Zenroren President Obata Masako’s statement at House of Representatives Budget Committee hearings

February 15, 2022

On February 15, 2022, the Budget Committee of the House of Representatives (lower house) invited Zenroren President Obata Masako to testify at the hearing for the government budget bill for 2022. In her statement, she made clear that state of working people and Japanese economy, as well as it analysis before the Budget Committee members. Below is the full translated text of her statement before the Committee.

I am Obata Masako, president of the National Confederation of Trade Unions (Zenroren). Thank you for the opportunity to state our view on the government budget bill for FY 2022 reflecting the position of the workers and the trade unions.

It’s been more than two years since the outbreak of a coronavirus pandemic. The workers’ and the general public’s demands are growing more acute. Zenroren is now involved in the Spring Struggle 2022. I want to speak on several issues as part of the effort to realize the workers’ pressing demands based on opinions arising from the workplaces.

I. Policy changes are needed to save lives

First, amid the sixth wave of infections we are calling for policy changes to save lives based on the lessons that have so far been drawn.

On February 3, Zenroren submitted to the Health, Labor and Welfare Minister a letter of urgent request for measures to respond to the spread of infections. We are calling for far-reaching improvements in the healthcare, nursing care, and public health systems, faster booster vaccinations, the strengthening of the COVID-19 testing system, simplified application procedures for subsidies to help people who are forced to take a leave of absence during elementary and other school closures, and the faster payment of benefits. Not only Zenroren but also many people have been demanding these measures, and there has been some progress in the vaccination and the application procedures for the school closure-related subsidies. I want to take this occasion to reiterate our call for improvements in the COVID-19 testing and faster vaccinations.

The vulnerability of the nation’s healthcare and public health systems has been revealed in the ongoing pandemic. I request that the government take drastic measures to improve and expand them.

In the fourth and fifth waves of coronavirus, what may be called a medical system breakdown occurred so extensively that it’s been difficult for infected people to be admitted to hospital and many such people died at home. It’s been reported that more than 800 people died without being treated at hospital by the end of the fifth wave. In the ongoing sixth wave, infections are spreading so fast that the public health centers and medical services at hospitals are unable to meet the needs and more than 460,000 people were staying home for recuperation as of February 2. All this is caused by a shortage of staff ? doctors, nurses, and care workers ? and of public health centers and public health nurses. These problems need to be seen against the background of the government policy from the second half of the 1990s, viz., the budget cutbacks for social services, including healthcare, nursing care, and welfare, as well as cutbacks and restraint on public health measures. Even though public and publicly-funded hospitals have a key role to play in providing measures against infectious diseases, the government is promoting the elimination and consolidation of public and publicly funded hospitals. One key lesson drawn from the pandemic is that it is very important to expand the healthcare, nursing care, welfare and other social services.

Regarding the compilation of the government budget for FY 2022 (starting April 1, 2022), I want to emphasize the need to retract the “regional healthcare plan,” which the government is promoting on the promise of cutting the number of public and publicly-funded hospitals, and to make a policy shift to give priority to saving people’s lives by taking the following measures:

(1) We call for a major increase in the numbers of doctors, nurses, technical workers and care workers, and improvement in nighttime work and other working environment as well as treatment of workers.
(2) We call for reviewing the plan to reorganize and consolidate public and publicly-funded hospitals and to cut the number of hospital beds.
(3) Expand and improve the public health administration, including an increase in the number of public health centers and the number of public health nurses.

2. Substantially raise wages from the bottom up to ensure that every worker can live a humane life

Secondly, the task is to sharply raise wages, from the bottom up, so that everyone can live a humane life. It is conducive to solving the problem of income gaps, which are even widening amid the coronavirus pandemic, and to revitalizing the Japanese economy.

As everyone knows, real wages in Japan have been in decline over a period of more than two decades. This graph shows that Japan is the only country that continues to experience declines in real wages. Meanwhile, large corporations have continued to increase their internal reserves. I believe that they must fulfill their social responsibility by using a part of their internal reserves to give pay raises.

In his policy speech at the beginning of the current Ordinary Session of the Diet, Prime Minister Kishida Fumio called for a “new capitalism” to be created. He spoke of the various harms caused by neoliberal ideas. He said that an overreliance on markets has caused the expansion of disparities and poverty by arising from the failure to undertake fair distribution. As one of the measures to overcome the neoliberal policies, he cited “wage increase” as the foremost distribution strategy. He did put forward some measures to be taken to meet the pressing needs of the workers, which we can welcome. But unfortunately, pay raises for many workers may not be as high as the Prime Minister’s message says. I would like to make four points which are necessary to help sharply increase wages for all workers, from the bottom up.

(1) Care workers need pay raises
My first point is about measures concerning raising wages for care workers, which I took up last year at this committee hearing. It is significant that extremely low wages of care workers were brought to light and that efforts to solve this problem have started. Amid the coronavirus pandemic, all care workers are doing all they can to keep the social functions going at the cost of their lives.

The government is launching a plan in February to improve essential workers’ treatment. But the government plan will give a pay raise of 1 percent (4,000 yen a month) for nurses who are working for coronavirus patients and 3 percent (9,000 yen) for care workers, childcare workers, welfare workers, and after-school childcare workers. But on the ground, workers are puzzled, dissatisfied, and even infuriated by the government move.

First, the workers say that the proposed pay raise is too small, or one digit smaller than what they need. If the raise is distributed to workers in other types of jobs, they would receive a raise of under 1,000 yen.

Secondly, giving a pay raise to workers of selected types of work could bring in division to the place of care work, which is performed in teamwork.

Thirdly, the system is going to be introduced so hastily that it will contain measures to meet the busy February-April period conditions. The system was adopted by the Cabinet in late November last year. But in January, the government only released the draft. This has caused widespread confusion, hesitation, and resignation. There is little time to conclude a labor agreement to raise wages. In this regard, we cannot overlook that fact that there are moves to restrain such labor talks.

Fourthly, there are many local governments that do not take up a program to improve treatment of care workers on the grounds that there is little time to amend the relevant ordinance, hampering a wage increase despite the government’s intent.

We are calling for the following steps to be taken to drastically improve treatment of care workers:
i)Substantially extend the period of application for subsidies for improving treatment of care workers instead of closing it at the end of March.
ii) Give pay raise to all care workers without limiting it to particular types of job or employees.
iii)Increase wages by more than 40,000 yen per month, or more than 250 yen per hour.
iv)As the program requires that “two-thirds of wage increase is in base pay,” it does not exclude the use of subsidized fund to carry out annual pay rase. It’s necessary to design a system that would lead to increasing wages without fail.
v)As regards the wage increase system to be implemented in and after October, which is to be included in the government budget for FY 2022, it’s necessary to determine its details as soon as possible and to make clear that the fund for raising the medical service fee and care service fee should come from the government coffer.

I request that the government fulfill its responsibility to create a system to drastically increase wages for care workers in a manner that matches their work or its professionality, without shifting the burden onto the users in autumn.

(2) For 1,500-yen minimum wage, a uniform national minimum wage system

My second point is about raising the minimum wage to 1,500 yen per hour and establishment of a uniform national minimum age system.

In times of the coronavirus pandemic, contingent workers and female workers are experiencing contradictions, which can be seen against the background of extremely inadequate minimum wages.

The national average of the hourly minimum wage is 930 yen, a level working poor earning less than 1.7 million yen a year. As for regional gaps, the difference between the highest prefecture and the lowest prefectures is 221 yen per hour, or 400,000 yen a year (1,800 hours of work) for full-time workers. It is irrational that there are regional gaps of wages for equal work. The regional gaps constitute a cause of the overconcentration of the population in large cities and the impoverishment of local economies and hamper a substantial wage increase.

Professor Emeritus of Tsuru University Goto Michio estimates that near minimum wage (below 1.1 times the minimum wage) workers account for 14.2 percent of the working population in 2020. The rate doubled during the preceding decad. He says that the rate of female permanent workers who are paid less than 1,500 yen per hour is 49.8 percent. This means that the low minimum wage is contributing to expanding wage gaps between men and women.

Regional union federations affiliated with Zenroren have been conducting a minimum cost of living survey in 28 prefectures, including Tokyo, with about 30,000 people participating. The survey has found that the minimum cost of living needed for a young man or woman to live a humane life is between 220,000 yen and 240,000 yen a month, or 1,500-1,600 yen per hour (150 hours a month) everywhere in the country.

Recently, the survey found that the minimum cost of living in Osaka is 1,600 yen per hour. I strongly request that the government conduct a minimum cost-of-living survey.

In times of the coronavirus pandemic, many other countries have announced drastic minimum wage increases to “support the livelihoods of low-paid workers and essential workers. Germany’s Chancellor Olaf Scholz announced a plan to raise the minimum wage by 15 percent to 12 euros. Britain will raise the minimum wage by 6.6 percent to 9.5 pounds, and the United States is aiming to raise the federal minimum wage by 30 percent to 15 dollars. The Kishida government is boasting of the recent 28 percent (3 percent) raise as a substantial increase. But I must say that Japan still lags far behind in the minimum wage.

If nothing is done to change the present low wages, there could be another lost two decades which Japan experienced following the collapse of the Lehman Brothers. I call on the government to take steps to drastically raise the minimum wage and establish a uniform national minimum wage system.

(3) For drastically increasing support for small- and medium-sized businesses to help give a raise for all workers

My third point is that support for small- and medium-sized businesses is indispensable for raising wages for all workers as well as the minimum wage. Small- and medium-sized businesses are struggling to survive the coronavirus pandemic. Boosting support for them will make it possible to secure jobs and raise wages from the bottom up, and to revitalize the local economies.

The government plans to offer tax breaks for businesses that give a pay raise. But only profit-making corporations can receive the subsidies while loss-making companies, which account for 60 percent of all companies, will not be eligible. The tax system offers nothing good to most small- and medium-sized businesses. Corporate tax breaks should not be offered. Large corporations should be asked to pay more in tax to share the costs necessary for maintaining society. Today, cutting the consumption tax rate will be more effective as it will benefit all business operators, including loss-making companies. The need is to develop and implement measures to support the struggling small- and medium-sized businesses.

Zenroren recently compiled a proposal on measures in support of the small- and medium-sized businesses after discussions with business organizations. The proposal is entitled, “For favorable local economic cycles by improving the minimum wage and expanding support to small- and medium-sized businesses.” It calls for the following measures:

First, small- and medium-sized businesses should get subsidized to avert a shortfall of cash in hand due to a minimum wage increase; social insurance premiums payments should be reduced or exempted.

Secondly, as part of securing fair trade, it is necessary to allow suppliers to raise their unit prices in a reasonable manner when they raise wages.

Thirdly, a system of local economic circulation needs to be developed instead of allowing profits produced in regional or local economic activities to be concentrated in Tokyo or flowed out of the country.

As part of the effort to implement these measures, it’s necessary to sharply increase the budget to help small- and medium-sized companies, to strengthen measures to enable them to keep on doing business, to promote public contracts that include provisions to help in local economic cycles and require contractors to pay certain amounts of wages.

In implementing the reduction or exemption of social insurance premiums for small- and medium-sized businesses, it is important to have the employers’ share of the premiums payment according their ability to pay so that large companies will be asked to pay their fair share. It is also important to cut the consumption tax rate to 5 percent and raise the tax exemption limit.

Once the new “invoice” system is introduced in October 2023 as scheduled, many of the small- and medium-sized businesses with an annual income of less than 10 million yen, which have been consumption tax-exempt, may have difficulty continuing doing business. We strongly request that the invoice system be revoked.
*The invoice system will require business customers to retain qualified invoices which fulfil certain conditions in order for them to claim input consumption tax credits while requiring sellers to issue such qualified invoices.

(4) Need to improve the Employment Insurance System

My fourth point is about the Employment Insurance System. Let me make our case from the viewpoint of securing workers’ livelihoods.

Japan’s system of compensation for the loss of earnings due to interruption of business due to the pandemic is far more inadequate compared to other countries. This came under criticism. In 2020, in answer to a question in the Diet, then Prime Minister Abe Shinzo said he was aware that the amounts of Japan’s subsidies to employers maintaining jobs are lower than Western countries. Consequently, the upper limit amount of the subsidy was set at 15,000 yen. The amount of money to help make up for income loss to individuals taking a leave of absence was set at above 10,000 yen per day.

The amount of the subsidy to companies that keep the employment was set initially at 8,370 yen per day. The amount was decided based on the upper limit of daily benefit paid from the Employment Insurance. Although the opinion that this amount is too small to make ends meet was shared by lawmakers, nothing has been done to improve it. The amount was even lowered in August last year.

The present Employment Insurance system is vulnerable. Only about 20 percent of all unemployed are receiving the employment insurance benefits. That’s much lower than other developed capitalist countries. In addition, the amount of the benefits is between 8,265 yen and 2,250 yen per day. The amount, which varies according to age group, has been cut by 2,000 to 2,700 yen per day, or 60,000 yen to 81,000 per month.

It is hardly possible to meet the objective of the Employment Insurance Act, which is to keep the stability of livelihoods and make it easy for people to do job search. People will be obliged to find a job as soon as possible even if the job and the working conditions do not satisfy him or her.

A review of the Employment Insurance system should include an increase in the basic daily benefit amount.

The government share of costs for the employment insurance payment should be 25 percent in line with the main statute, or 10 times the current amounts, and the amount of benefit should be paid to basic benefits recipients so that the 475,000 current beneficiaries will get an additional 35,000 yen a month.

III. There are sufficient financial resources for the improvement

The state has a significant role to play in the effort to reduce poverty and income inequality to shift to equitable society. We believe that it is possible to implement all these measures if ways and means, and spending policy are changed.

As I said earlier, the large corporations capitalized at 1 billion yen or more have increased an additional 7.1 trillion yen in internal reserves, bringing the total to 466 trillion yen. We believe that a part of the internal reserves they have amassed should be used to support subcontracting small- and medium-sized businesses and to give pay rases for workers whose wages have been lowered to the point that makes it difficult to make ends meet. It is also possible to boost tax revenue by taxing internal reserves and introducing progressive taxation system.

The Kishida government has compiled a 36 trillion yen supplementary budget, the second one for FY 2021 and the largest ever, to implement economic policies. This includes 770 billion yen military expenditure. The military budget for fiscal 2021 is the first to reach six trillion yen; the military budget as a percentage of GDP stands at 1.09 percent, the highest a cabinet has ever adopted. Amid the global pandemic, the priority should be given to saving people’s lives, and there is no need to increase spending. We call for the military budget to be reduced and the saved money should be redirected to pay for anti-coronavirus measures, for far-reaching support for medical and public health services, and for supporting needy people.

Conclusion

Finally, let me touch upon the ongoing discussions at a Health, Labor and Welfare Ministry‘s Labor Policy Council on the announcement of criteria for improving working hours for bus and taxi drivers as well as truckers. After a proposal for 11 hours of rest between driving hours met opposition from the employers, the discussion is focusing on whether a time interval needs 9 hours or 11 hours. Drivers use time intervals to commute to and from work, eat meals, sleep and do other things. It is known that under the current 8-hour time interval, drivers may suffer sleep deprivation, which makes it difficult to keep the workers in good health or ensure users’ safety. Even a 9-hour time interval cannot reduce traffic accidents or karoshi (death from overwork). I strongly ask for the establishment of a time interval of 11 hours or more for drivers’ rest period as a standard. With this I conclude my remarks. Thank you.

*1,000 yen = 87 US dollars (1 US dollar=115 yen)