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The repayment period will start at the beginning of next year for the support loans extended by the government to people whose income declined due to the COVID-19 pandemic. However, there are likely many people who have lost their jobs and therefore will struggle to repay the money.
The central and local governments need to help people rebuild their livelihoods through various programs.
As part of its COVID-19 measures, the government established a special loan program that allowed people to borrow up to ¥2 million under the livelihood welfare fund program from March 2020 to September this year. About 3.35 million loans were taken out, amounting to about ¥1.4 trillion.
Many people were forced to leave their jobs or take a leave of absence due to the pandemic. The special loans were not an insignificant measure.
The government will provide relief measures to people who are expected to struggle to repay the loans. Households exempt from residential tax will not have to pay the money back, and people who are unemployed or recovering from illness will, in principle, be allowed to defer repayment for one year. Measures to support people who are experiencing hardships are understandable.
However, exempting people from repayment, or postponing the return of the money, is not a fundamental solution. It is important to support the employment of people in need and strengthen the foundation of their livelihoods so they can repay the loans on their own.
Although economic activity has normalized and a labor shortage is widely reported, people who have been out of work for a long time tend to be shunned by companies. People with emotional problems also have difficulty finding jobs at Hello Work public job placement offices.
The municipal government of Toyonaka, Osaka Prefecture, has established a program to create an individual support plan for people in need who are having difficulty finding a job. For example, the city has a system in place to help such people get back into a work routine — through such roles as cleaning — and receive training at companies to aid them in finding a job.
Last year, more than 200 people found jobs through this support system.
This shows how important it is to employ measures that are tailored to each individual’s circumstances. Such efforts must be expanded nationwide.
Public assistance is the last safety net for people in need. However, many people hesitate to apply for it due to prejudice against and misunderstanding of the system.
Needless to say, public assistance is a right of citizens guaranteed by the Constitution. The government should encourage people who are in need due to unemployment or for other reasons to apply without hesitation.
Separately from COVID-19 loans to individuals, the repayment of effectively interest-free and unsecured loans to small and midsize companies has begun. Some companies are reportedly holding off on hiring and capital investment that they could have made in normal circumstances, in anticipation of using such funds for repayment.
Of course, if such companies become unable to continue their business due to difficulty repaying their respective loans, all this is meaningless. Flexible measures should be considered based on an accurate understanding of each borrower’s situation.
