Japan Cuts Employment Insurance Premium Again — February 27 Update
Japan employment insurance p is back in focus as the MHLW confirms a premium cut to 1.35% from 1.45% effective April 1. This is the second straight reduction, reflecting higher reserves. The unemployment benefits portion falls to 0.6%, split by employers and workers, while other components stay the same. We explain the change, quantify savings for FY2026 payroll costs, and outline effects on unemployment benefits Japan. Expect a small boost to margins and disposable income amid a tight job market.
What changes on April 1
The employment insurance premium drops to 1.35% from 1.45% starting April 1, per the MHLW. The cut centers on the unemployment benefits portion, now 0.6% shared by employers and workers. Other components are unchanged. It is the second consecutive reduction as reserves rise, according to local reporting. See coverage from Asahi Shimbun for details source.
Because only the unemployment benefits slice moves, the 0.10 percentage point reduction is effectively shared. In practical terms, employer and worker burdens each ease by about 0.05 percentage point on the insured wage base. The rest of the premium structure stays fixed. That structure funds stabilization and training programs, which are employer-heavy, so worker relief aligns with the benefits portion only.
Employer impact and FY2026 payroll planning
The 0.10 percentage point drop saves ¥100 per month for every ¥100,000 of insured pay. At ¥300,000 monthly wages, total contributions fall about ¥300, split roughly ¥150 for the employer and ¥150 for the employee. At ¥500,000, total monthly savings are near ¥500. These small amounts add up across headcount, trimming unit labor costs.
For FY2026, plan a 12‑month effect from April 2026 to March 2027. Annual savings are about ¥1,200 per employee for every ¥100,000 in monthly insured wages. For example, at ¥300,000, the employer’s share declines roughly ¥1,800 per year, with the same for the worker. Update payroll systems, accruals, and quotations to reflect the 1.35% rate.
Worker take-home pay and benefit access
Workers should see slightly higher take-home pay starting with April payrolls. The change is small, about ¥150 per month at ¥300,000 wages, but it is reliable and continues through FY2026. Employers should communicate the new Japan employment insurance premium rate on payslips so employees can verify the lower deduction from April onward.
Employment insurance supports eligible workers who lose jobs or face reduced hours. Benefit access requires application and verification, typically through Hello Work offices. Some benefits are claim-based, so timely filing matters. For a concise overview of related public benefits and claim types, see this explainer from LIMO source. Always check the latest MHLW guidance before applying.
Macro signals and compliance steps
This cut slightly supports corporate margins and household spending. Sectors with large payrolls and thin margins gain a bit more, while consumer staples and services may see a small lift from extra disposable income. The broader job market remains tight, so wage dynamics and productivity will likely matter more than this modest premium change.
Confirm that HR and payroll software reflects the 1.35% total rate from April 1. Update employee notices, vendor contracts, and cost models. Recalculate FY2026 payroll costs using the new rate and document assumptions. Track future MHLW premium cut guidance in case reserves shift again. Keep clear audit trails for internal controls and year-end reviews.
Final Thoughts
The MHLW premium cut to 1.35% from 1.45% on April 1 is modest, but it is certain and immediate. Employers gain about ¥100 in monthly savings per ¥100,000 of insured wages, shared equally with workers through the unemployment benefits slice now set at 0.6%. For FY2026, these small monthly amounts compound across teams and contracts, trimming labor costs and nudging net pay higher. We recommend updating payroll tables, internal budgets, and vendor quotes this month, then confirming April payslips match the new Japan employment insurance premium rate. Keep an eye on reserves and future MHLW notices as the labor market and benefit outlays evolve.
FAQs
When does the new employment insurance premium take effect?
The new rate of 1.35% applies from April 1 payrolls. Employers should ensure systems switch in time for April salary calculations. Workers will see the lower deduction on April payslips. The change runs through FY2026 unless the MHLW issues further updates later in the year.
How much will employers and workers save each month?
Savings are about ¥100 per month for every ¥100,000 of insured wages, split roughly equally. At ¥300,000 wages, that is about ¥150 less per month for the employer and ¥150 more in worker take-home pay. Annual savings scale with wage levels and headcount.
Which part of the premium changed?
Only the unemployment benefits portion changed. It now stands at 0.6% and is shared by employers and workers. Other components remain the same. This is why the burden reduction is split between employers and employees, while the employer-only parts of the premium are unchanged.
What should HR and payroll teams do now?
Update payroll software to the 1.35% total rate starting April 1, revise FY2026 budgets, and communicate new deductions on payslips. Recheck employment contracts or quotations tied to labor cost rates. Keep documentation for audits and monitor new MHLW notices in case contribution rates are adjusted again.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.