Social security reforms a tough mission for Abe’s new Cabinet

Prime Minister Shinzo Abe, who reshuffled his Cabinet on Wednesday, is set to boost efforts to reform the nation’s social security systems — a top priority domestic issue for him as he enters the last two years of his final three-year term as president of the ruling Liberal Democratic Party.

Discussions on the matter are, however, bound to be tough, as adjustments to the areas highlighted are likely to increase financial burdens on people, with a backlash expected from opposition parties.

“The biggest challenge (for the new Cabinet) is tackling the country’s aging population and low birthrate,” Abe said at a news conference after the launch of the reshuffled cabinet. “I’ll push ahead with reforms to create a social security system reassuring to everyone,” he added.

Abe unveiled a plan to establish a new panel that would discuss sweeping reform measures, including support for parenting.

The push to reform welfare reflects Abe’s concern that the cost of medical care for elderly people is set to start surging in 2022, when Japanese baby boomers, born from 1947 to 1949, will be 75 or older.

The prime minister aims to have reform bills for pension and nursing care and legislation to revamp medical care enacted during ordinary sessions of the Diet, in 2020 and 2021, respectively.

Under consideration are plans to raise elderly people’s out-of-pocket medical expenses to 20 percent from the current 10 percent under the health insurance system, and to increase copayments by users of nursing care services.

Also being studied is the idea of expanding the scope of workers covered by the kosei nenkin pension program for corporate workers. But that is expected to draw opposition from employers as the measure would increase their premiums.

Ruling bloc lawmakers may become increasingly cautious about social security reform measures as terms of office for current members of the House of Representatives, the lower chamber of the Diet, in October 2021 approaches.

Abe also aims to add some final touches to “Abenomics,” a reflationary policy he has been promoting since returning to power in late 2012. But escalating trade tensions between the United States and China threaten to overshadow any results from the economic policy.

The Bank of Japan has been promoting aggressive monetary easing in hopes of raising consumer inflation to 2 percent. But recent government data showed that the core consumer price index for July, excluding fresh food prices, had risen only 0.6 percent year on year.

Uncertainty about the Japanese economy is growing ahead of a planned consumption tax rate hike, from 8 percent to 10 percent, set for Oct. 1.

“We’ll take thorough measures in a timely manner if downward economic risks become evident” Abe said at the news conference. “We’ll work to make sure that Japan’s economy will not put a damper on the global economy.”

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