I firmly believe that the obsession with fiscal discipline has led to Japan’s long-term economic stagnation. The exact same logic applies to social insurance. When the Ministry of Finance, which holds broad authority over fiscal matters, can only think in terms of “collecting and redistributing,” we cannot expect the Ministry of Health, Labour and Welfare—or the academics they gather for their councils—to do any better.
It is a vicious cycle, an infinite loop: “Collect more → the economy worsens → finances deteriorate further → collect even more.” This happens because they fail to realize that we must first achieve an economy where wages rise and growth is on a stable track. Japan and Germany are probably the only countries in the world shouting about “funding shortages” while sitting on massive current account surpluses.
The Disaster of Abolishing the “106-Man Yen Wall”
In this context, the government has proposed a pension reform bill to abolish the so-called “106-man yen wall.” Note that this is an abolition, not a raise. It is a plan to squeeze social insurance premiums out of even more non-regular workers. This earns zero points. As I have stated, we should not implement any policy that reduces take-home pay right now. Since the pension system already uses a “macro-economic slide” for payouts, the 106-man yen wall should instead be indexed to wages or prices to increase disposable income. Why won’t they do this?
The DPP’s Misstep: Extending the Contribution Period
Meanwhile, the Democratic Party for the People (DPP) has suggested “slightly extending the payment period” for the national pension. If this refers to raising the mandatory contribution age to 64, it isn’t just zero points—it’s minus 50 points.
Does this party not understand how much pension anxiety drags down an economy where wages aren’t rising? The income for those over 60 is already limited. Forcing them to pay premiums for another five years is hellish. Furthermore, this will increase the labor supply, putting even more downward pressure on wages. In a country where the future looks so bleak, who would want to have children? We are heading toward a future where “NISA and iDeCo flourish while the economy perishes.” No pension reforms should be attempted until we can confirm that wages are rising steadily.
Conclusion: Focus Solely on Wages
As I’ve written before: once wages rise, people—including the elderly—will naturally start working more. As a result, the number of people paying into the social insurance system will increase without the government doing a thing. Right now, we should be thinking about nothing other than raising wages.
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