Social welfare, assistance for the ill or otherwise disabled and the old, has long been provided in Japan by both the government and private companies. Beginning in the 1920s, the Japanese government enacted a series of welfare programs, based mainly on European models, to provide medical care and financial support. During the post-war period, a comprehensive system of social security was gradually established.
The futures of health and welfare systems in Japan are being shaped by the rapid aging of the population. The mixture of public and private funding has created complex pension and insurance systems, meshing with Japanese traditional calls for support within the family and by the local community for welfare recipients.
The Japanese welfare state
Japan's welfare state has a non-typical conservative regime. Similar to other conservative countries, Japan has an occupational segmented social insurance system. Pre-war Japan once adopted a German-style social policy. Japan also borrowed ideas of pensions and health from the German system. In addition, Japan's welfare state embodies familialism, whereby families rather than the government will provide the social safety net. However, a drawback of a welfare state with the familialism is its lack of childcare social policy.
In Japan, 65% of the elderly live with their children, and the typical household is composed of three generations. The difference between Japan's welfare state and the traditional conservative system is the residual welfare state and the significantly low social transfer rate that Japan has. The social policies of the 1960s and 1970s were made as a compensation for failed industrial and economic policies. The social policy became a platform of electoral strategies only in the 1980s and 1990s, which happened after Japan's Liberal Democratic Party (LDP) lost its domination in the parliament in 1993. Also, social welfare programs extended to areas that were not productive and to people like the elderly or disabled who were not productive. Finally, the Japanese government provided social care programs to the elderly and children, along with the policy that promoted general equality. This contradicted the humanistic aspects of Confucianism's explanation, suggesting it was not appropriate to describe the Japanese welfare system as a "Productivist Welfare Regime".
Welfare expenditure
Japan also has comparatively low social spending: among the OECD countries in 1995, Japan spent only 14.0% of its GDP on social expenditures, lower than many other OECD countries: this figure compares to 15.4% in the US, 20.4% in the UK, 19.8% in Italy, 26.6% in Germany, 28.3% in France, and 32.5% in Sweden. Since Japan maintained sustained economic growth after World War II and had increasing equality, Japan's economic and social structure was perceived as somehow different from the European and North American models. This difference was explained in 2000 by a model called the "Productivist Welfare Regime". The model argued that the central economic policies conducted by the conservative Liberal Democratic Party from 1955 through 1993 caused Japan's economic growth in the post-war era. Since the Productivist Welfare Regime purposely provided extended social welfare only to those linked to productive sectors in society, to encourage economic production, it provided the economic gain. The Japanese familialism of its social care system, based on its Confucianism tradition, relieved the government from having to face social welfare stress, and undermined necessary gender welfare in Japan.
Government expenditures for all forms of social welfare increased from 6% of the national income in the early 1970s to 18% in 1989. Medical insurance, health care for the elderly, and public health expenses constituted about 60% of social welfare and social security costs in 1975, while government pensions accounted for 20%. By the early 1980s, pensions accounted for nearly 50% of social welfare and social security expenditures because people were living longer after retirement. A fourfold increase in workers' individual contributions was projected by the twenty-first century.