Transcript The Japanese Approach to Long-Term Care for Older People 3

Implications of Population Ageing in East Asia An Analysis of Social Protection and Social
Policy Reforms in Japan, Korea and Taiwan
Tetsuo Ogawa
University of Oxford
Research and the Paper Structure:
1. I intend to adopt an Analytical Framework, which I call “the PEST”,
to examine aspects of the significant phenomenon of population
ageing and reforms in social policies in Japan, Korea and Taiwan
2. Social Policy Reforms in Japan, Korea and Taiwan concerning
population ageing: The outlines of policy responses addressing ageing
issues in the region and analyses the principles underlying the ongoing reforms and practice
Cases: Reforms of Pensions, Health and Long-Term Care in three
countries
3. Policy Solution and Prospective Policy Action: the Imperatives for
Social Policy Changes and Prospective Reforms in the Future.
4. Conclusion
1. The PEST Analytical Framework:
Various Views about Population Ageing and Social Policy from International Organisations:
1)
OECD (1998) states that responding to these challenges requires social policy solutions. It states
‘spending pension, health and long-term care must be attained for older people (OECD, 1998)’.
2)
Strategic frameworks need to be in place at the national level in order to harmonise and sustain ageing
reforms, and to build-up public understanding and support of older people in the region (ISSA, 2002:
13).
3)
‘A sustained decline in fertility rates underlines a rapid ageing and decline of Japan’s population that can
be expected to continue well into this century. This dramatic shift will have profound social and
economic implications, but the transition appears manageable if appropriate policy measures are ever
taken (IMF, 2001)’.
4)
It must be necessary to note that in the age of globalisation, international co-operation may also facilitate
the success of the social protection and reform process (UN, 2002).
An Attempted Analytical Framework of Social Protection and Social Policy Reform
There is the very issue of how to address responses the Japanese, Korean and Taiwanese
societies have taken to population ageing: in what ways have they set policy principles to
guide policy reforms which are applicable, with varying degrees of urgency, to the three
different societies?
Explaining the PEST Model:
Influences by four major changes, i.e.,
1.
2.
3.
4.
Political Changes
Economic Changes
Social Changes
Technological Changes concerning Medical
Science
> External and Internal Factors influencing a country’s
social policy relating to population ageing in a wider
context of Political Economy (Paul Pierson, 2001 et
al)
Methodological Issues: Macro-Analysis
Method 1: Factor Analysis Data by the OECD, National
Governments
Population Ageing
External Factors:
International Migration
and Labour Market,
and Global Pension Fund
Political Economy
Technology
Social Changes:
The Advancement of Medicine
Social Value Changes
Method 2: Micro-Analysis
Using Input and Output Tables: The Analysis
of ‘Industrialisation in Welfare Services’

In Japan, the 2000 Input and Output Tables
‘Creation of the new ‘Nursing Care’ sector’
In line with the introduction of the Long-Term Care Insurance
System in April 2000, new ‘Nursing Care (In-home)’ and ‘Nursing
Care (In-facility)’ sectors were introduced for the 2000 I-O Tables.
Basically, these sectors cover the services provided through the LongTerm Care Insurance System. As annual values are needed for I-O
analysis, the values from January to March 2000 were calculated for
annual estimation. These sectors exclude ‘the purchase of welfare tools
and equipment’ and ‘housing renovation services,’ which come under
In-home services.
2. Social Policy Reforms in Japan, Korea and
Taiwan concerning population ageing
Economic Implications of Demographic Changes:
1) Population ageing reduces output growth and limits increase in
economic welfare.
2) Debate: Political Economy of Welfare State versus Finance of
Welfare State.
3) Priority Areas and Policy Co-ordination:
Pension, Health and Long-Term Care (protective social policy
perspective)
and
Employment (productive social policy perspective)
3. Policy Solutions and Prospective Policy
Actions

The Need to Change Social Policies >What is the
Policy Imperative?
 Policy Making for What? > No Open Method
 Discussion: From Selectivism to Universalism in
welfare entitlement
i.e. avoiding the fragmentation of Welfare Access
and integrating ageing-related policies to create a
Life-Saving System based upon universal rights
A Consequence brought by population ageing
in Japan:
By 2025, one older person will fall on roughly two persons of working
age, which will leave Japan with a significantly higher old-age
dependency ratio than any other country in the world (OECD, 1998).
The key issues are:
 How to balance resources between the working
population and older population?
 Large increase in the role of government in transferring
resources from the working age to old age?
 How to sustain the current low level of social protection
expenditures and avoid excessive financial pressure on the
working population

Old-Age Dependency Ratios (U.N. World Population)
Japan
2000 27
2025 47

Canada
France
Germany Italy
U.K.
U.S.
20
41
28
36
25
36
27
36
21
33
28
43
Japan’s Potential Support Ratios with 5 Scenarios
2000
2025
2050
Medium
Variant
Medium Variant
with Zero
Migration
Constant total
Population
Constant
age Group
15-64
Constant
Ratio 1564/65 Years
or Older
3.99
2.24
1.71
3.99
2.24
1.71
3.99
2.35
2.07
4.03
2.59
2.19
4.77
4.77
4.77
Source: U.N. Population Division 2000.
Issues of Social Policy Reforms in Japan
1) The government is concerned with the increase of public
social expenditures: The need to tackle ageing issues by a
series of social policy reforms, Pensions, Health Care and
Long-Term Care.
2) How to address the ageing issue simply? – The debate over
social policy reforms in Japan has focused mainly on three
questions:
(1) how to cope with the rise of social protection expenditure?
(2) to what extent should future benefits be cut if possible?
(3) How the Japanese Welfare System can be changed?
3) Expenditures are cost-effective to meet the most pressing
requirements?
Policy Imperatives for Reforms: Japanese
Case
Economy and Employment
Environment
GDP growth – 0.46 %
(2000-2001)
Unemployment Rate 5.03%
(2001)
Public Debt
136.70 % of GDP
Central and Local
Government Finance
Borrowings (by Japanese National Bonds)
State JPY 414 Trillion (€ 3.23 Trillion)
Local JPY 109 Trillion (€ 0.85 Trillion)
Rate of Social Protection
/General Expenditure 38.4 %
Demographic Changes
TFR 1.39 (2002) Projected as of 2050
Social Policy
Reforms
1) Pensions,
2) Health Care,
3) Long-Term Care
and
4) Employment
Policy
Current Issues in Pensions





Sustainability of PAYG Public Pension
Non-Participation and High Drop-Out from the
Basic Pension Scheme
Financial Pressure on Firms?
Extension of Defined Contribution (DC) Pension
Scheme to some other parts?
Pension guarantee and fund issues in a global
context Who is responsible for your retirement?
The 2004 Pension Reform


(1)
(2)
(3)
(4)
Choice of Cutting Benefits, Higher Government
Transfers, or System Change?
Various ideas on Prospective Pension Reform:
The Elder Representative Group: Replacement Rate
59%; Contribution Rate 26%
The Japan Federation of Economic Organisations:
Replacement Rate 36%; Contribution Rate 13.58%
The Ruling Party (LDP and the Komei Party)
Replacement Rate 50%; Contribution 18.3%
The Opposition Party (DPJ)
Replacement Rate 50%; Contribution 13.58% +
Consumption Tax Rise 3%
The Overview of the 2004 Reform
1. Employees’ Pension Insurance Rise
from 13.58% (2004) to 18.3% (2017)
0.354 % rising-up every year
2. Introduction of the New Indexation (till 2023)
New Indexation = Consumer Price Index - 0.9%
The Content of 0.9 %= 0.3% (the Rate of Increase as an
Extension of Life Expectancy) + 0.6% (the Pace of
Decrease as Labour Force Down)
3. Income Replacement Rate
59% (2004) > 50% (2023)
Conclusion:
Policy-Research on Population Ageing:
The essential question we should ask is: what is the role
of government? What kind of government can be said as
‘good’ for people? If we think a government that tries to do
more is good, then such a government should actively
make ageing policy. In East Asian societies, the role of
government is said ‘unique’ in tackling the challenges of
population ageing and policy reforms.
In some cases, analysts tend to take an institutionalist
approach to explain this role. However, we might need to
have a new innovative analytical framework to research
social policy relating to population ageing.