Referring to “grants in money,” Sontoku Ninomiya once said, “Such help only induces avarice and indolence, and is a fruitful source of dissensions among the people … poverty must be made to rescue itself” (excerpted from Representative Men of Japan by Kanzo Uchimura). The number of welfare recipients reached a record high of 2,170,000 in 2015, exceeding the number during the post-war reconstruction period, and public funds spent on welfare have increased to 3.8 trillion yen. The system should be reformed to incorporate incentives that encourage people to become independent and to pull themselves out of poverty.
1. Reduce Welfare Benefits to a Level Below Basic Pension Benefits, or Switch to a Basic Income System!
Japanese government spending on welfare swelled to 3.8 trillion yen in 2014. About half of this amount was allocated to medical assistance. Under the current system, those eligible for welfare can receive medical services for free. In addition, they are exempt from taxes and social insurance premiums, are not required to pay NHK subscription fees, and are entitled to many other protective rights. Furthermore, the welfare benefits they receive are higher than minimum wages or pensions. This is why budgets for welfare are growing.
Social safety nets are necessary but the problem lies in the fact that, due to overprotection, incentives to become independent from the system do not function. While the basic pension is about 65,000 yen, the welfare benefit for a single adult is about 80,000 yen and that for a family of four is about 200,000 yen. This leads to the conclusion that it is better to receive welfare than to work hard and pay for someone else’s pension benefits. The system should be reformed as follows: Welfare benefits are gradually reduced to a level below that of pensions and elderly people reaching the pension eligibility age are required to switch from welfare to the pension. Alternatively, adopt a basic income system to eliminate any perception of unfairness.
2. Require Welfare Recipients to Pay 30% of Their Medical Expenses!
About half of the government’s spending on welfare is allocated to medical support. Those eligible for welfare can receive medical services for free, with whatever fees they pay to doctors reimbursed. If medical services are free, it’s understandable that people avail themselves of as many medical services and medicines as possible. However, there is no need to differentiate between welfare recipients and other people. For medical services, a system under which welfare recipients, like others, are required to pay 30% of the costs should be adopted.
3. Encourage People to Work Through Incentives!
The issue with the current welfare system is not related to advanced age, single-parent families, or illness or injury, but to the increase in the number of working-age households receiving welfare. The number a decade ago was 72,000 households; it has increased to 290,000 households today. It is necessary to encourage people to work as a basic criterion for receiving welfare benefits and to create a system where earned income can be added to welfare benefits in order to offer an incentive to work.
4. Limit the Period of Eligibility for Benefits!
The most important aspect of welfare system reform is how to encourage welfare recipients to get off welfare. The issue with the welfare system is that once people go on welfare, their dependence tends to be prolonged and it becomes harder for them to get off. I therefore propose limiting the period of receiving welfare benefits (for example, to three years). Being a time-limited safety net, this system will compel welfare recipients try to find a way to become independent themselves and make efforts to achieve their goal.
The system should provide an incentive to stay off welfare, such as a reduction in the amount of benefits paid if they become newly eligible, unless there are unavoidable circumstances, such as illness.