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60% of loans to Japanese unemployed become overdue

Publication Date : 14-01-2013

 

About 60 per cent of the loans extended under the Japanese government scheme to assist the unemployed have not been repaid on schedule as of the end of last March, according to the Health, Labour and Welfare Ministry.

About 4.85 billion yen (US$54.21 million) of the loans became due by the end of March, but about 2.93 billion yen of this amount has not been repaid.

The ministry assumes the borrowers had difficulty finding jobs due to the economic slump. Making matters worse is that loans were extended to the elderly and other people who had difficulty supporting themselves.

Therefore, the total amount of loans that are not repaid on schedule may increase further.

The special loan scheme was launched in October 2009 in the wake of the Lehman shock the previous year to encourage unemployed people to find new jobs so they would not become a burden on society by receiving welfare benefits.

Under the scheme, people could borrow money every month for a year, without the need for guarantors. Interest rates were set at 1.5 per cent, but in some cases the loans were interest-free.

Up to 3.4 million yen could be extended per household. Those eligible to receive the loans were low-income earners who do not pay local resident taxes.

According to the ministry, about 330 million yen out of about 680 million yen were in arrears by the deadlines set for repayment in fiscal 2010, and about 2.6 billion yen out of about 4.17 billion yen by the fiscal 2011 deadlines.

The Japan National Council for Social Welfare calculated that in a three-year period until October last year, about 65,000 people borrowed a total of about 55.3 billion yen.

An official of the ministry's Community Welfare and Services Division said, "The employment situation is severe and many [of the loan recipients] have been unable to find jobs."

The national council said its local social welfare councils are in charge of extending loans and they do not have the authority to investigate borrowers whose whereabouts are unknown.

According to the local councils, there are cases in which loans have been extended to elderly persons who have difficulty finding jobs, people who have not worked for a long time, and those who should have been covered by welfare benefits.

Though some borrowers were relieved as they could obtain loans for basic living expenses, others received welfare benefits because they could not get jobs or they declared personal bankruptcy when their debts ballooned.

*US$1=89.46 yen

 

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