Discounting Compensation in Welfare

Ministry of Health, Labour and Welfare (MHLW) decided to refund payment of welfare for low-income families, which once was cut along with price deflation between 2013 and 2015. Although the Supreme Court found the cut during that period had been illegal, the ministry still argues that the policy was partly not illegal. The plaintiffs demand full refund. 

Following Article 25 of Constitution of Japan, that guarantees everyone “the right to maintain the minimum standards of wholesome and cultured living,” Japan has a welfare system in which subsidy is paid for families with income lower than minimum standards of life. The subsidy is paid for cost of food, appliances, rent, and medical treatment. The total recipients of the subsidy are about 2 million people of 1.6 million families.

 

Some recipients of the welfare filed lawsuits against the government of Japan in 2014 and later that its decision to reduce the subsidy between 2013 and 2015 was illegal. In that period, the government reduced the payment by 58 billion yen, according to decline of commodity price which had been minus 4.78 percent. It also cut the payment by 9 billion yen as “adjustment of distortion,” which was balancing payment for the recipients.

 

The Supreme Court found in June 2025 that the cut of payment for price deflation had been illegal, reasoning that cutting the payment according to market price had been gone too far beyond discretion of the government. On the other hand, it regarded adjustment of distortion as not illegal. The government has been considering how deal with the requirement from the court.

 

An experts’ committee on this issue in MHLW concluded that 9 billion yen for adjustment of distortion would not be refunded. Then, cut of subsidy along with price deflation would be refunded only to the plaintiffs, about 700 people, as a compensation for lawsuits. The rest of recipients, about 3 million people, will receive less refund, from which consideration of 2.49 percent of decline in average consumption between 2013 and 2015 is deducted. For most recipients, 2.49 percent is applied instead of 4.78 percent.

 

MHLW calculates that the refund for each of the plaintiffs will be 200 thousand yen, and for the rest of recipients 100 thousand yen. Each of 700 plaintiffs receive the refund as twice as much as each of 3 million recipients who did not participate in the lawsuits. The government will secure 200 billion yen for the refunding in FY2025 budget. Prime Ministrer Sanae Takaichi apologized in Diet discussion about illegally reduced subsidy over a decade ago.

 

The plaintiffs decided to file a new lawsuit against the governmental decision, arguing that distinguishing plaintiffs from other recipients were beyond discretion of the government. The distinction may violate a basic principle of the constitution, which guarantee the people equality under laws. At the time between 2013 and 2015, the government was struggling for reducing spendings for social security under the leadership of former prime minister Shinzo Abe. Its discount in welfare may cost further, if the court deny the ministry’s handlings.

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