Japan: Economics in Everyday Life

24. Why Are So Few People on Welfare in Japan?

24 Why Are So Few People on Welfare in Japan? Yoko Kimura In January 1995, the Great Hanshin Earthquake struck Kobe City and the surrounding areas, killing more than six thousand people and making more than three hundred thousand people homeless. Yet news reporters covering the disaster noted that large numbers of households that qualified for disaster relief refused to apply for public assistance . Why are the Japanese reluctant to seek public assistance? Japan imposes stringent qualification rules on welfare recipients . In 1995, while still caught in the grips of the country’s worst and longest economic recession since World War II, less than 1.5 percent of all households and 0.7 percent of the population in Japan received general welfare assistance. The percentage of Japanese households receiving welfare assistance has declined from 2.3 percent in 1965 and 2.0 percent in 1985. Japan’s welfare system is designed to discourage able-bodied individuals from receiving public assistance. In 1995, 84.1 percent of the households receiving public assistance were either elderly or sick or handicapped households, and only 8.8 percent were single-parent households headed by women with dependent children. 179 U.S. Welfare Dependency In contrast to Japan’s low welfare dependency, in 1993, 8.6 percent of American households received cash public assistance; 9.4 percent of the households received food stamps; 5.3 percent received housing assistance; and 13.5 percent received medical care assistance through the Medicaid program. In 1992, 13.5 percent of the U.S. population participated in at least one major means-tested public assistance program. Strikingly, 49.0 percent of the population in families with female head of household (no spouse present) and related children under eighteen years of age received at least one type of major meanstested welfare assistance. In that year, the United States spent an equivalent of 3.5 percent of the gross domestic product on welfare assistance, compared to only 0.3 percent in Japan. Rising welfare dependency has become a social problem of great concern to Americans, prompting the U.S. Congress and the Clinton administration to pass a landmark welfare reform bill in 1996 that would drastically curtail public assistance benefits and eligibility in America. Who Qualifies to Receive Welfare Assistance in Japan? In Japan, households, not individuals, qualify for welfare assistance . By contrast, in the United States, welfare eligibility focuses on the individual. Japanese law does not precisely define who is poor, granting some discretion to the local government, even the individual social worker, in deciding who qualifies for welfare assistance. As a rule of thumb, assistance is given to bring the recipient’s income up to 60 percent of the average income of laborers. Assets, such as home equity, are converted into income streams and included in the calculation. Qualifying households can receive cash assistance to pay for food and clothing, housing, compulsory education (including school lunch), funeral costs, maternity costs, and job-related 180 Japan: Why It Works, Why It Doesn’t (e.g., job training) costs. They can also obtain free medical care. About three-quarters of the cost of welfare assistance is paid by the national government; local governments administer the programs and pay the other 25 percent. Reasons for Low Welfare Dependency Why is the welfare dependency ratio lower in Japan? Japan’s fast economic growth after World War II produced low unemployment rates, high wages, and hence fewer poor people (see chapter 26). Japan also has one of the most equal distributions of income among developed countries. Improving social security benefits means that fewer elderly people need financial assistance. The design of Japan’s welfare system also keeps dependency low. The law stipulates that a household cannot qualify for welfare assistance if its members have direct (lineal) blood relatives (or, if there is a relative living with them) who can provide financial support. Lineal blood relatives include parents, children , and siblings. Sometimes family courts determine which relatives must provide financial support for needy family members . By tradition, Japanese children were expected to care for their elderly parents. In a Japanese family the eldest son and his wife often live with his parents and are expected to provide financial support as well as personal care. More than 60 percent of the Japanese elderly live with their extended families. Since husbands and wives are not blood relatives, the law further stipulates that spouses must support...