Japan running out of funds for parental leave allowances

The ballooning cost to provide allowances for employees who take parental leave is causing fears of a fund shortage.
By: | April 21, 2022

The amount of paid benefits nearly tripled over 10 years and is expected to increase further as employers are supposed to more strongly encourage their workers to use the child-rearing system.

The Ministry of Health, Labour and Welfare will soon start discussing possible revisions to the system and ways to procure alternative revenue sources.

Parents who take time off work to care for children younger than 1 can receive 67% of their monthly wages for the first six months. The rate drops to 50% from the seventh month.

The benefits come from the parental leave programme of the unemployment insurance system, under which employees and employers co-pay insurance premiums equally.

The government has been strengthening the childcare leave system to boost the declining birthrate. The insurance benefit percentage, for example, was raised from 50% to 67% in 2014.

The end of leave for parents who cannot find day care nurseries for their children was extended in 2017 from when their children reach 1.5 years old to 2 years old. 

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The labour ministry’s data showed that the number of allowance recipients doubled from 210,000 in fiscal 2010 to 420,000 in fiscal 2020, mainly because more women continued to work after giving birth. In fiscal 2020, 46,000 men took parental leave, 15.3 times the figure of 3,000 a decade earlier, according to The Asahi Shimbun.