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Wednesday, Jan. 5, 2011

Rengo head pushes for tax reform

Quick action needed to tackle welfare, aging ills


Staff writer

The Democratic Party of Japan-led government should focus on reforming the tax and social welfare systems this year and work to improve job prospects for young people, Nobuaki Koga, president of the Japanese Trade Union Confederation (Rengo), recommends.

News photo
Nobuaki Koga

"A consumption tax increase should be considered" to fund welfare programs, the leader of the biggest DPJ support group said at its headquarters in Chiyoda Ward, Tokyo.

And the DPJ should work to sell the public on the importance of raising the tax, he added.

Despite the criticism the DPJ has taken for its leadership, "I don't think it is favorable to return to the old ways," he said, referring to the DPJ's long-ruling predecessor, the Liberal Democratic Party.

Experts argue that the current welfare system is unsustainable because of the rapid aging of society. By 2020, more than 30 percent of the population will be 65 or older. The experts warn that unless the government increases revenue to cover social expenditures, the financial burden will weigh down the younger generations.

Because LDP administrations were generally reluctant to increase taxes, experts are urging an immediate hike in the consumption levy and reform of the welfare system.

But raising the tax could also backfire for the DPJ, which pledged in its platform for the 2009 general election, which is won handily at the LDP's expense, not to raise the levy for four years.

Prime Minister Naoto Kan floated the idea of a consumption tax hike shortly before the July Upper House election but dropped it after the DPJ's staggering setback at the hands of voters. The DPJ now plans to devise a detailed plan for social security and tax reform by June.

Koga urged the party to act quickly to generate needed revenue to improve the welfare system.

"The DPJ needs to make a reform proposal as soon as possible, and discuss how much of the burden taxpayers will shoulder and how much they will benefit from it," he said.

On the whole, the Rengo president gave high marks to the DPJ for policies pursued in 2010. The party, he said, made good on its slogan — "putting people's lives first" — by introducing the child allowance and free high school tuition.

"They demonstrated that they think education and child-rearing are important," Koga said.

But regarding labor issues, he said he was "very disappointed" that the government has failed to pass the revised Worker Dispatch Law, which forbids sending temporary workers to factories.

Tied up with passage of the extra budget, the DPJ failed to pass the revision bill during the extraordinary Diet session at the end of the year. Voting was postponed to the ordinary legislative session starting this month.

Many temp workers in the manufacturing industry were thrown out of company-provided dorms when they lost their jobs — a trend that accelerated after the bankruptcy of Lehman Brothers in 2008 triggered a global financial crunch. Though they do the same jobs as regular workers, temps are paid much less and are regarded as a "disposable workforce."

Numbering about 1 million, there are relatively few temps compared with the 17 million nonregular workers — most of them part-timers — but the unjustness of their situation cast them in the spotlight, Koga said. "There should be some regulation" to improve their conditions, he said.

Meanwhile, Koga also touched on the low employment rate among the young. According to the Statistics Bureau, the unemployment rate was 9.1 percent in October for people aged 15 to 24, compared with 5.1 percent overall.

"Young people's low employment rate is a serious issue," Koga said.

Notably, university graduates are having a hard time landing a job. As of October, only 57.6 percent who will graduate in March had a job offer, the lowest rate since the Health, Labor and Welfare Ministry began keeping records in 1996.

Many start hunting for a job as early as their junior year, and continue the search until the spring of their senior year. It's important to get an offer during this time because most companies don't hire after graduation. Those who don't get an offer sometimes choose to stay enrolled for another term or year, adding to their financial burden.

"I expect a new program initiated by the health ministry to provide subsidies to companies that consider applicants for up to three years after they graduate will help improve the situation," Koga said.



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