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Since the burst of the bubbly economy in the early 1990s, changes in pay practices of Japanese firms have received increased attention both in Japanese academia and the popular media. The focus point of attention has been to what extent the hitherto predominately seniority related compensation practices are being replaced by more performance-based salary systems and what kind of problems are associated with such changes. 

          Seniority-based pay (nenkō joretsu chingin) has often been described as one of the so-called 'three pillars of the Japanese employment system'; the two others being lifetime employment (shūshin koyō) and in-house company unions (kigyōbetsu kumiai). Just as many other features of the Japanese economic system it has recently come under increased scrutiny and has been criticized for being too costly and ill-suited to motivate and retain workers in the fast-changing business environment. Given the high dominance of this compensation practice so far, any changes have a high significance for our understanding of contemporary Japanese management practices.

           There are already a number of important Japanese studies about recent changes in pay practices, and I have also conducted research and published in this area. However, one aspect of recent pay reforms which remains under-researched is the relationship between corporate pension and pay system reform. Since retirement benefits make up a substantial part of overall employees' compensation, a full understanding of the on-going pay reforms requires more knowledge about how changes in pension legislation since the early 2000s have influenced the provision of corporate retirement benefits.

The aim of this paper is to address the influence of changes in pension legislation in the early 2000s on the provision of corporate retirement benefits. Today, well over 80 per cent of Japanese companies have some sort of retirement benefit plan, and most big companies pay pensions as well as lump-sum benefits. With regard to the number of participants and the amount of assets under management, by far the most important occupational pension schemes have so far been defined benefit (DB) plans. These plans are employer-sponsored retirement schemes where final payouts are linked to employment tenure and the development of wages over time. The significant point is that these plans have a similar incentive structure as seniority-based wages because the benefits are directly linked to employment tenure and rise progressively over time.

        With the last occupational pension reform enacted in October 2001 and April 2002, employers were given new options for company pension plans, most significantly so-called Japanese-style 401(k) defined contribution (DC) plans. These new plans have no longer a seniority-oriented incentive structure and the investment risks are born by employees. Against the background of these new legal options, a number of questions arise which will be tackled in this paper:

  • How have companies utilized the new options in the reform of their pay systems?
  • What are the interactions between corporate pension and pay system reforms? Specifically, how have changes in corporate governance (for example in terms of shareholder influence) and the labour unions impacted the restructuring of corporate pension systems?
  • Are there significant differences among different sectors or between corporate groups and independent companies?
  • What are the likely effects of the current global financial crisis?

Methodologically, this research is based on the analysis of secondary statistical data and primary data gained through semi-structured interviews with Japanese pension experts, human resource managers, labour union officials, academics, and bureaucrats in April 2009.

Amidst endeavors to examine social policies from a gender-sensitive perspective, this study investigated elderly women's economic risks and effectiveness of pension policy in a comparative manner. First, relative poverty risks of elderly female householder of 15 OECD countries in their 1990s were calculated using Luxembourg Income Study dataset. Second, women's pension rights were specified by integrating pension indicators into two separate indices - individual right and derived right. Third, fuzzy-set qualitative comparative analysis (Fs/QCA) was used to analyze the causal relationship between pension rights and economic welfare of elderly women. Control variables such as women's labor market participation rate, social expenditure for the aged and social assistance expenditure (% of total social expenditure) were also considered. As a result, individual rights passed the necessity test for high economic security of elderly female householder while derived right passed the necessity test of the high relative poverty risk of elderly female householder (benchmark proportion of .65, p<0.05). In the sufficient test, countries with "high individual right and low derived right" usually showed high economic security of elderly female householders. In addition, "low individual right and high derived right" joined with one of "high women's economic activity, low relative public spending on the elderly or low relative social assistance expenditure" were revealed as the causal combinations sufficient for the relative poverty risk. These conclusions suggest that pension policies developing individual rights, rather than derived rights, would have more resilience on elderly women's economic risk from a comparative perspective.

Full paper: Kim_S-W_2009_womens_economic_risk.pdf 

The proposed paper will describe and analyse the "Ten Year Plan for Long-term Care" initiated by the government of the RoC in 2007.  The plan was devised to cope with the country's rapidly ageing population and with changes in family structure that made reliance on the extended family and particularly on care provided by adult children increasingly untenable.  It provided substantial additional finance to extend forms of communal living, including forms of semi-sheltered housing, but also to enable people to be as self reliant as possible for as long as possible and even to live in their own homes.  Whilst families are still expected to pay a share of costs, increased government subsidy will be available.  Rather than simple means-testing, the amount provided will be determined by a sliding scale that takes account not only of income but also of the severity of impairment.  A substantial growth of the social care industry is expected.

 

The paper will consider the extent to which the RoC, in developing its Ten Year Plan looked at systems of long-term care provision in other countries.  Relevant here are financing mechanisms.  Policymakers rejected a system of long-term care insurance such as exists in Japan and is being put in place in Korea.  However, it is to be asked whether a system that relies upon budget allocations from the finance ministry rather than dedicated financing is likely to be sustainable, particularly in the increasingly harsh economic climate that has followed the world crises.  Equally relevant are the criteria for eligibility.  Not all forms of frailty will entitle claims for assistance.  In addition to looking at these issues, the paper will discuss the ambitious delivery systems envisaged in the plan. Here, it will look at staff training programmes and the capabilities of the currently rather limited not-for-profit sector upon which reliance is being placed.