What is Wages? A Clear Explanation of Income Earned in Type B Continuous Employment Support!

One of the employment options for people with disabilities is the Type B Continuous Employment Support Office, a place where individuals who find it challenging to work in regular companies can work while utilizing welfare services.

This article is intended for those considering using these services or individuals with disabilities who are contemplating their career paths, so please read to the end.

1. What is Kōchin?

Kōchin refers to the money paid to individuals who find it difficult to work under a typical labor contract due to health conditions, and who engage in production activities (tasks or work) through employment support like Type B Continuous Employment Support (positioned as a welfare service).

Kōchin encompasses all payments made by the business operator to the user, regardless of the name, such as wages, salaries, allowances, bonuses, etc.

Since it is not based on a typical labor contract, the compensation for products or achievements is considered kōchin, not wages.

1-1. How does the Kōchin system work?

The amount paid is distributed among the number of people involved in production, calculated as the income from production activities minus the necessary expenses for the business (such as material costs, transportation, consumables, order activities, repair costs, utilities, etc.). (The specific kōchin may vary by office.)

Necessary expenses do not include personnel costs or operating expenses of the office.

Therefore, the income from employment support businesses, which is the total revenue from contracted work and product sales, forms the basis for kōchin.

There is a rule that the average monthly kōchin paid to each user must be at least 3,000 yen. However, it does not mean that 3,000 yen is guaranteed as a minimum wage, so caution is needed.

From this, it can be said that the nature of kōchin is "distribution money."

In other words, the key to improving kōchin distribution is how much the costs related to production or service provision can be reduced while increasing revenue from contracted work.

Some might think that reducing the number of people would increase the kōchin distributed, but doing so would deprive people with disabilities of employment opportunities.

It is up to the office to balance protecting the employment of people with disabilities, improving kōchin distribution, and managing the office.

1-2. Average Amount of Kōchin

According to the Ministry of Health, Labor and Welfare, the average amount of kōchin in Japan for fiscal year 2022 was 17,031 yen per month, equivalent to an hourly rate of 243 yen.

Compared to fiscal year 2021, there was an increase of 3.2% in monthly amounts and 4.3% in hourly rates.

However, the amount remains low compared to Type A Continuous Employment Support, where a minimum wage is guaranteed through employment contracts.

Reference: Status of Employment Support Measures for Persons with Disabilities | Ministry of Health, Labor and Welfare

1-3. What Do You Need to Do to Earn Kōchin?

Even those who find it difficult to work under an employment contract can earn kōchin by engaging in production activities with the necessary support.

The tasks that generate kōchin vary by employment support office. Tasks can include packing products, baking bread, cleaning buildings, and more, depending on the user's suitability.

Some offices specialize in internet-based work, offering tasks like YouTube data analysis, web design, and site construction, which can be completed solely on a PC.

Each employment support office has its own unique characteristics.

1-4. Can People with Disabilities Live on Kōchin Income and Disability Pension Alone?

As explained above, according to the Ministry of Health, Labor and Welfare's survey results, the average kōchin has been on the rise since fiscal year 2009, reaching 17,031 yen in 2022.

Additionally, some may be eligible to receive a basic disability pension depending on their disability.

However, the amount received varies depending on the degree of disability. For example, those with a level 1 disability can receive 83,551 yen per month, which, combined with kōchin, amounts to about 100,000 yen in income.

Considering living expenses such as rent, food, and utilities, it is challenging to live solely on kōchin and basic disability pension.

As a result, some receive financial support from family or live in group homes. 

To address these issues, the government is promoting the "Kōchin Improvement Plan Support Project," which includes dispatching management experts to employment support offices and conducting training sessions for human resource development.

If you are considering combining kōchin income and disability pension to be under someone's care, please refer to the following article.

Reference:

For those who want to know about living expenses and support systems necessary for living alone, even if it's challenging at the moment, please refer to the following article.

Reference:

2. Do You Need to File a Tax Return Because You Receive Money as Kōchin?

In conclusion, whether you need to file a tax return depends on your situation.

Typically, income earned based on a contract with a business (company or corporation) is called salary income. On the other hand, kōchin is income (money) earned "without an employment contract," so it is not considered salary income.

However, it falls under the category of "miscellaneous income." Since miscellaneous income is not subject to withholding tax, it is subject to tax filing.

For more information on withholding tax and tax filing, please refer to the following site.

Reference: Comprehensive Explanation of the Withholding Tax System! Introducing Income Subject to Withholding and Cases Where It Is Not Required | Credit Saison Co., Ltd.

Legally, if the annual kōchin received is 550,000 yen or less (approximately 45,833 yen per month), filing is not required.

Considering the average hourly wage and working hours, it is unlikely to exceed 550,000 yen, and in most cases, filing is not necessary.

If you are unsure whether you need to file a tax return, you can contact the National Tax Agency's consultation desk or your local tax office for inquiries.

Below is additional information on the concepts of withholding tax and tax filing.

Reference: National Tax Agency | Special Provisions for Necessary Expenses for Home Workers, etc.

2-1. What Exactly Is Withholding Tax?

Withholding tax refers to the process where a business (company or corporation) deducts the tax (income tax) on annual income from an employee's salary in advance. It is mandatory for businesses that pay salaries to employees.

By conducting withholding tax, employees do not need to file a tax return, and they can pay a small amount of income tax from their salary each month. For the government, withholding tax provides "stable tax revenue" and ensures "accurate collection of income tax," offering significant benefits.

2-2. Is Tax Filing Necessary?

Tax filing refers to the "procedure for paying income tax."

Employees under an employment contract are generally exempt from tax filing because the company or corporation conducts withholding tax and year-end adjustments, filing and paying income tax for all employees.

Kōchin from Type B Continuous Employment Support is considered miscellaneous income (income not from salary), so tax filing is required depending on the income amount.

3. Differences in Salaries Between Type B and Type A Continuous Employment Support

The major difference between Type A and Type B is the presence or absence of an employment contract.

Type A involves an employment contract, ensuring a salary with a guaranteed minimum wage. On the other hand, Type B is for those who find it difficult to work under an employment contract, receiving compensation in the form of kōchin based on their achievements.

Although the amount is smaller compared to Type A, one of the features is that individuals can work at their own pace without pressure, according to their health condition. Additionally, there is an option to advance to Type A once they become accustomed to the work.

If you want to know more about the differences between Type A and Type B Continuous Employment Support and the process of utilizing them, please refer to the following article.

Reference:

If you want to know more about Type A Continuous Employment Support, please refer to the following article.

Reference:

4. How Do People with Disabilities Perceive Kōchin?

Receiving kōchin as compensation for production activities or achievements can boost confidence in working and serve as motivation to continue working.

However, many express that "disability pension and kōchin alone are far from enough to live independently or buy what they want," and "they feel guilty for relying on others," indicating that while they may formally participate in society, there is a significant barrier when focusing on the essential aspects.

Moreover, there are notable negative opinions such as:

• Feeling like they are not participating in society because they do not pay taxes
• Struggling to maintain motivation due to working for extremely low wages, such as 200 yen per hour or even less
• Considering resignation because negotiations with supervisors or offices regarding wages or tasks do not lead to changes, and instead, worsen human relations

There is room for improvement in the approach to continuous employment support.

While there is a focus on improving kōchin, addressing the essence of aspects like "working styles" and "finding unique value for individuals" reveals numerous challenges in terms of social participation, economic independence, employment support, and return-to-work support.

5. Why Has the Concept of Kōchin Become Established?

The establishment of the concept of kōchin can be attributed to the following factors:

• No employment contract
• Work itself is low-paying (weak sales activities)
• Offices do not focus on kōchin (lack of research by companies/corporations)
• Flexible commuting plans as a trade-off
• Weak pricing strategy

Since there is no employment contract, distributing the amount remaining after deducting necessary expenses from the income of contracted work to users suffices.

Many offices may feel that they are protecting employment in this way. While protecting employment is important, focusing more on social participation and value creation for users might bring about change.

Additionally, the majority of work generating kōchin involves simple tasks.

For those who struggle with simple tasks, continuing such work may increase mental stress and not contribute to career advancement.

Some offices believe that "this is a place of belonging before being a workplace," and that they are providing a place of belonging and employment, valuing things more important than kōchin.

In extreme cases, some offices claim that "kōchin is not the most important thing." Where have the words "social participation," "economic independence," and "providing employment opportunities," which are the higher concepts of employment support, disappeared to?

6. Conclusion

Considering the previous discussions, it seems that simply receiving work is not sufficient in continuous employment support.

It is heard that many offices struggle with sales activities to acquire work. There are cases where, despite taking on a large volume of work due to accepting very low-paying jobs or projects, kōchin does not increase.

Accepting work at low prices reduces the profits for both the office and users, lowering the motivation of workers.

Even if you tell participants to "keep a high motivation and work," it is difficult unless the fundamental issues are addressed.

For companies, there is a sense of doing good by creating jobs for people with disabilities.

On the office side, many perceive that they are contributing to companies and society by securing work for users and providing affordable labor.

From Ayumi's perspective, it is neither goodwill nor anything else, but rather a failure to make efforts to fairly evaluate the value and compensation of work. There is no effort to create added value, focusing mainly on outsourcing projects. Users (people with disabilities) are left behind, and it seems to be a harmful tradition.

It is wrong that basic human rights are not guaranteed just because someone has a disability.

Behind the system of the word "kōchin," there is a deep darkness based on justice and grand principles.

In the economic circulation system of continuous employment support, based on the beautiful words of disability welfare, social participation, employment of people with disabilities, and independence, I would like to continue researching who and how benefits (benefits from exploitation) are being enjoyed.

Furthermore, I hope to continue promoting and proposing approaches in Ayumi's own way so that the government can change the system to allow genuinely and sincerely operating continuous employment support providers to survive.