【Aging, safety net and fiscal crisis in Japan】No.119: Local Public Companies

In this column series, Yukihiro Matsuyama, Research Director at CIGS introduces the latest information about aging, safety net and fiscal crisis in Japan with data of international comparison.

Prefectures and municipalities operate local public companies to provide services such as hospitals, transportation, water supply, drainage systems, and so on. According to a report of the Ministry of Internal Affairs and Communications, the number of local public companies is 8,534, of which 3,639 drainage companies and 2,196 water supply companies comprise 68.3% of the total. However, hospital companies have the largest number of staff (Table 1). In Column No.18, I explain that there are two types of public hospitals: hospitals directly operated by local governments and hospitals operated by local independent administrative agencies. The local public hospital companies in Table 1 do not include local independent administrative agencies.

As shown in Table 2, the revenues from service users in the 2016 fiscal year are 8,875 billion yen as a whole, and the net income is 724 billion yen, so that management seems to be sound. However, this is the figure after accepting 1,975 billion yen of operating expense subsidies, and the financial burden of maintaining local public companies is substantial. In particular, it is a problem that local public transportation companies with annual revenues of 692 billion yen carry cumulative undisposed deficits of 1,762 billion yen.

Table 1: Basic data of local public companies

Source: Ministry of Internal Affairs and Communications

Table 2: Financial data in the 2016 fiscal year for local public companies

Source: Ministry of Internal Affairs and Communications

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