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More Details on the Coming Change in Visa Renewals

The Japan Times has a good summary of the issues surrounding the changes to the visa renewal process starting in April 2010. I blogged about this a while back, but the Japan Times column covers some of the implications of having to enroll in an insurance scheme in order for foreigners to renew their work visas.

Louis Carlet, deputy secretary of Nambu, laid it down for everyone in the room to understand. There are a few basic things that all foreigners in Japan have to know, he explained: first, that everyone over the age of 20 in Japan is required to enroll in an approved Japanese government health insurance scheme and pension fund. If you are under 75 and working at a company that employs more than five people, this most likely means the shakai hoken (social insurance) program; if you are unemployed, self-employed or retired, the equivalent system is the kokumin kenko hoken and kokumin nenkin (national health insurance and pension). The only people exempt are sailors, day laborers, and those working for companies employing less than five people, or for firms without a permanent address (e.g. a film set).

The two systems cover different ground, all of which is explained in detail at www.sia.go.jp/e/ehi.html. Roughly, shakai hoken consists of two parts: kenko hoken (health insurance), which covers 70 percent of your medical costs and 60 percent of lost wages due to illness, and kosei nenkin (pension insurance), which provides a pension after age 65 for those who have paid into the system. The two are inseparable, and anyone enrolled in shakai hoken through their employer automatically pays into both. The kokumin kenko hoken (national health insurance) and kokumin nenkin (national pension) package offers similar coverage but is not provided through an employer.

The bottom line is that all residents of Japan (except those mentioned above) have to be enrolled in one or other of the two systems. The revised visa laws, therefore, should pose no threat to anyone's visa renewal, because every foreigner in Japan should already be enrolled.

It has long been standard practice within eikaiwa to skirt enrollment of instructors by limiting the working hours in contracts. For example, the contracts Chris and I signed back in the day stated that we agreed to teach up to 28 hours of classes a week. The 28 hours is important because the law stipulates that companies must enroll employees in shakai hoken if the employees work 30 or more hours a week.

In 2005, NOVA brazenly changed working conditions by shortening lessons to 40 minutes and adding 2 minutes of "planning" on either side of each lesson. The net result was more unpaid free tie between classes and instructors working fewer than 30 hours per week. It was a move that supposedly saved NOVA at least ¥1 billion a year in insurance contribution payments.

Enrollment in social insurance is not without its drawbacks. Many would question the wisdom of having approximately ¥30,000 deducted from their paychecks every month, especially if they know they won't be living in Japan long enough to collect a pension. Moreover, if you've never paid into shakai hoken, you may wind up paying up to 2 years in back contributions.

That said, the benefits outweigh any initial pain. For one, you will be enrolled into a health and pension plan you are legally entitled to, and you'll avoid looking foolish like the people at the beginning of the article who didn’t know anything about social insurance in Japan or were dissuaded from joining it.

There is also recognition. Recognition that you are a full-fledged employee entitled to the same benefits as other Japanese workers. This could translate into better working conditions and improved job security. Most importantly, you are covered. No more worries about hospital visits and fewer worries about pension contributions. As the article points out, pension contributes can be refunded, but the maximum amount tops out at 3 year’s worth of contributions.

That doesn’t mean all is lost for long term residents, however. You need to check with your government and find out if it has a pension agreement with Japan. For example, Canada and the UK have them, meaning that contributions paid in Japan count toward your pension back home.

This is a positive development for workers, but it does make you wonder what took so long for this to become a reality.

Comments

I'm a bit confused...

Let's Japan.org wrote:

"It has long been standard practice within eikaiwa to skirt enrollment of instructors by limiting the working hours in contracts. For example, the contracts Chris and I signed back in the day stated that we agreed to teach up to 28 hours of classes a week. The 28 hours is important because the law stipulates that companies must enroll employees in shakai hoken if the employees work 30 or more hours a week."

But when I click on the included link (http://www.sia.go.jp/e/ehi.html)

It states:
"You must be also covered if you are a part-time worker and if both your work days and your work hours are more than 3/4 of the regular workers in your workplace."

It seems to indicate that the same "75% loophole" is still in place and that workers under that 75% of normal working hours do NOT have to enroll in the social insurance program.

Am I wrong?

What's missing from what I wrote is that even though you may only be teaching 28 hours a week, you are physically in the office/school for 40 hours a week. Any non-teaching activities like preparation or grading or writing of evaluations isn't deemed to be work by a lot of schools. Common sense says that if you're in the office for 40 hrs/week, you're full time and should be covered by shakai hoken.

Shawn
Let's Japan.org::Blog

I think you're absolutely right. Although teachers are only technically "working" 28 hours, they do have to be at the school for 40-40+ hours.

But as a (western) owner of a small English school, I'm just worried about teachers HAVING to join the shakaihoken system. For a company (especially a small company) it really is SO expensive. I now know that first hand. But I DO completely support teachers being enrolled in a national health plan, especially since I think Japan's health care system is good. So I'd like to see our teachers enrolled in the kokumin kenkohoken system. I'm willing to raise our teacher's salary to offset some of those costs. However, on the shakaihoken system, the company has to also pay premiums, which are effectively equivalent to what the teacher is also paying. Thus the cost of employing the teacher goes up 10-15%, making it much harder to employ teachers... much less good ones. The system IS hard for business.

But I adamantly do NOT support the pension system, especially for us westerners. Getting paid back of fraction of what we pay into the system (if we do not stay here for the long haul) is ridiculous. And as a person with basic money sense, I think paying a system ¥100 today that will be worth ¥20-¥50 in the future, is absurd. My ¥100 today could be put into some really basic, safe investment that will at least keep up with monetary inflation.

But, the reason I commented was just to find out if teachers did in fact HAVE TO join the shakaihoken system. I am worried about that. Do you know if that is the case... or will the "75% loophole" continue to exist? Like I said, I do want good working conditions for all of my teachers, but I also have to think about my business as a business.

Thank you for your reply.

Thanks for raising the question. My brain tends to turn to mush when I sit down in the front of the computer.

As for having to join, AFAIK, nobody knows how this is going to be enforced. Will some kind of official notice be issued between now and next April? Or will foreigners be in for a rude surprise when they are told they should join shakai hoken or kokumin kenko hoken when they go to renew their visas?

Shawn
Let's Japan.org::Blog

I'd love to have SH. I have the national health plan and pay the pension myself 100% in cash. For the pension I just pay the (around) 14k minimum monthly and save/invest the rest. Pension is not just pension. If all hell breaks loose it's there to cover you with disability and death and SH will cover you even more. Knew of a salaryman (Japanese) who broke his neck skiing - paralyzed- and he gets 60% of his salary until retirement age because of SH. With just the pension you get some disability but not 60%...but still

I say GO SH!!

Any school owners with employees worried about it I'd say just work things out with your pricing and/or slightly lower salaries to cover it. And/or make sure the part timers are really part time.

Is paying into SH for your employees really that bad? I occasionally hear this same concern from western eikaiwa owners who employ people- I mean on their internet posts. If any school owners are that worried about SH putting a super big dent in their earnings should they be in business in the first place? It sounds like they are almost over the edge already.

For the small school owner, it is really about the option of employing 2 part timers (who can cover for eachother) cheaper than you can employ one full timer. Given the situation that the vast majority of employees will never become permanent and will probably leave the country in two years or less, why invest in the full timer when the part timer situation is so much more flexible?

Another bugbear is that whilst the employee who leaves the country can claim back their payments from the government, the company can't claim back it's share, that is kept by the government as far as I understand.

Having full time staff is a long term investment for any company and a real cost, which is why there are so many part time staff in every industry, not just eikaiwa. In the eikaiwa situation, of course, it's a wasted investment in most cases.

Of course, I would be happy to help out with the insurance side of things if people wanted to be better covered in case of disaster.

It goes both ways. Cheap ass eikaiwa companies such as Peppy Kids Club, iTTTi Japan, Geos... should stop taking advantage of foreign workers on stupid one year contracts and provide more stable employment with national health insurance, shakai hoken.. and the cheap ass teachers ahould've enrolled into NHI which costs a little more than the cheap health insurance advertised in the Metropolis magazine but opted for the cheaper overseas insurance packages. The Eikaiwas didn't tell us workers about enrolling into the NHI when we first started for their crappy companies. Hard working teachers put in more than 29.5 hours per week. The Labor Law Office should investigate some of these illegal companies...

You could provide the best conditions in the world and it would make very little difference. the majority of employees will have left either at or more usually before the time that they start to become worth the money they are getting paid.

Hogwash, every large ekaiwa out there recruits using "career" as a major theme in hiring, why does Gaba's recruiting site URL "http://careers.gaba.co.jp/" ? teachers ditch language schools because they are lied to and mistreated left, right and sideways.

Re: health insurance
I spoke to the Kansai immigration office last week about the new law coming into effect and they said you need to have proof of health insurance - doesn't have to be national, just proof of health insurance.

Well, I certainly agree that people treat major eikaiwa with the disdain they deserve and that they might treat them better, that is give them better service if their conditions of work were better. However, I still contend that even with much better conditions, the vast majority would leave before they are any good.

I think you make an interesting point about shakaihoken. I agree that benefits such as covering a person in the case of being paralyzed is invaluable, and I would never belittle that kind of benefit. However, I do worry about the long term viability of the system. With Japan's shrinking birth-rate, (increasing) rate of "Furita", "NEET", I see the system having long term financial problems.

Regarding lowering salaries... I think it's a good idea, but I'm afraid that a lot of westerners in Japan don't see the SH system as having the same long term, tangible benefits as you do. A lot (including myself) see the actual amount of Yen we receive in our bank accounts. Of course if we were all going to stay in the country for the rest of our lives, people might be able to buy in the system. But as I mentioned before I do think there are viability problems. Furthermore, anyone who isn't planning on spending their whole life in Japan won't want to pay ANY money into a Japanese pension system. That will discourage people working in the Eikaiwa industry, as well as westerners across all industries, from working in Japan.

The one thing I take a bit of exception to is:
"Is paying into SH for your employees really that bad? I occasionally hear this same concern from western eikaiwa owners who employ people- I mean on their internet posts. If any school owners are that worried about SH putting a super big dent in their earnings should they be in business in the first place? It sounds like they are almost over the edge already."

Of course it's not "bad." I didn't suggest that. But for a small school, a school that I think is actually offering better service than most of the big Eikaiwa schools, it IS hard for a small company starting out. In the future I think our school will be able to compete (if only locally) with some of the bigger schools. However, mandatory SH enrollment would unnecessarily make it harder for ALL schools in the Eikaiwa industry. As I said, generally speaking instructors would rather make more money and not pay into a system whose benefits they will likely never see. Maybe it is best having people who plan to spend their lives in Japan enrolled in the plan. But I think that constitutes the minority, not majority, of westerners living in Japan.

About "over the edge already"... I think it's a bit presumptuous unless you have any kind of experience having run a business. Remember that a business is a business. A successful business will be profitable as well as offer a service that people will find valuable. Being profitable does factor in the cost of employing its employees. All of these things I understand. However, if you start taking money out of those employees pockets and putting it into a system that they do not support and cannot use, you'll find less employees that are willing to work for that business (read "in Japan"). Furthermore, you will discourage the formation of businesses, sometimes good businesses, business that could offer real, valuable service.

This topic also begs the question, what is a part-timer? I mean, we all know Japanese friends/family/etc. that are "part-timers" that are working 40-40+ hours a week. Or is it our western idea of part-time work which actually IS part-time work, consisting of 15-20 hours/week?

I look forward to your response.

A part-timer is a cheap disposal worker with lower wages and no fringe benefits, bonuses eg. eikaiwa entertainer (not real teacher) who is mistreated by their employers, usually Japanese.

Is paying into SH for your employees really that bad? (I meant that bad for your profits). But starting out and the struggles with it are just a part of life.

SH might be the least of your problems anyway. Do you know that once you reach 10million yen in sales per you have to start paying 5% on the amount you take in (not profits)...then you deal with the other usual taxes, costs, and SH(if that happens). Maybe you do know...but if you don't then this is a new rule I think that started in the last few years. But there are some things you can do...like split the business in two if you are married, for example. Don't know all the details but there are legitimate options. And then think about this 5% will come to 10% in the future.

I, myself have a Mickey Mouse operation I do at night and Saturdays just to boost my salary. It doubles my ALT salary so I claim it on my tax. But get lots of cool write offs for teaching in my house. I know very well what's involved to get bigger and I have no desire to try to take what I have any further and if you do then I hope you do well.

If you don't have to pay SH (even if it might be in the gray area) I'd say go for it, that's your business. But I know if you had a very solid operation you would not be concerned so much about cost...that is if you had no choice but to pay in SH which seems you are worried about.

Again IF schools HAD TO start paying SH there are plenty of small schools who could absorb that and can continue going strong. Would your school be one of them? Would you still be OK if you had no choice but to pay into it? I don't know the legal difference between PT and FT. But that is between you and the system.

Talking numbers with specific example? I have a friend who runs a mom and pop small eikaiwa. Great operation. I think they employ around two FT and 2 PT teachers. Their sales I think are around 30-35 million yen. Maybe down recently with the recession but still OK. And when the new rule for sales tax kicked in their tax bill went up +1,500,000 yen per year just like that- they had to pay more but nothing came crashing down. I don't know if their FTers get SH but even if they do they would have no problem adsorbing the extra 1,000,000 (?) or so extra cost per year. And when sales fax goes up to 10% they will still be healthy, although probably griping. I'm not sure what their take home is. But (like they always have from the beginning) they - like clockwork - take international vacations 3x per year and during peak seasons(!!), have a house that's paid off, and have a pretty decent car. My friend really doesn't care about making more money at his current point in his small-biz career. He just gripes if he suddenly has to work more than he thought (like if someone quits). That's his goal now- to work as little as possible and have his teachers do it for him. He succeeded so personally I know it can happen...but not for everybody.

I just know the above situation closely. But I know there are plenty of schools of all sizes that would be able to handle SH and other things like the 10% sales tax probably coming up in the next several years.

Good luck....I hope all goes well. Even with all these things that may seem impending you will still have a chance to do well...some have and will continue to do well. But not all will do well. That's just life...again, good luck.

These eikaiwa schools go in cycles. They start, they boom and then they burn. Maintaining a school in good health can't be done. Your mate's school will go bankrupt at some point and they will be left homeless begging for food. It's just the nature of the game.
From anonymous to anonymous.

...well...he's been in business for around 20 years actually...

Do you understand the legality of bankruptcy? His schools will technically go bankrupt? Are you saying he will have to go to court and have his school - a small business - declared bankrupt?

Many fail. I don't know the percentage. If you live in Japan long enough you start to get to know of some of the smaller schools (whose owners are often gray haired and pretty well off and happy after working successfully for many years- Japanese or gaijin) that operate well and will continue to operate well even through this current recession. And you also might know some flaky operations that don't last so long for various reasons. But just like coffee shops eikaiwa shops can open up just about anywhere- some will last and some won't.

You sound bitter about something

Anonymous,
Thank you for the insightful addition to our discussion... and for the encouragement.

Although I think your comment is both poignant and (obviously) well thought out, you should leave the conversation for people who actually have something meaningful to say.

Look, the situation is simple.

Eikaiwa is for (a) short term holiday makers, who want to stay 2 or 3 months in Japan, and need to earn money to eat cup noodles or boiled rice, OR (b) retarded people.

If you are in Eikaiwa, you are either (a), or you are (b).

Purely and simply, Eikaiwa is for RETARDS, end of.

THORN

I wouldn't describe your friend's school as a small one. It is definitely middle sized.

The majority of businesses, Japanese businesses, of this kind of size and quite a lot larger come to that - let alone smaller ones which are quite numerous at this time, would not be seen dead paying shakai hoken to staff in a business that size. OK? I'm talking dentists, doctors, you name it. They could do it, but they refuse. Personally, I believe that is very unfair in the case that said businesses are investing in developing long term expertise in their staff. They should be more generous to people in that category. However, in the case of eikaiwa, the chances of an investment of that nature paying off would be slim indeed. Moreover, as pointed out above, most don't even want it: the real problem is with the insurance in case of medical disaster. That should be fixed up.

Paying out shakai hoken in situations that other businesses wouldn't dream of doing likewise to prove some kind of point to yourself and the world might not send you broke - it would just be a pain in the bum and a complete waste of money.

Interestingly enough, Japanese labor law says that you only have to work when you're being paid. So if your school is paying you just for the class time, then legally you don't have to do any preparation, marking etc. outside of paid lesson time.

Instructors should claim for prep and marking from their manager. And if he won't pay you for it, then like I said, legally you don't have to do an ounce of work once the lesson's over.

I was working at a school recently that told the manager that they wouldn't do any work outside the lesson unless he paid them for it. He had no choice but to bow to their demands.

I think the sooner Eikaiwa instructors realized this and followed the law to the letter, the better for them.

The Ripper

I picked up on this issue via Japan Times, the union, and Arudou Debito.

The ministry is only emphasizing that after April 1, 2010, they will specifically be looking for the helath insurance card. This is mentioned in a list of eight items for visa renewal, as part of Number Eight. (About the duty to enroll in social insurances).

People are interpreting this to mean that they can continue to blow off the pension.

But starting January 2010, the Social Insurance Agency goes away. It will be replaced by the Japan Health Insurance Association (now functioning), and the Japan Pension Agency.

There is no saying how the Japan Pension Agency will function and whether it will share enrollment information with the immigration officials.

It may well be that you will have to show a health insurance card, and nothing about the pension (because the immigration can just go and get that record anyway).

Maybe nothing will change. But it seems to me if there are all these revisions going on, it makes sense at least to sign up for the thing.

You can be two years in arrears according to the coupon.

Forgive me for being slow on the uptake, but from what I'm reading ALL foreign residents as of 2010 MUST be enrolled in the compulsory J Govt. Health Insurance Scheme, in order to renew our Visas?

I have private health insurance that I am happy with. I've been with them for 6 years. Will I have to cancel that insurance and be forced to go onto a shcheme I don't want? Sounds a little Communist to me... Again sorry for maybe missing something...can anyone clear things up please?!?

Sounds a little Communist to me...

Nate, I would agree. No! It's very communist and we must declare war on it. I'm afraid Obama is going to be the next Hitler and he is destroying our country that we all love. It's going to happen in USA where old people will be euthanized in special "death panel" camps as even Sarah Palin has confirmed this. It's already happened in England and Canada (where everyone seems to know people from those countries who died as a result of socialized evil communist Hitlerized medicine). And it's happening in Japan. Quick!! Leave Japan!! No! Leave the earth. We are all trapped by socialized medicine where we will all DIIIIIIIIIIIIIIIEEEEEEEEEEEEEEEEE!

If that happens, all you Eikaiwa teachers better stay healthy, because the Japanese would likely prefer to euthanize you then shell out a large some on one of their dispensable English puppets.

http://www.hmrc.gov.uk/nic/japan.htm

[quote]National Insurance Contributions Office - Agreement Between the UK and Japan on Social SecurityYou may be interested to know about the Agreement between the UK and Japan on Social Security.
Following discussions between officials of the UK and Japan, the Agreement came into force on 1 February 2001. Entry into force was announced in a Press Release.

The main purpose of the Agreement is to ensure that a person is not liable to pay social security contributions for pension purposes to both countries' schemes at the same time. The parties to the Agreement are the United Kingdom of Great Britain and Northern Ireland, the Isle of Man, Jersey, Guernsey (including Alderney, Herm & Jethou) and Japan. The Agreement does not cover benefits.[/quote]

Not all officials in Japan are aware of this treaty. Certainly the yobbo at my local ward office wasn't.

You won't be forced onto it, but then again, without evidence of paying into either the shakai or kokumin hoken you won't get your visa renewed.

There you go...free will at work.

Nenkin (pension payments) are generally bundled with shakai or kokumin hoken but you don't have to pay them if, for example, you are from a country with a dual taxation agreement with Japan. If the company you work for wants you to take the whole bundle then just opt with the kokumin hoken and set it up yourself at the local ward/city office.

If you are a UK citizen and have moved to Japan the following may be helpful to you.

Japan and the UK have a dual taxation agreement. Before coming to Japan you should have registered yourself with the Non-Residents section of Revenue and Customs in the UK.

If you have not done so yet, do not delay in doing so.

Leaflet IR20 will explain more about this:

http://www.hmrc.gov.uk/pdfs/ir20.htm

Assuming you have elected to pay N.I. contributions whilst abroad you may not be aware that you do not necessarily have to pay Class 3 contributions and can pay Class 2 instead.

Class 2 contributions are currently 2.10 pounds per week, whereas,
Class 3 contributions are currently 7.55 pounds per week.

You have a time limit in which to backdate contributions without penalty of five years from your date of entry into Japan. There is a further time limit of two years which would include some form of penalty charge.

To find out if you are eligible to pay class 2 contributions you should first contact the Revnue and Customs for a pension forecast. Further details are available in leaflet NI38.

http://www.hmrc.gov.uk/leaflets/nic.htm

After you receive your pension forecast you can decide if you wish to pay contributions. Should you do so, then you need to fill out form NI38 and send it to them. After a while you will receive a letter telling you what you must pay to Revenue and Customs.

Note: N.I. payments can only be made by cheque. If you do not have a UK bank account or nominated person set-up as proxy you will need to pay by a sterling cheque. This can be done by contacting the main branch of banks such as UFJ in your local area. The cost of producing the cheque is about 5000 yen and UFJ uses Citibank to issue it's cheques. If you have a Citibank account you should check with them first.

Upon receipt of the bankers draft you will send the money by post to the address supplied by revenue and customs.

If you wish to use a proxy then you can only use a proxy from the year that you asked to register the proxy from. As far as I am aware you can not use a proxy to make back payments to Revenue and Customs.

"The 28 hours is important because the law stipulates that companies must enroll employees in shakai hoken if the employees work 30 or more hours a week."
Shawn, this is a misconception:
1) This is not stipulated anywhere in the law
2) the 3/4th of full-time notion is simply an internal guideline that the Social Insurance Agency uses to determine who to crack down on. (Like when a police officer decides not to pull someone over for going 5km over the speed limit, but will definitely do so for going 10km over the speed limit...)
I was at a meeting with other union leaders on the 13th of July in the Diet building #2 with officials from the SIA, and this is what they told us.

I also recently visited my ward office in Kanagawa and asked of the minimum enrollment requirements for Shakai Hoken. I was told by the representative that if a company has
1) 5 workers or more
2) and each of these five members made at least ¥130,000 a year ( ¥10,833 a month)
then the company is obligated under the law to enroll everyone into Shakai Hoken.

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