Reduction of Welfare Benefits Found Illegal

The Third Petty Bench of Supreme Court sentenced on June 27th that a decision of government of Japan to reduce welfare benefits from 2013 to 2015 was illegal and invalid. The court found that the Ministry of Health, Labour and Welfare (MHLW) had falsely determined reduction of the benefits beyond its discretion. Although the court dismissed the responsibility of the government for compensation to the plaintiffs, it became a major issue for the government how to adjust the policy of welfare benefits. 

After the Lehman Shock in 2008, a lot of workers in Japan lost their jobs and recipient of governmental welfare benefits increased from 1.1 million families in 2007 to 1.5 million in 2011. The Liberal Democratic Party, an opposition party led by president Shinzo Abe against the administration of Democratic Party of Japan, upheld a campaign policy of reducing the benefits by 10 percent in the Lower House election in 2012. Inappropriate reception of the benefit was one of the social concerns at the time.

 

When Abe took office of the prime minister after the election, the MHLW embarked on implementing LDP’s campaign promise of reducing welfare benefits. To justify their policy for the reduction, the ministry introduced its unique calculation. The MHLW annually reduced 58 billion yen as an adjustment for deflation and 9 billion yen as balancing between recipient of the benefits and other low-income families starting from FY2013. Annual reduction amounted to 67 billion yen, causing 6.5 percent of down in public support for foods and utilities of the recipients.

 

The Supreme Court found that the MHLW only counted on decline of commodity price for 58 billion yen of reduction in welfare benefit, ignoring actual trend of consumption. It had been usual that the level of welfare benefit would be determined with consideration of ordinary quality of life of the people. The ministry also did not consult with any experts about the reduction. The court concluded that the Minister deviated from its discretional power and abused it.

 

Article 25 of the Constitution of Japan states that “All people shall have the right to maintain the minimum standard of wholesome and cultured living.” The court meanwhile concluded that 9 billion yen of balancing between the recipients of welfare benefits and other low-income families would not be illegal. However, the Chief Judge, Katsuya Uga, attached his opinion which illegalized 9 billion yen of the balancing and required compensation for the shortage of benefits which the sentence did not recognize.

 

The welfare benefits are paid to families which income falls below the standard set by the government. About 2 million people receive those benefits. It is estimated that they missed 300 billion yen of the benefits by the decision of Abe government. Reducing cost for social security was one of the major agenda for Abe administration that advocated bold expenditure for economic growth, the policy which was called Abenomics.

 

As the decision of MHLW was dismissed, it is possible that the system of welfare benefits would be revised. It may add another pressure on already ailing national budget in the time of highly aged society with low birth rate. A campaign policy of the LDP in 2012 have left a heavy burden for the future. 

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