Japan’s employment insurance premiums to hit record low

Government plans to cut mandatory contributions to encourage spending by employees and their employers

Insurance News

By Gabriel Olano

The government of Japan will lower premiums for the national employment insurance scheme for fiscal year 2017-2019 to 0.6%, down from 0.8%. This is the lowest ever rate for the program.
According to the government, the rate cut was done in the hopes of spurring personal consumption and corporate spending.
Half of the premium is deducted from an employee’s paycheck, while the employer shoulders the remaining half. For example, if an employee earns ¥4 million (US$ 35,300) annually, the reduction in premiums will save the employee and the employer ¥4,000 (US$35.30) each.
The government also plans to reduce the State’s share in unemployment benefits to 2.5%, down from 13.75%, also reaching a record low.  This is still part of the government’s effort to reduce spending. The planned reduction, the first in a decade, will begin in FY 2017, and will be effective for three years.
According to sources, these plans will be presented to a subgroup meeting of the Health, Labor and Welfare Ministry’s Labor Policy Council in December. Afterwards, the government will finalize the plans before year-end, while a bill will be filed once the Diet resumes its regular sessions next year.
The employment insurance system has a record-high balance of ¥6.43 trillion due to an improved job market, so sources believe that the plan to cut down on premiums is financially sound.

Related stories:
Mitsui Sumitomo introduces bitcoin insurance
Tokio Marine launches disaster information campaign for homeowners
Insurance sector faces turn for the worse

Keep up with the latest news and events

Join our mailing list, it’s free!