How Employment and Consumer Rules Will Change in Japan Starting April 1st

Starting April 1st, with the start of the new fiscal and legislative year, a number of new laws and regulations will come into effect that will impact employment and consumer rules for people throughout Japan. Below we summarize the key changes.

Companies to be obligated to create opportunities for people to work until age 70

The revised Elderly Persons Employment Stabilization Law will be enforced starting April 1st. The change obligates companies to provide employment opportunities for employees up to the age of 70. Companies can use various methods to accomplish this, from abolishing mandatory retirement at a certain age, to raising the retirement age and re-hiring employees. The aim of the law is to help deal with Japan’s labor shortage, caused by the country’s declining birthrate and aging population and to bolster the national pension system.

According to a survey conducted by Teikoku Databank in February, of approximately 11,000 companies nationwide, about a quarter are “introducing a continuous employment system up to the age of 70,” which includes re-hiring employees who have already left the company. About five percent of companies will get rid of their mandatory retirement age and about three percent said they are increasing their retirement age. However, about 50% of companies said that they have not thought about how to deal with the new law.

A Ministry of Labor survey conducted last June found that about 33.4% of people currently employed are 66 years or older.

Equal work for equal pay for regular and non-regular employees at small- and medium-sized companies

Starting April 1st, small- and medium-sized companies will be obligated to provide equal pay for equal work for regular and non-regular employees. This follows the implementation of this requirement at large companies in April 2020.

The law change obligates companies to treat regular employees and part time-employees without “unreasonable” difference. For example, some small- and medium-sized companies have responded by changing work rules so that contract and part time-employees can take condolence leave and to receive subsidies to support working-from-home, something that they had previously limited to regular employees. Other companies have said that they will start providing family allowances for spouses and employees with children to enable them to continue their part-time jobs.

Non-regular employees will also be able to ask management at companies to explain “treatment gaps” between regular and non-regular employees.

According to a survey of 150 small- and medium-sized companies conducted by En-Japan, a major human resources service company, from December 2020 to January 2021, only about 28% of companies said that they already have an equal pay for equal work system in place.

Retail stores and leaflets will have to use price tags with the consumption tax included

Until March 31st, retailers were allowed to display base prices, then add “+ tax” in signage. For example, until now stores could indicate a price of “100 yen + tax,” but this will have to be changed to “110 yen” starting April 1st. The point is to make the final price easier for consumers to understand.

Small reduction in monthly public pension amounts

Starting April 1st, the amount of public pension received in 2021 will be reduced 0.1% compared to fiscal 2020. This will be the first reduction in four years, reflecting a decline in the wage level of the current working generation. 2020 was also the first year in four years that consumer prices fell (by 0.2% annually).

In a model household with two couples receiving a public pension, the monthly amount will decrease by ¥228 to ¥220,496 (about $1,998 USD).  The national pension for self-employed people will decrease by ¥66 yen to ¥65,075 yen per month if the full amount has been paid for 40 years.

Small increase in long-term care fees

On the social security front, the long-term care (kaigo, 介護) fee paid to long-term care providers will increase by 0.7% from April 1. The aim here is to improve wages and treatment of long-term care staff, amidst a labor shortage in this field.

Decrease in car insurance premiums

The Financial Services Agency (FSA) decided that as of April 1st, automobile liability insurance premiums would be reduced on average about 6.7%. This reflects the fact that accident insurance payments have been curtailed due to improved vehicle safety performance and fewer numbers of people on the road due to COVID-19 stay-at-home measures. This is the third time in five years that car insurance premiums have been reduced but the first time since September 2017.

Starting April 1st, insurance premiums for private (home use) vehicles will drop by ¥1,540 yen to about ¥20,010 (for a two-year contract, for all locations in Japan except Okinawa and the outlying islands). For light vehicles (keijidousha), the rate will drop by ¥1,410 yen to ¥19,730 yen.


Nikkei newspaper, March 31, 2021 (in Japanese) — Overview

Nikkei newspaper, January 18, 2021 (in Japanese) — Pensions

Nikkei newspaper, January 22, 2021 (in Japanese) — Car insurance

Lead image: iStock – 1273009037