Japan's Safety Net Inequality: Labor Market Transformation and Social Insurance

2020/04/21

Employment insurance provides a safety net when people lose their jobs, but do you know what percentage of unemployed people actually receive employment insurance (unemployment benefits)?

The answer is less than 30%. Conversely, more than 70% of unemployed people do not receive unemployment benefits. This is largely because many people in non-regular employment lose their jobs without meeting the eligibility requirements.

Not only is it difficult for people in non-regular employment to benefit from employment insurance, but they also tend to fall through the cracks of social insurance—such as pensions and health insurance, which are supposed to be part of "universal coverage"—due to delinquent premium payments.

If only those in stable forms of employment, such as regular employment, can enjoy the benefits, is there any meaning to such a safety net? This was the underlying concern that led me to write this book.

That said, the "safety net gap" between regular and non-regular employment has been widely pointed out. In this book, I go a step further and consider measures to correct this gap, along with the dilemmas they entail.

Relief measures for those who fall through the safety net include expanding welfare such as public assistance and expanding the scope of social insurance (employee insurance), but the latter has a larger scope of impact. This is exactly what the government is currently pursuing, and I have no intention of denying that direction.

However, simply expanding the application of social insurance may not lead to enhanced benefits, and it may not be effective for those who are unemployed or work intermittently in the first place. This is particularly important when considering support for the "employment ice age" generation.

Relying on self-help efforts by families or corporate efforts to restore a frayed safety net also raises concerns about unfairness and side effects. As labor participation by women and the elderly increases, careful design is required to adapt social insurance to these changes.

However, there were also things that were unexpected at the time of writing. Discussions on expanding the application of employee insurance, measures to secure employment until age 70, and the separation of childcare leave benefits have progressed rapidly over the past six months. Therefore, would it be a stretch to say that it is important not to lose sight of the context of the discussion from the perspective of this book?

Japan's Safety Net Inequality: Labor Market Transformation and Social Insurance

Tadashi Sakai

Keio University Press

352 pages, 2,700 yen (excluding tax)

*Affiliations and titles are as of the time of publication.