disabilities by providing vocational rehabilitation services. The National Institute of Vocational Rehabilitation offers high-quality and advanced vocational rehabilitation services. The Area Vocational Rehabilitation Centers for Persons with Disabilities are located in three places and provide various vocational rehabilitation services systematically. The local Vocational Centers for Persons with Disabilities were established in each prefecture and provide specific rehabilitation services in line with the types and degrees of disabilities. The centers also offer vocational consultations and advices on employment management of disabled persons to employers. Furthermore, the Employment Support Centers for Persons with Disabilities and the Employment and Living Support Centers for Persons with Disabilities have been established. The former are located in 14 places and provide work preparation training to disabled persons to help them attain vocational independence. The latter were established in 90 locations and offer vocational support for daily living and community activities.

113. The MHLW and JEED provide various skill development and training opportunities such as trial employment to persons with disabilities, including employer assistance programs to encourage voluntary employment of disabled persons. When the prefectural governor commissions an employer to implement on-the-job training for disabled persons in the types of work appropriate to their capabilities for a period of six months or less, a commission of JPY 24,000 per month per person is provided to the commissioned employer. When an employer is commissioned by the prefectural governor to conduct short-term adaptation training with actual job experience for a period of two weeks or less, a training fee of JPY 960 or 1,000 (US$10.26 or 10.69) per day is provided to the commissioned employer. The beneficiaries and annual amount of the Main Employment Program and Vocational Training for Disabled are shown in Table 34.

Table 34: Main Employment Program and Vocational Training for Disabled 2008-2009 2009-2010 Number of Beneficiaries from Support Center of Living and - 8,100 Employment Number of Beneficiaries from training program by Municipality - 157,892 Number of Beneficiaries from Job Coach Program - 9,550 Total Amount (million JPY) 16,037 18,589 Source: Annual Report on Government Measures for Persons with Disabilities, Cabinet Office, 2010, 2011; Employment Security Bureau; Ministry of Health, Labour and Welfare, 2011.

114. Public vocational training is provided at public vocational ability development centers to support disabled persons to acquiring the necessary skills for various occupations. The Vocational Ability Development Centers for Persons with Disabilities have been established to provide vocational trainings for persons with severe disabilities, intellectual disabilities, etc. In addition, training courses exclusively for intellectually disabled persons have been launched at Public Vocational Ability Development Centers. Training period is three months to three years depending on the training categories. Contracted training is another form of service to provide knowledge and skills necessary to find employment. The contracted trainings are implemented at private companies, social welfare foundations, non-profit organizations, private education and training institutions, etc.

115. A system called “Job Coach” has been provided by the Local Vocational Centers for Persons with Disabilities along with individual support plans by vocational counselors. The objective of the Job Coach is to improve the support system in the workplace and assist disabled persons in adjusting to the workplace. Services provided by the Job Coaches include support for improving working efficiency, reducing working errors, and improving human relations and communications in the workplace. These services are offered with the applications made by disabled persons, employers or other parties; and a support period is generally from 2- 4 months. The number of disabled persons who were given trial employments is 2,998, with 2,541 becoming regular employees after the trial in 2009-2010. The number of disabled persons who availed of a Job Coach Service is 3,087 in 2009-2010.

3. Employment Program for the Elderly

116. The Law Concerning Stable Employment of Older Persons revised in 2004 requires employers to take measures to secure employment of older persons, including continued employment until 65 years old. The target persons are aged 60 or above, as well those aged 45 to 59. The Subsidy for Promoting Continued Employment necessary for implementing the law was introduced in 2006. This subsidy program consists of three components: (i) Incentives for the Introduction of Continued Employment System; (ii) Subsidy for the Employment of Older Workers in Large Numbers; and (iii) Subsidy to Support Introduction of Measures, for securing employment of older persons.

117. The number of beneficiaries of the Employment Program for the Elderly is 540,000. The total expenditure of the Employment Program for the Elderly is JPY 537,706 million in 2009- 2010 (Table 35).

Table 35: Beneficiaries and Expenditure of Employment Program for the Elderly 2008-2009 2009-2010 2010-2011 Total Number of Beneficiaries of Elderly* 490,000 540,000 590,000 Total Amount (million JPY) 229,390 537,706 - * Employed by private enterprises only, not including employed by public institutions. Source: Employment Security Bureau, Ministry of Health, Labour and Welfare, 2011.

4. Employment Program for the Single-mother

118. The Ministry of Health, Labour and Welfare has the programs to support the independence of single-mother households. One of the programs is the grant for education and training. The grant, covering 40% of the education and training cost, is provided to the mothers of single-mother households who receive the Child Rearing Allowance, upon completion of the designated education and training courses but has no eligibility of benefits for vocational training under the Employment Insurance. The maximum amount of grant is JPY 200,000 (US$2,138). The other program is the Grant on Single-Mother Households for promoting advanced skills training. Under this program, the grant is given when mothers of single-mother households, with the economic level of Child Rearing Allowance recipients, enters training school for two years or more to obtain a nurse or care worker certification. The mother can receive JPY 141,000 per month as grants for a period equivalent to half of her training period (i.e., maximum 18 months) upon completion of the program.

119. Vocational training with preparatory lessons are implemented for single mothers with minimal or no employment experience while receiving the Child Rearing Allowances or other benefits under Public Assistance. This training combines preparatory lessons, such as business

35 manners as a basic step for employment with outsourced training to obtain skills and know-how required in actual workplaces. This training started as part of the Independence Support Program for Single-Mothers.

120. Table 36 shows the number of beneficiaries under the employment support program for single-mothers and amount of central government expenditure for these programs. There are 80,000 single-mothers who received JPY 3,341 million (US$ 36.68 million in 2009-2010.

Table 36: Beneficiaries and Expenditure of Employment Program for the Single-mother 2008-2009 2009-2010 Total Number of Beneficiaries 76,000 80,000 Total Amount (million JPY) 2,227 3,431 Source: Employment Security Bureau, Ministry of Health, Labour and Welfare, 2011.

5. Subsidy Program for Employment

121. The employment subsidies system was introduced under the special scheme established with the revision of the Employment Insurance Law in 1974. Employment Adjustment Subsidy is granted to business owners forced to suspend operations when the employer grants lay-offs with payment or temporarily transfers workers to related firms. The subsidy covers two-thirds (four-fifths for SMEs) of wages paid to the workers for a maximum of 300 days for three years. In addition to the wage allowance, the cost of training workers are also subsidized with JPY 4,000 (US$ 42.76) per day or JPY 6,000 (US$ 64.14) for SMEs. Furthermore, there are subsidies with the aim of providing comprehensive assistance in finding new jobs for displaced workers. Subsidies using the Special Emergency Fund for Job Creation are provided to employers employing workers on a regular or trial basis or to those who are displaced and start new businesses on their own. Subsidies are also given to employers giving free vocational training to those expecting to lose their jobs.

122. Subsidy to Support Labour Transfer is given to the employer to help them cover the cost of giving re-employment assistance planning to workers about to be laid-off, extending paid leaves for re-employment activities, or providing re-employment counselling with an office or advisor. The subsidy is also granted to cover the cost of re-employment support if the employer consigns re-employment to private job placement companies; and laid off workers are re- employed within three months. The employer hiring laid-off employees under the re-employment assistance planning also benefits from this program. Subsidies are also given to employers hiring and training elderly workers forced to leave work.

123. There are some subsidy programs to support starting new businesses. Subsidy to Newly Established Local Business Enterprises is provided to persons starting corporations that serve social purposes, providing services outsourced by the local government, or employing two or more workers for re-employment. Subsidies are also paid when a person with Employment Insurance coverage starts a new business and becomes an owner of an enterprise that is applied to the Employment Insurance System.

124. In addition, various subsidy programs have been prepared with the goal of creating new employment opportunities for hard-to-employ job applicants, such as middle or older job seekers, single mothers, and persons with disabilities. These include Special Grants to Create Employment in New and Growth Sectors for middle and older job seekers, Emergency Special

Subsidies to Create Local Employment for middle and older job seekers, Subsidy for Trial Employment for hard to employ job applicants, and Grants for Employment Development for hard to employ job applicants. Under the last grant program, those employing disabled persons are given grants equivalent to a specified percentage of wages paid to disabled employees for a certain period.

125. Table 37 shows the number of employment generated with subsidy programs and the amount of central government expenditure for these programs. About 20 million jobs were generated through these programs with an expenditure of JPY 653,472 million in 2009-2010. This amount increased compared to previous year because of emergency measures that created a negative impact from the economic crisis of 2008. The crisis affected the Japanese economy severely and economic growth was negative in 2008 and 2009. The economy recovered gradually in 2010, but severe conditions still continue.

Table 37: Beneficiaries and Expenditure of Employment Subsidies

2008-2009 2009-2010 2010-2011

Total Number of Beneficiaries (000s) 254 21,298 10,035 Total Amount (million JPY) 6,779 653,472 324,600 Source: Employment Security Bureau, Ministry of Health, Labour and Welfare, 2011.

6. Public Job Introduction System

126. To provide job seekers with suitable job opportunities, the Public Employment Security Office (PESO) was established in approximately 600 locations throughout Japan. These offices are connected online and offer services using the Comprehensive Employment Information System that immediately provides information on job vacancies and job searches through computer systems.

127. Several supplementary services were introduced to respond to various needs. Banks of Human Resources have been established in major cities to introduce eligible personnel for medium-and small-sized enterprises; and to promote employment for the elderly. In addition, about 60 part-time Job Banks and part-time Job Satellites have been established in convenient places to offer comprehensive job information services. Furthermore, the PESO has established the ‘Hello Work Information Plaza’ to support job seekers in finding employment information using searchable devices.

128. The number of job seekers employed with the services of the PESO is 2.75 million and the amount of expenditure from the National Government for the public job introduction system is JPY 97.8 billion in 2009-2010 (Table 38). These days, the employment rate through ‘Hello Work’ is low. The Government has enforced consultation service for job seeking and career building, and introduced the Job-Card System from 2008-2009.

Table 38: Number of Job Seekers Employed and Expenditure FY2008/09 FY2009/10 FY2010/11 Number of Job Seekers 2,554,354 2,755,974 2,582,331 Number of Job Seekers Employed* 164,170 178,284 179,158 Annual National Expenditure (million JPY) ** 883,628 212,083 189,026 * Those who are employed with the services of the PESO **National Government expenditure for public job introduction system

Source: Statistics on Employment Security Measures, Ministry of Health, Labour and Welfare; Main Items of Draft Budget for Ministry of Health, Labour and Welfare 2008, 2009, and 2010; Information from the Employment Security Bureau, Ministry of Health, Labour and Welfare.

7. Skill Development and Training (Public Vocational Training)

129. The Human Resources Development Promotion Law enacted in 1969 requires the national government and prefectures to provide vocational trainings for workers in need of assistance for the improvement and development of vocational ability. In accordance with this requirement, public human resources development facilities have been established to cope with various needs on vocational training. These facilities are Human Resources Development Centers, Polytechnic Junior Colleges, Polytechnic Colleges, Polytechnic Centers, Human Resource Development Centers for the Disabled, and the Polytechnic University. The total number of these facilities is 269 in 2009-2010. The Human Resources Development Centers offer comprehensive vocational trainings for unemployed job seekers, workers and graduates, while the Polytechnic Centers provide short-term vocational training for unemployed job seekers. The Human Resources Development Centers for the Disabled provide special vocational trainings for the disabled. Six months training courses are offered for the unemployed to obtain skills necessary for re-employment.

130. A system called ‘Job Card’ was introduced in 2008-2009 for persons with less working experience as full-time employees at ‘Hello Work’ and other related organizations. The objectives of the Job Card are career development through career consultation, and practical vocational training, to obtain a full-time employee position. The total number of persons benefiting from the Job Card is 224,000 FY2009. The Government targets increasing the number of beneficiaries to 3 million by 2020, and developing the system into the Japanese NVQ or National Vocational Qualification.

131. The provision for vocational training for the unemployed is covered by the Employment Insurance. The number of persons receiving vocational training as employment insurance benefits is 316,816 and annual benefit expenditure is JPY 84.59 billion in 2009-2010 (Table 39).

Table 39: Number of Vocational Training Recipients and Expenditure 2008-2009 2009-2010 Number of Beneficiaries 255,175 316,816 Annual Expenditure (million JPY)* 85,258 84,594 Annual Expenditure (million US$)* 824.78 904.36 *Budget base amount. Source: Monitoring Report on FY2010, Ministry of Health, Labour and Welfare, 2011.

8. Unemployment Benefits

132. The Employment Insurance covers most of the Unemployment Benefits. Given the current severe employment conditions, the Government has deregulated the application criteria of Employment Insurance and enhanced other programs for non-regular employees not eligible for unemployment benefits. Housing and Life support is provided to those experiencing job loss and difficulty in their housing and daily lives as a ‘Second Safety Net’. The training for the unemployed is strengthened through the improvement of the functions of ‘Hello Work’.

133. The maximum amount of housing allowance is defined by the regional norm and provided for a maximum of six months. The Living and Welfare Fund Loan Program was revised and deregulated in 2009. The maximum amount of the Loan is JPY 200,000 (USD 2,138) per

38 month, with an interest rate of 1.5% after an unredeemable period. The prefectural council of social welfare makes the approval on the loan after a screening by the municipal council of social welfare. The number of persons receiving unemployment benefit as a “Second Safety Net”21 is shown in Table 40.

Table 40: Beneficiaries and Expenditure of Unemployment Benefits 2008-2009 2009-2010 Number of Beneficiaries of Housing Support Benefits 20 55 Annual Expenditure (million JPY) 3,249 70,000 Number of Household of Living and Welfare Fund Loan 26,353 40,931 Annual Expenditure (million JPY) 17,866 25,257 Number of Beneficiaries of Training Program 91 497 Annual Expenditure (million JPY) 11,531 117,484 Total Number of Beneficiaries*(000s) 55,452 86,507 Total Amount (million JPY) 32,646 212,741 *The number of beneficiaries of Living and Welfare Fund Loan is obtained by multiplying the average size of poor household, 2.1 persons by the number of households. Source: Information from the Director-General for Policy Planning and Evaluation, 2011.

IV. SOCIAL PROTECTION INDEX AND ITS DISAGGREGATIONS

132. The revised Social Protection Index (SPI) is a unitary indicator that can be disaggregated for analytical purposes.

133. The revised SPI is calculated by Total Social Protection Expenditures per Total Potential Beneficiaries by 25% of the GDP per capita (representing average poverty line expenditures). In other words, the total social-protection expenditures spread across all potential beneficiaries are compared to poverty-line expenditures in each country.

134. The revised SPI index can be disaggregated into two components, one for the ‘depth’ of coverage and the other for the ‘breadth’ of coverage of social protection programs. The first indicator is the Total Social Protection Expenditures divided by the Total Actual Beneficiaries (i.e., the average size of benefits actually received or ‘depth’). The second indicator is the Total Actual Beneficiaries divided by the Total Potential Beneficiaries (i.e., the proportion of potential beneficiaries actually reached or ‘breadth’).

135. The revised SPI can also be disaggregated by the major categories of social protection programs: social insurance, social assistance and labor market programs. When the total expenditures per total potential beneficiaries for each major program are weighted in population terms, the program SPIs add up to the total SPI.

21 In Japan, social security systems like health insurance and pension system target all citizens equally. In addition, if people face temporary economic and social difficulties, they can receive certain benefits equally from social security systems. These existing systems are regarded as a basic safety net. The Public Assistance is sometimes called the “Last Safety-net” because it is the last measure for secure life from the social security system. Previously, basic social security could cover most difficulties, however, nowadays they are not sufficient. We need different types of safety nets or “Second Safety Nets” to fill the gaps.

136. Furthermore, the revised SPI can also be disaggregated by expenditures per potential poor and non-poor beneficiaries. Finally, gender-wise data allows the disaggregation of expenditure by gender.

137. The derivation of the SPI for poor and non-poor and the SPI women and men used poverty and gender targeting rates. The rates are based on the results of household surveys; administrative reports of social protection implementing agencies; and in some instances, on the professional judgment of the consultants.

A. Basic Statistics

Table 41: Japan Basic Statistics for 2009 Source of Statistic Unit 2009 Value Data Notes GDP (current prices) Million JPY 474,040,000 MIC GDP per capita (current Million JPY 4 MIC prices) GNI (current prices) Million JPY 483,855,800 MIC Total Population 000s 127,510 MIC Number of unemployed 000s 24,630 MIC JFY 2009-2010 and underemployed includes 21 million low paid workers Population aged 60 000s 38,419 MIC Mid-year population years and over estimate Employed Population 000s 62,820 MIC JFY 2009-2010 Population living below 000s 20,670 MIC Consultant's estimate the national poverty line based on poverty line of ¥2 million per annum per household. Disabled population 000s 7,228 MIC JFY 2009-2010 Children aged 0 to 14 000s 17,010 MIC Mid-year population years estimate Disaster Affected 000s 550 MHLW – Population Per capita poverty line Million JPY 2 MHLW Calculation based on income (annual) OECD methodology Average household size persons 2.6 MIC JFY 2009-2010 Exchange rate US$1= 93.54 MIC Calendar year GDP = gross domestic product, GNI = gross national income Source: Country Sources, 2011

B. Social Protection Expenditure and Beneficiaries

138. Expenditures on social protection activities are obtained from the Ministry of Health, Labour, and Welfare. In 2009, the social protection expenditure reached more than JPY 474 trillion, amounting to about 19.2% of GDP. There are about 214 million beneficiaries of social protection in 2009.

Table 42: Social Protection Expenditure by Category SP Category 2009 Annual Percent Expenditure (%) (million JPY) Pensions 42,147,517 46.2 Health Insurance 29,162,938 32.0 Unemployment Benefit 1,480,141 1.6 Other Social Insurance (e.g. maternity, 7,834,522 8.6 disability benefits) ALL Social Insurance 80,625,118 88.4 Assistance for Elderly 3,167,701 3.5 Health Assistance 0.0 Child Protection 1,684,211 1.8 Disaster Assistance and Relief 407 0.0 Other Social Assistance 4,156,220 4.6 ALL Social Assistance 9,008,539 9.9 Labor Market Programs 1,522,733 1.7 Total SP Expenditure 91,156,390 100 GDP (million JPY) 474,040,000 SP Expenditure Indicator ( 19.2% Source: Consultant’s estimates, 2011

139. Expenditure on Social Protection in Japan is dominated by social insurance. Mainly pensions and health insurance account for almost 90% of total social protection expenditure. Social assistance and welfare programs account for about 10% of the total; labor market programs account for 2%.

Table 43: Expenditures and Beneficiaries of Social Insurance Programs, 2009 2009 2009 Implementing Detailed Expenditure Beneficiaries Social Insurance Program Agency Category (JPY Millions) (000s)

Pension Insurance MHLW PEN 42,147,517 38,400

Medical Insurance MHLW HI 18,195,638 127,445

Long-Term Care Insurance MHLW OSI 6,872,133 - Health Service System for the MHLW HI - Elderly 10,967,300

Employment Insurance MHLW UB - 1,480,141 Workmen's Accident MHLW OSI - Compensation Insurance 749,648

Unemployment Benefits MHLW OSI - 212,741

Total 80,625,118 165,845.0 Source: Country Sources, 2011

140. Table 44 shows the individual social insurance programs in terms of expenditure and number of beneficiaries. The largest program in terms of expenditure is the Pension Insurance, accounting for 46% of the total followed by Health Care Insurance (20%) and subsidized Health Services for the elderly (12%). Expenditure for these three largest programs accounts for 78%

41 of total expenditure for all social protection programs. These figures reflect the dominance of the Japanese social protection system by targeting the elderly and providing a comprehensive health care system.

141. Beneficiaries from some programs can fall into more than one target group (e.g., beneficiaries of the Health Care for the Elderly schemes are both elderly and sick). There can also be overlaps within groups of programs (i.e. some elderly may benefit from both pension and public assistance programs). However, this is less of an issue in Japan since coverage rates tend to be high, thereby reducing the need for a detailed estimation of these overlaps.

Table 44: Expenditures and Beneficiaries of Social Assistance Programs, 2009 2009 2009 Implementing Detailed Expenditure Beneficiaries Social Assistance Program Agency Category (JPY Millions) (000s)

Public Assistance MHLW OSA 3,007,200 1,764

Welfare for the Elderly MHLW AE 3,167,701 2,857

Welfare for the Disabled MHLW OSA 1,149,020 6,606 Welfare and Protection for MHLW CP Children (Facility Service) 488,078 2,097 Welfare and Protection for MHLW CP Children (Children Allowance) 995,622 9,278 Welfare and Protection for

Children (Children Rearing MHLW CP 153,945 986 Allowance) Welfare and Protection for Children (Loans of Welfare

Funds for Mothers with MHLW CP 6,566 51 Dependent Children and Widows) Welfare and Protection for

Children MHLW CP 40,000 44 (Child Abuse Prevention)

Disaster Relief MHLW DA 407 550

Total 9,008,539 24,233 Source: Country Sources, 2011

142. Among the social assistance programs, Welfare for the Elderly has the biggest share of expenditure, followed by Public Assistance and Welfare for the Disabled. Expenditure for child protection programs is about 2% of the total while disaster relief received the smallest share.

143. Child protection programs reached the most number of beneficiaries with more than half of social assistance benefitting children (12,456,000), while almost 7 million people with physical disabilities received social assistance.

Table 45: Expenditures and Beneficiaries of Labor Market Programs, 2009 2009 2009 Implementing Detailed Expenditures Beneficiaries Labor Market Program Agency Category (JPY Millions) (000s) Employment Generation Program for

the Elderly (Silver Human Resource MHLW LMP 12,858 791 Centers) Employment Program for the MHLW LMP Disabled 18,589 221

Employment Program for the Elderly MHLW LMP 537,706 540 Employment Program for the Single MHLW LMP Mother 3,431 80

Subsidy Program for Employment MHLW LMP 653,472 21,298

Public Job Introduction System MHLW LMP 212,083 178 Skill Development and Training MHLW LMP (Public Vocational Training) 84,594 317

Total 1,522,733 23,425 Source: Country Sources, 2011

144. Expenditure for labor market programs amounted to only more than a trillion, even less than the expenditure for child protection programs. Among these programs, the subsidy program for employment accounts for the biggest share, almost half of the total labor market program expenditures.

145. Labor market programs benefited 23,425,000 people, consisting of displaced employees, elderly, and disabled.

V. ANALYSIS OF THE COUNTRY RESULTS

146. This chapter presents the results of the computation of the SPI, and its disaggregated social protection values are discussed.

A. Disaggregation by SP Category

Table 46: Disaggregation by Category Social Social Labor Market All SP Programs Insurance Assistance Programs Total SP Expenditure (Million JPY) 80,625,118 9,008,539 1,522,733 91,156,390 Beneficiaries (000s) 165,845 24,233 23,425 213,503 Reference Population (000s) 165,929 45,458 24,630 236,017 25% of GDP per capita 929,000 929,000 929,000 929,000 SPI 0.368 0.041 0.007 0.416 Source: Consultant’s estimates, 2011.

147. Disaggregation by major categories of social protection programs is calculated into social insurance, social assistance and labor market programs. When the total expenditures per total potential beneficiaries for each major program are weighted in population terms, the program SPIs add up to the total SPI.

148. As shown in the Table 47, the SPI for social insurance is 0.368. The resulting SPI for social assistance is 0.041 and 0.007 for labor market programs. It shows that the highest SPI is for social insurance programs.

149. The overall SPI for Japan in 2009 is 0.416, which implies that the average per capita social protection expenditure is about 41.6% of the poverty line expenditures (set at 25% of GDP per capita). Per capita expenditures on social insurance are about 36.8%, while for social assistance and labor market programs are 4.1% and 0.07%, respectively. The summation of the SPIs by category reflects the overall SPI.

B. Disaggregation by “Depth” and “Breadth”

Table 47: Disaggregation by Depth and Breadth Social Social Labor Market All SP Programs Insurance Assistance Programs Depth 0.523 0.400 0.070 0.460 Breadth 0.703 0.103 0.099 0.905 SPI 0.368 0.041 0.007 0.416 Source: Consultant’s estimates, 2011.

150. The Social Protection index had been disaggregated into two components – the ‘depth’ of benefits and the ‘breadth’ of coverage of social protection programs. Disaggregation by depth shows the generosity of social protection. When social protection benefits are generous, the depth number exceeds one. The disaggregation by breadth shows share of actual compared with the targeted beneficiaries. Table 48 shows the Japan’s disaggregation in terms of its depth and breadth.

151. SPI depth in 2009 is 0.460. This indicates how much social protection benefits each beneficiary received in 2009; compared with the poverty line expenditures. The 2009 depth indicates that the average social protection benefits are about 46.0% of the poverty line expenditures.

152. The derived 2009 SPI breadth is 0.905. The SPI breadth of 0.905 indicates that close to hundred percent (90.5%) actually received social protection benefits. The overall SPI is the product of depth and breadth indices.

C. Disaggregation by Poverty

153. The SPI can also be disaggregated by expenditures on poor and non-poor beneficiaries. The value gauged the total expenditures for every actual poor beneficiary as a ratio to all potential beneficiaries, both poor and non-poor.

154. The obtained SPI value for the non-poor is 0.285, while for poor is lower at 0.131. These indices imply that the average per capita expenditures on non-poor is about 28.5%, while for poor is 13.1% of the poverty line expenditures. This also implies that the benefits which

44 went to the non-poor are more than twice those of the poor recipients of social protection programs.

Table 48: Disaggregation by Poverty Status Poor Non-Poor SP Expenditure (Million JPY) 28,747,179 62,409,211 Reference Population (000s) 236,017 236,017 25% of GDP per capita 929,000 929,000 SPI 0.131 0.285 Source: Consultant’s estimates, 2011.

D. Disaggregation by Gender

155. Table 49 provides the indicator of gender focus of social protection expenditures. The key information is the Gender Targeting Rate (GTR), which is defined as the percentage of program expenditures that were received by women.

156. The SPI for men is slightly higher at 0.223 compared with women at 0.193. These figures imply that the average per capita expenditures on men is about 22.3% of the poverty line expenditures, while it is 19.3% on women. The slight difference in expenditures for women and men shows little gender disparity in the targeting of social protection programs in Japan.

Table 49: Disaggregation by Gender Women Men SP Expenditure (Million JPY) 42,269,152 48,887,238 Reference Pop (000s) 236,017 236,017 25% of GDP per capita 929,000 929,000 SPI 0.193 0.223 Source: Consultant’s estimates, 2011.

VI. CONCLUSION AND RECOMMENDATIONS

157. The 2009 SPI value of Japan is 0.416. The social insurance programs contribute most to the overall SPI with an index of 0.368, while social assistance and labor market programs have 0.041 and 0.007, respectively. The average benefits of social protection are about 46.0% of the poverty line expenditures with the depth index of 0.460. The breadth of social protection is quite high with breadth of 0.905 due to wide coverage of social insurance, especially Medical Care Insurance, which benefits almost everyone. Similarly, other insurance programs such as Pension Insurance, Employment Insurance, Workman’s Accident Compensation Insurance, and Long-Term Care Insurance, are basically compulsory. The Japanese strategy of social protection has shifted from reduction of poverty to protection from poverty by implementing insurance programs. With the results of the 2009 SPI, it can be said that Japan has achieved its objective.

158. Japanese social protection programs also include relief systems that provide an income source, particularly supporting poor and vulnerable people such as the disabled, elderly, children, and single parents. The variety of labor market programs that were recently implemented cushioned the effects of global economic uncertainties.

159. However, financial sustainability remains as serious challenge for the current system given the ageing of the population, resulting from increasing longevity as well as declining fertility. This is imposing a strain on both health care and pension systems. A number of potential measures to address these issues, which are also affecting many developed nations, needs to be given much attention.

Appendix 1 46

FORMULATION OF THE SOCIAL PROTECTION INDEX AND ITS MAJOR DISAGGREGATION

A. Structure of the SPI

1. Based from the 2011 SPI Handbook by Baulch’ and McKinley, the SPI is described as a simple and unitary indicator rather than a composite index. It is not an abstract index and should provide a “normative” reference such as the magnitude of the impact on people.

2. The formulation of the revised SPI, under the present study, refers to the total SP expenditures divided by the total potential beneficiaries, and relative to a quarter of GDP per capita. This is mathematically expressed in the following equation:

where

E represents the sum of all SP expenditures; PB represents the sum of all potential beneficiaries; and Z represents poverty-line expenditures which is 25% of GDP per capita.

3. The term “Total Expenditures per Total Potential Beneficiaries” has two parts:

(i) Total expenditures per total actual beneficiaries – this represents the Depth of the SPI; (ii) Total actual beneficiaries per total potential beneficiaries – this represents the Breadth.

4. It is noted that 25% of GDP per capita is roughly the average national poverty line across ADB’s sample of countries.

B. SPI’s Major Disaggregation

1. Disaggregation by Depth and Breadth

5. The SPI can be disaggregated into measuring the depth of coverage and also, the breadth of coverage. Depth represents the average expenditures that the government spends for every actual beneficiary as a percentage of poverty-line expenditures.

a. Depth 6. The index is measured as

(Total Expenditures divided by Total Actual Beneficiaries); Divide by Z or the poverty-line expenditure.

7. The index is represented by the following equation:

Appendix 1 47

where

D represents Depth represents the sum of all SP Expenditures, and Z represents the poverty-line expenditures.

b. Breadth

8. The breadth of coverage index is simply the proportion of the total actual beneficiaries receiving government benefits over the total potential beneficiaries. This is computed as

Total Actual Beneficiaries divided by Total Potential Beneficiaries.

9. The index is represented by the equation

where B denotes Breadth, represents the sum of all actual SP beneficiaries represents the sum of all potential SP beneficiaries.

2. Disaggregation by Component

10. The second major disaggregation involves the three-way distinction between components.

11. Each of the three components for Expenditures per Potential Beneficiaries of SI, Potential Beneficiaries of SA, Potential Beneficiaries of LMP is multiplied by its weight. The mathematical relationship between the three components is based on weighted average.

(i) SPI for Social Insurance (includes pensions, health insurance, and unemployment benefit) (ii) SPI for Social Assistance (includes assistance for the elderly, health assistance, poverty programs and child protection) (iii) SPI for Labor Market Programs (include training and public works scheme)

12. The formula for the SPI of each of the three categories can be illustrated by the formula for SPIsi. Deriving the SPI for Social Insurance proceeds as

(SI Expenditures divided by SI Actual Beneficiaries) multiplied by

(SI Actual Beneficiaries divided by SI Potential Beneficiaries) multiplied by

48 Appendix 1

(SI Potential Beneficiaries divided by All SPI Potential Beneficiaries) multiplied by 1/Poverty-Line Expenditures.

13. The SPI for SI is expressed in the equation

14. The last expression in the numerator represents the proportion of SI, which is the potential SI Beneficiaries divided by the Total SPI Potential Beneficiaries.

Z represents the poverty-line expenditures.

15. After each of the three components’ expenditures per potential beneficiaries (SI, SA, LMP) has been multiplied by its weight, all three are added together. The resulting total is the country’s SPI. This is shown as

SPI = SPI (SI) + SPI (SA) + SPI (LMP)

3. Disaggregation of Expenditures on Poor and Non-Poor Beneficiaries

16. The SPI can be disaggregated by expenditures on poor and non-poor beneficiaries.

a. SPI (Poor)

17. The index is derived at as follows:

SPIp represents the total expenditures per poor actual beneficiaries as a ratio to all potential beneficiaries both poor and non-poor. The index is computed as:

(Total Expenditures on the Poor divided by the Total Poor Actual Beneficiaries) multiplied by (Total Poor Actual Beneficiaries divided by Total Potential Beneficiaries).

18. The index is represented by the following equation:

b. SPI (Non-Poor)

SPInp represents the total expenditures per non-poor actual beneficiaries as a ratio to all potential beneficiaries, both poor and non-poor.

19. The index is derived as

(Total Expenditures on the Non-poor divided by Total Non-poor Actual Beneficiaries) multiplied by (Total Non-poor Actual Beneficiaries divided by Total Potential beneficiaries).

Appendix 1 49

20. The index is represented by the following equation:

21. When SPI (Poor) is multiplied to SPI (Non-Poor), the product represents the SPI of the country.

Appendix 2 50

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