Short-Term Measures Are Not Enough to Resolve Problem

Editorial

12:40 JST, July 10, 2023

As labor shortages continue, an increasing number of companies want part-time workers to work more. Measures should be taken to ensure that tax and social insurance systems do not discourage housewives and others from working.

The government is considering measures to address the “annual income barrier” for part-time workers. The government plans to formulate a “package of measures to strengthen support,” including subsidies for companies that raise wages, as early as this autumn.

The annual income barrier refers to an issue in which part-time workers are required to pay taxes and social insurance premiums once their income reaches a certain level.

For a wife who is a dependent of her husband, if her annual income reaches ¥1.3 million, or ¥1.06 million if working for a company with 101 or more employees, she must enroll in employee pension and health insurance programs for herself, which reduces her take-home pay due to the premium burden.

For this reason, there has long been a practice of reducing the number of work hours so that part-time income does not exceed the threshold.

In recent years, the minimum wage has been raised, resulting in an increase in the hourly wage for part-time workers, which has further strengthened the tendency for housewives and other part-timers to reduce their working hours. Some in the business community have called for creating an environment in which housewives and others can work longer hours.

In order to improve the current situation, the government plans to subsidize up to approximately ¥500,000 per employee for companies that raise wages so that social insurance enrollment does not reduce take-home pay. The government will expand the previously existing subsidies for unemployment insurance.

The subsidies are intended to be used as a source of funds for wage hikes and for social insurance premiums, half of which are contributed by employers. It is hoped that companies will make use of the subsidies so that people will be able to work more if they wish.

However, while the subsidy system may be effective as a temporary measure to compensate for labor shortages, it is not a fundamental solution. It could also mean that once the subsidies end, people will return to their former ways of working.

During meetings of a Health, Labor and Welfare Ministry council, a plan has surfaced to reduce part-time workers’ pension premiums to a certain extent so that housewives and others can work without worrying about the annual income barrier. Effective measures must be discussed toward the 2025 pension system reform.

Many people mistakenly believe that the annual income barrier means “the more you work, the more you lose.” Even if a person’s immediate take-home pay is somewhat reduced due to the cost of premiums, their enrollment in the pension system will add to the amount of benefits after retirement.

With life expectancy increasing for both men and women, the public pension scheme is becoming more and more important to support people in their post-retirement lives.

It is important for the government to explain the structure of the pension system for part-time workers in an easy-to-understand manner, and to encourage people to enroll in the employee pension system.

(From The Yomiuri Shimbun, July 9, 2023)