Asian Development Bank Institute (ADBI) and Policy Research Institute (PRI) Joint Workshop Aging Population in Asian Countries and Its Impact on Fiscal Sustainability 28th March 217 @ADBI Conference Room Demographic change and social security policy responses - the case of Japan - Reiko Hayashi, Ph.D Director of International Research and Cooperation
Population in million 14 12 1 8 6 4 2 Population by broad age group and aging rate, 192-26 (in million) 35 36 35 32 29 26 24 23 22 2 18 93 17 16 15 14 87-19 years old 13 34 12 36 11 37 56 38 79 79 78 75 71 68 66 63 38 59 54 5 36 46 44 34 76 41 3 74 2-64 years old 26 71 68 63 56 46 51 27 31 35 39 41 3 3 3 4 4 5 5 6 7 9 11 12 15 18 22 26 29 34 36 37 37 37 39 39 38 36 35 65 years old and older 192 193 194 1947 195 1955 196 1965 197 1975 198 1985 199 1995 2 25 21 215 22 225 23 235 24 245 25 255 26 Year 21 128.57 215 127.11 Projection Source : 192 to 215 by Population Census, Statistics Bureau, Ministry of Internal Affairs and Communications. 22 to 26 by Population Projections for Japan, medium-fertility and medium-mortality assumption (212) National Institute of Population and Social Security Research 45% 4% 35% 3% 25% 2% 15% 1% 5% % Aging rate (%)
Very quick ageing in Japan Years required for aging rate to rise from 7% to 14% France 1864 115 1979 Sweden 1887 85 1972 United Kingdom 1929 46 1975 Australia 1939 73 212 Hungary 1941 53 1994 United States 1942 72 214 Canada 1945 65 21 Spain 1947 45 1992 Japan 197 24 1994 Kazakhstan 1994 6 254 South Korea 1999 18 217 Singapore Thailand China Sri Lanka Projection 1999 22 22 27 2 2 23 2 219 222 225 227 Vietnam 216 18 234 India 223 28 251 Indonesia 225 25 25 185 19 195 2 25 Year Note : The year to the left of the bar designates the year in which the percentage of the population aged 65 and above (aging rate) reached 7%; the number to the right of the bar designates the year when the aging rate attained 14%. The number on the bar designates the years required for that increase. Source : Hungary by Kinsella and Wan He (29); Kazakhstan, Vietnam, India, and Indonesia calculated using UN (215) and others by IPSS (216)
Dependency ratio 11 1 Dependency ratio 9 8 7 6 5 4 Dependency ratio = Pop Aged -14+65~ Pop Aged 15-64 3 194 195 196 197 198 199 2 21 22 23 24 25 26 27 28 29 21 211 Year World Japan Indonesia S.Korea Thailand China Vietnam Source : United Nations, DESA, Population Division (215). World Population Prospects: The 215 Revision, DVD Edition.
Social Security in Japan Health Insurance Pension Long term care insurance Welfare Public assistance Disability Policy to mitigate low fertility Labour insurance
Universal Pension Coverage (1961) and expansion Contributors in Million 8 7 6 5 4 Number of contributors (insured, members and dependents) by pension schemes 1 9 8 7 Proportion of people receiving public pension by age category 3 2 1 Coverage % 6 5 4 197 191 1913 1916 1919 1922 1925 1928 1931 1934 1937 194 1943 1946 1949 1952 1955 1958 1961 1964 1967 197 1973 1976 1979 1982 1985 Seamen's Insurance Mutual Aid Association of Private School Personnel Mutual Aid Association of Public Corporation Employees, etc. Mutual Aid Association of Local Government Employees Mutual Aid Association of National Government Employees Agriculture, F.F. Organization Employees Mutual Aid Association Farmer Pension Fund National Pension Employees' Pension Insurance Source : Statistics Bureau (1988) Historical Statistics of Japan 3 2 1 1975 198 1985 199 1995 2 25 21 215 22 All age Male All age Female 6+ Male 6+ Female 65+ Male 65+ Female Source : Ministry of Health, Labour and Welfare Comprehensive Survey of Living Conditions
Reserve Funds of Public Pensions 3 25 2 Trillion Yen 15 1 5 197 198 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 Mutual associations of personnel of agricultural, forestry and fishery organizations Private school teachers and employees mutual aid association Local government employees mutual aid association National and Related Public Service Mutual Aid Association National Public Service Mutual Aid Association Seamen's Insurance National Pension Employees' Pension Funds Employees' Pension Insurance Social Benefit : Pension Source : National Institute of Population and Social Security Research Japanese Social Security Statistics DB Table 24, 26 http://www.ipss.go.jp/ssj-db/e/ssj-db-top-e.asp
Maximization of demographic dividend Fiscal loan fund 3 3 25 By financial sources 25 By purposes 2 2 Trillion Yen 15 Trillion Yen 15 1 1 5 5 Gov t guaranteed bond, gov t guaranteed borrowed money Postal life insurance and annuity Other Trust Fund Bureau National pension Welfare pension Postal savings Special account for industrial investment Source : Ministry of Finance Budgetary Statistics, fiscal year edition In Statistics Bureau (1988) Historical Statistics of Japan Trade and economic cooperation Fundamental industry Local area development Transport and communication Road National land security and disaster restoration Agriculture, forestry and fisheries Small and medium enterprises Cultural and educational facilities Welfare facilities Life environment improvement Housing
Pension fund operation Until 2 MHLW Pension special account Fund deposit Operation return MOF Trust Fund Bureau Loan Return of interest Fiscal Loan Fund Operation (Public works etc.) From 21 MHLW Pension special account Fund deposit Operation return Government Pension Investment Fund (GPIF) MHLW: Ministry of Health, labour and Welfare MOF: Ministry of Finance Source : Ministry of Health, Labour and Welfare http://www.mhlw.go.jp/stf/seisakunitsuite/bunya/nenkin/nenki n/zaisei/tsumitate/tsumitatekin_unyou/darega_unyou.html Financial Market
Reforms 1985 : Introduction of Basic Pension From household to individual 21 : Defined Contribution Plan 21 : Pension reserve funds operation from MOF to GPIF 21 : Abolition of Social Insurance Agency in 21 Replaced by Japan Pension Service 215: Macro Economic Slide : fixing premium and sliding benefit Transparency : Information available through internet (>< Obscurity by complexity)
1 Universal Health Coverage in 1961 Mutual Aid Association (Civil servant) Medical Care System for Elderly in the Latter Stage of Life Seamens' Insurance 8 National Health Insurance (Farmer, informal sector) Mutual Aid Association Coverage % 6 4 Health Insurance Managed by Government (Small company) National Health Insurance Health Insurance for Day Labourers 2 Health Insurance Managed by Association (Large company) 1926 1928 193 1932 1934 1936 1938 194 1942 1944 1946 1948 195 1952 1954 1956 1958 196 1962 1964 1966 1968 197 1972 1974 1976 1978 198 1982 1984 1986 1988 199 1992 1994 1996 1998 2 22 24 26 28 21 Health Insurance - Managed by Government Health Insurance - Managed by Association Sources : Ministry of Health and Welfare (1976) Historical Statistics of Japan (Statistics Bureau), Social Security Statistics of Japan (IPSS), Takagi (1994)
Free medical care for the elderly from 1973 by the Partial Revision of the Act for the Social Welfare for the Elderly Number of patient per 1, population 25, 2, 15, 1, 5, Elderly =7+ Emergence of Elderly hospital Age 1-4 5-14 15-24 25-34 35-44 45-54 55-64 65-74 75+ 194 195 196 197 198 199 2 21 22 Year Note : Number of patient is the sum of out-patient and in-patient during one day of the survey Source : Patient Survey, Ministry of Health, Labour and Welfare
Health and Medical Services Act for the Aged in 1983 Financing of elderly medical expenses before and after the Elderly Health System Before Owed by Insurers 82% Employer-based Health Insurance National Health Insurance Government 18% National Govt. Government 18% Local Govt. After Employer-based Health Insurance National Health Insurance Owed by Insurers 7% Employer-based Health Insurance National Health Insurance Government 3% National Govt. Local Govt. By the number of insured elderly 5% Adjusted by the national average rate of elderly 5% Source : Health and Welfare Statistics Association (1985) Journal of Health and Welfare Statistics
Launch of long-term care insurance system in 2 Source of financing Primary insured Aged 65+ Premium Secondary insured Aged 4-64 Subsidy National Prefectural Municipal Insurer and Operator Municipalities (Shi-Ku-Cho-Son 市区町村 ) Care-needs assessment and Care-Plan elaboration by Caremanager Copayment Operation In-home services Facility services Community -based care services Nursing care prevention services Community -based nursing care prevention services
Increasing expenditure medical, long-term care, welfare for the elderly 9 Thousand yen per person aged 65 and over 8 7 6 5 4 3 2 1 22 24 26 28 28 29 29 34 32 33 36 39 42 46 48 52 6 61 64 67 65 219 19 252 21 283 31 335 36 374 394 422 444 465 471 489 5 51 8 8 8 6 3 2 2 2 2 3 3 3 145 8 178 195 28 221 224 219 224 227 238 249 256 263 525 532 541 541 558 558 558 572 542 544 515 518 52 518 513 513 517 526 537 546 544 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 Medical expenditure Long-term care expenditure Welfare expenditure Year Source : ESCAP (215) Long-term Care of Older Persons in Japan SDD-SPPS Project Working Papers http://www.unescap.org/resources/long-term-care-older-persons-japan
Future prospects 12 1 214 Social Benefit 8 Trillion yen 6 4 2 Pension 195 1951 1952 1953 1954 1955 1956 1957 1958 1959 196 1961 1962 1963 1964 1965 1966 1967 1968 1969 197 1971 1972 1973 1974 1975 1976 1977 1978 1979 198 1981 1982 1983 1984 1985 1986 1987 1988 1989 199 1991 1992 1993 1994 1995 1996 1997 1998 1999 2 21 22 23 24 25 26 27 28 29 21 211 212 213 214 Year Pension Medical Care Longterm care Welfare & Others Source : National Institute of Population and Social Security Research Financial Statistics of Social Security
1+ 95 9 85 8 Active ageing elderly NOT dependent Revision of Act on Stabilization of Employment of Elderly Persons Population by labour status 21 in 212 75 7 65 6 55 5 45 4 35 3 25 2 15 1 5-1,5, -1,, -5, 5, 1,, 1,5, Male Employed Male Unemployed Male Housework Male Education Male Other Male Child Male Unknown Female Employed Female Unemployed Female Housework Female Education Female Other % 6 5 4 3 2 1 Elderly (65+) labour force participation rate 196 198 2 22 Male Female Source : Statistics Bureau, Population census Source : Statistics Bureau, Labour Force Survey
Increasing healthy life expectancy along with life expectancy, 21 to 213 21 72.65 12.28 (84.93) Male Female 24 27 21 213 21 24 27 72.69 73.36 73.62 74.21 69.4 69.47 7.33 8.67 9.17 8.86 12.9 12.63 12.68 12.4 (78.7) (78.64) (79.19) (85.59) (85.99) (86.3) (86.61) 21 7.42 9.13 (79.55) 213 71.19 9.2 (8.21) 1 2 3 4 5 6 7 8 9 1 Healthy life expectancy (years) Unhealthy years (Life expectancy) Source : Health Japan 21 (the second term) Progress of each objective, Ministry of Health, Labour and Welfare, http://www.mhlw.go.jp/file/5- Shingikai-161-Daijinkanboukouseikagakuka-Kouseikagakuka/sinntyoku.pdf
5% 4% 3% 2% 1% Further reforms Elderly income security and redistribution Proportion of people receiving public assistance % 194 196 198 2 22-19 2-64 65+ Tax financed Basic pension? Raising pensionable age along with life expectancy or healthy life expectancy? Increasing irregular employment > flexsecurity and link with employment insurance Source : National Institute of Population and Social Security Research Statistics on Public Assistance http://www.ipss.go.jp/s-info/j/seiho/seiho.asp