4. High Economic Growth and Expansion of the Social Security Systems: 1965-1974

(1) Overall Situation

Rapid Economic Growth

• Although Japan's economy slumped during the years 19641965, it grew more rapidly than during the previous years. Japan had suffered a continual trade deficit after the war, but now it had a trade surplus year after year, and its gross national product (GNP) was second in the free world in 1968. Although the Japanese people were enjoying material affluence, however, environmental pollution and urban problems were symptomatic of the distortions of economic growth.

Expansion of the Social Security Systems

• As the economy continued to grow rapidly, benefit levels of medical insurance and pension were raised many times. During the 1970's, there were more efforts to return some of the benefits of economic growth in the form of public welfare. 1973 was called the "first year of welfare," and substantial improvements were made in benefits throughout the social security systems to upgrade public welfare.

Expansion of the Medical Care System

• In the area of medical care, the medical insurance benefit ratio was raised many times. In 1968 a 70% benefit ratio was established for the National Health Insurance, and in 1973 medical costs became free for elderly people age 70 and older. In the same year, a 70% benefit ratio was established for families under the insurance for employees, and the high-cost medical care benefit system was established, which set a cap on copayments.

• Meanwhile, as demand for medical care increased, it became obvious that medical care facilities and medical personnel were in short supply and unevenly distributed geographically. To resolve these problems, in addition to existing measures for serving remote areas (such as remote area clinics and mobile clinics), measures were taken to redress the uneven distribution of medical resources by establishing medical schools in every prefecture. However, this did not contribute significantly to redressing the inequities between urban areas and rural areas.

Measures Against Environmental Pollution

• As the economy grew, production activities grew in sophistication and scale, and factories released more smoke and waste water. As a result, environmental pollution problems such as air pollution and water pollution became increasingly critical. Under these circumstances, prefectural and local governments established ordinances to deal with pollution, and in 1967 the Basic Law for Environmental Pollution Control was enacted. Comprehensive measures were promoted at the national level, while in 1971 the Environment Agency was established to strongly promote anti-pollution measures.

Enhancing the Living Environment

• Rapid economic growth also brought with it an economic and social structure of "mass production and mass consumption." In addition, the concentration of population and industry in urban areas also led to steep growth in water demand and massive waste discharge.
  As domestic and industrial water demand increased, water shortages worsened in large cities, and there were comprehensive efforts to develop new sources of water, along with government subsidies for dam construction and facilities to deliver water supplies over wide areas. Since sewer facilities were also inadequate, industrial and municipal waste water caused problems of river pollution, and efforts were made to construct sewer systems in urban areas, but few changes were made in agricultural communities.

• To deal with the rapidly increased volume of waste, a five-year plan was initiated in 1963 to provide for municipal solid waste disposal facilities, with the municipalities bearing the responsibility for disposal. The decision was made to undertake systematic development of these facilities. Because of the sharply increased volume of waste resulting from industrial activities, there was a move to provide disposal systems especially for industrial waste, and in this context the Waste Management and Public Cleanliness Law was enacted in 1970. As a result, waste resulting from industrial activities was segregated from municipal solid waste, and 1) business operators' responsibility for disposing of industrial waste was clearly defined, and they were obliged to follow disposal standards, and 2) in the case of municipal solid waste, the disposal areas of municipalities were expanded.

• Meanwhile, rural areas were becoming less populated, and were falling further behind the living standards of cities. The Mountainous Villages Development Law of 1965 and the Law on Emergency Measures for Depopulated Areas of 1970, as well as national subsidy programs, were instrumental in actively promoting infrastructure improvements in the living environment along with the industrial infrastructure.

Improved Pension Benefits

• As high economic growth resulted in improved wages, a higher national standard of living, and steadily increasing tax revenues, steps were taken to further refine income security measures.
  In addition, the population was aging rapidly, and the elderly were finding themselves in greatly changed circumstances due to the popularity of the nuclear family and changing attitudes towards support for the elderly. There was a dramatic increase in national concern over old-age issues,especially that of the pension system which was the main pillar of income security for the elderly.
  

• Under these circumstances, the benefit levels of the public pension were substantially revised to match the realities of economic growth and improved living standards. Previously, levels of pension benefit had been raised every five years when actuarial revaluation was conducted. However, the revision of 1973 introduced a price indexation system by which benefits were raised to reflect changes in the cost of living. Also the revision set benefit levels at about 60% of the average wages of the insured.

Developing Nursery Care Centers and a Child Allowance

• The advance of women into the workplace, an increase in the number of women who continued to work after having children, and the arrival of the second baby boom in 1965 led to the establishment of many more nursery care centers to assist in child care. In 1955 there were 8,300 nursery care centers, which were more than doubled to 18,200 by 1975. Much of the construction and operations of these centers was financed by public funds, and efforts were made at the time to revise the budget to include assistance for infant care, for example.

• In 1971, the child allowance system was instituted with the goal of contributing to stable living standards in the home and to fostering the healthy development and characters of children. In this way, the structure of Japan's social security system was virtually complete.

Revising Workmen's Accident Compensation Insurance and Instituting Employment Insurance

• In 1965, necessary measures were taken to make workmen's accident compensation insurance compulsory for all businesses and all workers, and insurance benefits were largely converted to annuities. In 1974, the unemployment insurance system was replaced by an employment insurance system which includes programs for improving employment structures and developing the abilities of workers in addition to existing unemployment benefits.

The Beginning of Employment Measures for the Middle-Aged and Older Workers

• Despite of overall improvement in unemployment and employment conditions, things remained hard for middle-aged and older workers. For this reason, employment quotas for middle-aged and older workers were established in 1971, and a Special Measures Law for Employment Promotion of Middle-aged and Older Workers was enacted, which set forth such measures as the issuing of the Job Application Pocketbook for Middle-aged and Older Unemployed Persons.

Discussion of Social Security Policies

(1) Establishing the Social Security Systems

• The social security systems were being greatly expanded during this period. This expansion was partly motivated by 1) expanding public needs for social security, which were being promoted at the political level, and 2) having available financial resources fueled by economic growth to meet these needs. As a result of this expansion, the social security systems became well established in the lives of citizens.

• As for the medical insurance system, benefits were improved, thus helping citizens to feel more secure knowing that they were assured of equal access to medical care. As a consequence, citizens began to have more medical needs, and there was increased use of advanced medical treatment and drugs. However, this also led to increased medical costs. In particular, the move to free care for the elderly in 1973 resulted in a dramatic increase in the health expenditures for the elderly, and produced the phenomenon of elderly people "using the hospitals as social salons." The finances of the National Health Insurance worsened under the burden for many elderly patients, and the issue was raised of how medical resources could be used more effectively.

• Meanwhile, although policies such as the construction of more medical schools were promoted in order to rectify geographic inequities in medical services, these policies were not always entirely effective, and issues remained regarding the system of providing medical care.

• As the economy grew rapidly, efforts were made to build a pleasant living environment in urban areas where population and industry were concentrated. Along with the maintenance of hygiene standards, these efforts included the introduction of flush toilets and the use of home electric appliances and other household appliances such as washing machines which used large quantities of water.

• However, providing such an infrastructure for urban life served to aggravate the problem of regional inequities by encouraging the further concentration of population and industry in urban areas, and the increased population loss in rural areas. Moreover, since these policies gave priority to economic considerations, economic activity was accelerated without adequate regard for the environment, resulting in increased water pollution and inappropriate waste disposal, and pollution became a serious social problem. Another important issue that should be aware of is that as mass production and mass consumption became a fixture of Japanese lifestyles, the society also came to generate vast amounts of waste.