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.Vol.31-No.03 March 1,1992
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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