What’s Ahead in 2021—Upcoming Money Matters to Know About in Japan
Law amendments, doubled payouts, tax deductions, and lower phone bills—Japan’s financial planners and advisors are counseling clients on these 5 money matters, occurring in 2021.
Aside from the economic repercussions of pandemic recovery and the continued uncertainty of the Tokyo Olympics, there are other events in 2021 that will have financial ramifications to earnings and savings in Japan.
Here are 5 money-related matters slated to occur in Japan this year that you should know about.
1. Amendments to childcare and nursing leave law
The latest amendment to Japan's Child Care and Nursing Care Leave law, effective from January 1, 2021, allows parents and guardians and those caring for elderly parents to take childcare and nursing leave in hourly increments.
Previously, part-time employees who worked 4 hours or less a day were not allowed to request childcare or nursing leave. Full-time employees could request childcare or nursing leave, but such requests had to be taken in half-day increments.
In this revision, both full-time employees and part-time employees will be able to request childcare leave by the hour, and companies and employers must amend their rules of employment accordingly.
This amendment is one put in place as the Japanese government attempts to rectify parents' and caregivers' low participation in the workplace. The revision aims to support parents and caregivers who telework and remote office workers, allowing workers to switch between work and parental duties with greater ease.
[Source: Outline of Child Care and Nursing Care Leave Law (Japanese site), Ministry of Health Labour and Welfare]
2. Amendments to mandatory retirement age law
From April 20, 2021, amendments to the Stabilization of Elderly Person's Employment will go into effect, encouraging employers to make a more significant effort toward retaining employees until age 70. This amendment does not obligate employers to keep employees beyond age 65. What it will do, however, is abolish the concept of a "mandatory retirement age" and encourage the continued employment of workers until age 70.
This amendment aims to target Japan's declining population and, subsequently, the working-age population—issues contributing to Japan's long-standing labor shortage. Yet, because there are no penalties for not employing these new amendments, human resource firms are doubtful if any significant changes will be made here.
With life expectancy in Japan regularly topping global charts, this brings its own challenges of supporting the health, wellness, and financial stability of a super-aging population. The measures Japan puts into place here are actions that the rest of the world will likely watch in the 100-year life expectancy era.
[Source: Stabilization of Elderly Persons' Employment, Amendment (Japanese site), Ministry of Health Labour and Welfare]
3. New mortgage extension rules for tax deduction
With concerns that the pandemic could adversely affect home sales, the central government is planning to extend the tax deduction of mortgages from 10 years to 13 years for homes bought by September 30, 2021 for newly built houses, or by November 30, 2021, for the purchase of condominiums.
House owners must move in by the end of December 2022 to be eligible for the tax deduction credit.
In addition, the target property's floor area will be changed from 50 square meters or more and lowered to 40 square meters or more. Other eligibility requirements apply. This article from Real Estate Japan provides a thorough English summary of the eligibility requirements.
[Source: Extension of mortgage tax breaks (Japanese article), Ministry of Land, Infrastructure, Transport and Tourism]
4. Doubled payout to help newlyweds
In a survey conducted by the National Institute of Population and Social Security Research, lack of financial resources was one of the main reasons singles gave for remaining unmarried. Japan's government responded by allocating a budget, administered by participating local governments, for newlyweds.
While this program is not new, the handout is up from ¥300,000 to ¥600,000. And the requirements for who receives the amount has relaxed, increasing the annual income limit to a dual-income of less than ¥5.4 million per year and the age to under 40 years old. Previously, the upper age limit was 35, and the combined total income was ¥4.8 million annually.
Newlyweds in Japan will first need to find a participating local government. But more local governments are expected to sign up, as the central government has agreed to bear two-thirds of the costs of this program from 2021.
[Further reading: Japan newlyweds can receive up to 600,000 yen to start new life (English article), Kyodo News]
5. Lower phone bills for all
The Suga administration has continued with its pursuit of lower monthly cell phone fees for Japan. And it appears that 2021 will see these lower bills realized with many carrier companies revealing plans with prices that are in some cases less than a quarter of previous monthly costs. Previously, users would pay between ¥7,000 and ¥8,000 per month, according to Statista.com.
According to Nikkei Asia, price wars over users will begin in the spring. In fact, Rakuten Mobile has recently declared a ¥0 plan, with a 1GB a month data usage, essentially giving users a free phone number and mobile service. Additionally, users who sign up during Rakuten’s current campaign period can receive a free year of service for a 20GB data plan.
Repercussions to moves like this by large carriers will likely reverberate through the telecommunications industry as smaller carriers scramble to compete.
[Further reading: Japan telecoms plan spring rate war for mobile services (English article), Nikkei Asia]
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