Japanese Gov’t to Provide ¥200,000 to ¥300,000 Cash Payments to Some Households: Coronavirus Countermeasure

The Japanese government is considering making direct cash payments to some households of between ¥200,000 and ¥300,000 (between $1,800 and $2,700), as part of the emergency fiscal stimulus package that will start rolling out in May. This is according to a report by the Nikkei newspaper.

The cash handouts will be aimed at lower income households and are part of a larger set of measures, equal to about 10% of Japan’s GDP. The various measures, including direct government spending and backing for corporate loans, is expected to total over 56 trillion yen (503 billion USD) and is meant to mitigate the economic fallout from the spread of the coronavirus.

Prime Minister Abe is expected to order an initial set of economic countermeasures on March 27th when the 2020 fiscal budget will be approved. The supporting supplementary emergency budget is expected to be approved in early April, finalized later next month, and implemented in May.

Which households qualify

Currently under debate is the mechanism for determining which households should qualify for cash handouts: whether to target households whose income has dropped a certain amount (due to the economic impact of the coronavirus) and whether to impose income restrictions for qualifying households. Another consideration is to how to help freelance workers who comprise a growing percentage of the workforce, but who may not be able to quickly find alternative employment.

People working for the travel, tourism, and restaurant industries have been especially affected because of the sudden drop off in both inbound and domestic tourists. The Japan National Tourism Organization said in 2017 that consumption by international and domestic travelers supported 4.7 million jobs in the country and accounted for 5% of the economy. As reported by Reuters, a recent report by a Japanese corporate research firm said 12 hospitality companies, including a cruise operator, had already gone bankrupt since the outbreak of the virus. The postponement of the Tokyo 2020 Olympics has also dried up revenue streams that had been anticipated by companies in the travel and tourism industries.

Japan has about 53 million households. Policy makers are considering limiting cash payments to about 10 million of those, based on household income level.

The government is considering making cash payments to qualifying households via the “emergency small funds” system. Households will be able to apply for cash handouts by sending an application to their city or ward office and will receive payments by direct deposit to their bank account.

Support for companies to keep people employed

The government also plans to provide support to companies in the form of “employment adjustment subsidies” to help people keep their jobs. Currently, small and medium-sized companies which would not otherwise be able to meet their payroll are eligible to receive subsidies equal to about two-thirds of wages in return for temporarily furloughing employees. As part of the new countermeasures, this amount may be raised to eighty percent and even ninety percent in some cases.

The government is also considering offering subsidies to companies that made offers to new graduates to keep them from rescinding them. This would be done by relaxing the rules for how companies qualify for subsidies.

Support for travel and restaurant industries

Because the travel and food and beverage industries have taken especially big hits, the government also plans to directly subsidize spending to support companies in these industries. For example, the government may issue discount coupons and gift cards directly to people to encourage travel and dining out.

Source: Nikkei newspaper, March 25, 2020 (in Japanese)

Lead image: Shinjuku, iStock

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