Recently, the Ministry of Internal Affairs and Communications released a survey report titled, “A survey on the promotion of consumer protection in the elderly support business, including identity assurance.” In response to the release of the report, Prime Minister Kishida visited the Toshima Ward Office in Tokyo on the same day of the release and had a discussion with officials from the ward and the Toshima Ward Residents Council of Social Welfare. Below comments from the Kishida Cabinet were posted on the official webpage of the Prime Minister’s Office following the discussion:

“The Kishida Cabinet, as part of our efforts to build a comprehensive social security system for citizens of all generations, is committed to addressing the everyday challenges of elderly individuals without family support and creating a society where they can age with peace of mind, even if they are alone. Specifically, as mentioned during the discussion with the officials of the Toshima Ward Office and the Toshima Ward Residents Council of Social Welfare, in light of the findings of the survey recently published by the Ministry of Internal Affairs and Communications, we will work with the Ministry of Health, Labour and Welfare to understand the current situation and identify issues related to identity assurance and other elderly support services provided by the private sector. We will follow this by developing a mechanism that will allow the elderly to safely and securely receive various support services, including identity assurance, from the private sector. Further, drawing from the insights of successful case studies, such as Toshima Ward, we will consider various measures, including the establishment of a consultation system for the elderly without sufficient financial resources, from an inter-ministerial perspective under coordination by the Cabinet Secretariat.” (Source: Official homepage of the Prime Minister’s Office)

According to last year’s estimates, the number of elderly individuals (aged 65 and above) in Japan exceeded 36 million, accounting for a staggering 29.1% of the population. This proportion is expected to continue rising going forward. Among households with elderly members, more than 60% are either single-person households or households consisting solely of a married elderly couple, which will become single-person households sooner or later. Against this backdrop, there is a growing demand for services for the elderly without family support, related to identity assurance, daily life support, and post-death administrative matters. This is an urgent issue our society has not experienced before. Addressing such an issue arising from social changes is of utmost importance for the nation, and the commitment expressed by the nation’s leader to confront it is of great significance. Meanwhile, meeting the demand from the elderly arising from social changes involves many complexities for the private sector to simply provide related services. Going over the findings of the survey report by the Ministry of Internal Affairs and Communications, I would like to reflect on the following points.

The report raises some serious issues that came to light through the surveys on various agencies involved in elderly support services. These issues are all right on point, and they cannot be resolved simply by leaving the provision of elderly support services to the principles of free competition in the private sector. If these issues are left unresolved or poorly managed, problems will frequently arise and reputable service providers will be reluctant to enter the market due to risks. Also, unscrupulous business operators will proliferate, preventing the widespread adoption of the support services. That being said, public agencies cannot endlessly pour taxpayer money into providing these services, either. Hence, it is crucial to shape these services in a way that allows the private enterprises to thrive, backed by appropriate support by public institutions. Here, I would like to provide some comments from the perspective of a private enterprise operator.

Elderly individuals, who may not have sufficient decision-making capacity due to aging and other factors, are the main contracting parties.

Signing contracts with elderly individuals carries risks for both parties—the service provider and the service receiver, the elderly—and must be done cautiously. For service providers, the possible change (i.e., deterioration) in decision-making capacity of the elderly due to conditions like dementia poses a significant risk. Hence, when signing these contracts, it is necessary to prepare for and prevent any potential issues by sufficiently explaining the terms of the contract to the elderly on multiple occasions and having a third party present when doing so. These measures, however, inevitably translate into additional costs that are factored into the price of the services. The same goes for risks associated with diminished decision-making capacity. If private companies cannot generate profits, they won’t be able to sustain their operations, but if they cut costs to secure profits, they may have to bear substantial risks.

The contract duration extends over the long term, if post-death administrative matters, etc., are taken into consideration.

Unlike simply providing goods or services, the contracts for support services for the elderly tend to extend over the long term, during which various additional costs can accrue. Unless revenue sufficient to cover these costs can be anticipated, quality service providers will be reluctant to provide these services. The fact that there are no appropriate elderly support services to address the pressing need for such services, a social issue, requires urgent attention.

Because service offerings are diverse and the methods and cost structure for providing the services vary, it is difficult to compare and assess service providers.

Most elderly service providers are small enterprises with limited service offerings. While it would be somewhat easier to compare and assess them if there were a substantial number of quality service providers in the market, this is currently not the case. In the future, it would be ideal to have a third-party organization gather and compile information from diverse sources, making it easier for prospective service users, i.e., the elderly, to compare and assess the service providers (a role our company could play).

The contract amounts are substantial, and a portion of the fees must be paid in advance before services are provided.

The contract amount for elderly support services tends to be substantial, as these services are not yet widely adopted and there are various risks involved. In fact, if some service providers offer services at low prices, this may imply that they are not taking on certain risks. In order to curtail risks for service providers, public institutions need to step in and play a role. Public institutions should provide a guideline and appropriate rules for the service providers, not only for collecting a portion of fees in advance before services are provided, but also in requesting payments after service delivery, which can be challenging if the service user lacks decision-making capacity or is no longer alive.

In many cases, there are no individuals that can guarantee the fulfillment of contractual obligations.

There are some laughable cases where the service provider, who is obligated to fulfill his/her contractual obligations to the service user, an elderly individual, is a sole proprietor and is older than the service user. Public institutions or third-party organizations should be involved in these transactions to ensure that contractual obligations are fulfilled. However, it is important to note that this will also add to costs.

Private enterprises, just like public institutions, serve to contribute to society. They contribute to revitalizing the economy by growing revenue, which leads to increased payments to suppliers, and to the consumption and taxation of the numerous personnel they employ. By generating profits and paying taxes on them, they also contribute to society. Therefore, public institutions should support private enterprises with sound principles in order to turn the new potential created by the super-aged society into a solid, functioning market. Above all, our country, considering its demographics and financial assets, must recognize that appropriate consumption and investment by the elderly are imperative to the revitalization of the economy. With the average age of the population approaching 50, Japan vastly differs from countries like India or the Philippines, which have more youthful demographics with an average population age of 20–29 years, and cannot rely on the younger generation to support the economy.

Hirotaka Shimizu
Chairman and CEO
Kamakura Shinsho, Ltd.