On December 19, 1991, the Ministry of Labour's Central Council on Employment Security proposed that the government overhaul unemployment benefits under the existing employment insurance scheme.
The costs required for Employment Insurance Services are presently covered by contributions paid by both employers and employees as well as by a subsidy from the National Treasury. The contributions are as a rule 1.45 percent of the wage bill, of which 1.1 percent is used for the costs for unemployment benefits and are paid by both employers and employees at a rate of 0.55 percent each of the wage bill. The remaining 0.35 percent of the wage bill, paid only by the employer, is used for services for the stabilization of employment. In addition, a quarter of the costs for unemployment benefits are covered by a subsidy from the National Treasury.
The proposed plan for reviewing unemployment benefits calls for: first, reducing contributions (to be used for unemployment benefits) by 0.3 percent from the current 1.45 percent in fiscal 1993; second, cutting the subsidy from the National Treasury by around 20 percent; and third, as a temporary step for fiscal 1992, lowering contributions by 0.2 percent at a legally set rate and reducing by around 10 percent the subsidy from the National Treasury.The proposed measures to reduce contributions and the subsidy from the National Treasury, in compliance with the regulations stipulated by law, are based on an assessment of the recent revenues for employment in funds.
The reduction in the subsidy from the National Treasury faced strong obiections from workers; however, the administration presented its view that it will begin studying basic issues regarding the employment insurance scheme.
Responding to the proposal made by the Council, the Ministry will submit to the next regular Diet session bills revising the Labour Insurance Levy Law and the Employment Insurance Law. The contributions and the subsidy from the National Treasury will be reduced for the first time in 17 years and 33 years, respectively. The proposed measures, when implemented, will enable both the employer and the worker to pay 0.4 percent of wages and salaries as contributions to the program. It means that the contributions will be reduced by 6,750 Yen for a worker with an annual income of 4,000,000 Yen and by 9,000 Yen for an employee with an annual wage of 6,000,000 Yen.
On the other hand, the wage bill of insurance funds amounted to around 970,000,000 Yen in 1990, a quarter of which was financed by a subsidy from the National Treasury. A 20 percent cut in the subsidy will lead to a reduction in annual expenditures of around 50,000,000 Yen.
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