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  5. Will Companies be Prepared for My Numbers?

Will Companies be Prepared for My Numbers?

Toshihiro Enami
Senior Research Fellow

Wednesday, September 16

At long last, My Numbers are ready to be sent out to citizens in October 2015, and companies will have to start using them in practice from January 2016. The media have stirred up quite a ruckus concerning whether or not companies will be ready for My Numbers. Let us look at whether preparations are progressing and what measures companies need to take in order to be ready.

1. Is public awareness of My Numbers low?

Some TV programs have asserted that “over 70% of the population still doesn’t know what My Numbers are!” This number is based on the common opinion survey conducted by the Cabinet in January. In my opinion, it was impressive that as much as 28% of the population actually responded, “I know all about My Numbers.” 

Figure 1: Awareness of My Numbers

Awareness of My Numbers  

Source: “Public opinion survey on My Number (social security and tax number) system”, February 19, 2015, Office of the Cabinet, government publicity bureau.

What I mean is that at the time of this survey the government had not yet started publicizing the My Number system; it did not start airing TV commercials featuring celebrities until March. In other words, one can assume that those people who said they knew the details of My Numbers were most likely corporate HR personnel and not laypeople.  

The government began advertising and publicizing My Numbers to companies around autumn of last year. In November, the Keidanren held a “My Number Practical Applications Symposium” in order to educate companies on the new system, thereafter making the presentation materials used at the symposium publicly available on its website. Including my own materials, more than 800,000 people have downloaded information on the new system. There is no doubt that large companies are aware of My Numbers. 

2. Are companies preparing for My Numbers? 

What progress, then, have companies made in preparing for the new system? In order to answer this question, let us examine data from recent survey results reported by Nikkei Computer (*1) and NTT East Japan (*2). 

Figure 2: Implementation of groundwork for My Numbers

Implementation of groundwork for My Numbers  

Source: “My Numbers Won’t Wait”, Nikkei Computers, April 30, 2015.

The Nikkei Computer survey was targeted at corporate information systems departments. The survey revealed a troubling truth: a mere 20% of companies responded that they have begun preparations for My Numbers. Those 20%, many of which are likely large corporations or in the financial sector, said they would need about one year of work for full implementation. Of those companies which answered “Not yet implemented, but plan to do so”, the majority estimated less than 9 months of work, suggesting that they are aware of the potential effects of the My Number system and are proceeding deliberately. 

In contrast, 20% of respondents said they have not yet implemented, but if the system requires it they will do so in the future. Almost 40% of those companies said they did not know how long their implementation would take. There has apparently been a problem with information relating to the My Number system penetrating into the information systems departments of these companies. Finally, more than 40% of respondents said they either don’t plan to implement preparations or they didn’t know about such plans.

Because we don’t know anything about the size of the respondent companies, we can’t make any clear conclusions about the progress of private companies in preparing for My Numbers. Let us look at the data from NTT East Japan, then. According to that survey, there are large disparities among companies based on their number of employees.

Figure 3: Preparedness for implementation of My Number system

Preparedness for implementation of My Number system  

Source: “Public survey of corporate awareness and implementation of My Numbers”, NTT East Japan

Of the companies with over 300 employees, 20-some-% answered they hadn’t begun preparations, compared to 70-some-% for companies with 1 to 20 employees. Companies with fewer employees are clearly lagging in terms of readiness for My Numbers.

3. Will Companies be Prepared?

It seems that companies’ degrees of preparedness for My Numbers vary greatly according to their sector and size. Therefore, we cannot say unequivocally that because some companies are behind right now, all companies will be unprepared.

The first to express interest in preparing for My Numbers was the financial sector, which handles a vast amount of legal records, unlike most other sectors. Consequently, financial institutions have a three-year extension on submitting the 20 types of ledger sheets they produce. Despite this extension measure, banks will need a plan for obtaining My Numbers from their customers during those three years. Furthermore, because special preparations would be needed to deal with natural disasters, most banks have likely finished with the planning stage or even begun their preparations.

Large corporations will have to deal carefully with group company operations in addition to the HR payrolls and legal records of normal companies. For example, if HR records of group companies are centrally managed and My Numbers of other group companies are referenced; or if specified personal information is transferred between companies during a secondment or personnel transfer, these can be seen as illegally providing employees’ My Numbers. Systems must be tweaked so as to be in accordance with the law. In addition to the above, organizations must formulate appropriate guidelines and regulations for handling My Numbers, as well as overhaul their organizational, personal, physical, and technical safety management in keeping with those guidelines. As a result, these companies are likely to be at the planning or beginning to implement stages.

By contrast, the many SMEs with less than a hundred employees which have not even begun to plan for My Numbers are not a very big concern. Most of these companies process their HR payroll on paper, and most places that have computer systems use off-the-shelf software packages. Companies which use paper will use ledgers which include My Number-related fields specified by administrative bodies and carry out the necessary administrative procedures. Those companies which use software packages will simply need to update to a version that can handle My Numbers. The safe management measures for these companies are much more lax than those for large corporations, and there is still plenty of time for them to prepare.

The one possible area of concern is those companies with more than one hundred employees which do not recognize themselves to be large companies. As large businesses (*3), these companies are required by law to implement safe management measures for My Numbers. Companies whose business requires them to deal with and safely manage personal information will no doubt have certain safety measures in place. The cases to watch out for are companies which were exceptions to the regulations of the Personal Information Protection Act, and are therefore not conscientious about such private information, suddenly being required to implement such measures as large businesses.

4. In order to start My Numbers as planned…

Starting the My Number system on time will require all levels of government to engage in publicity activities to educate the more than 500,000 SMEs said to operate in Japan. In particular, they should make it clear which companies are considered SMEs and which are large businesses and immediately give guidance to the latter on how to prepare for My Numbers.

I have listed the checkpoints that need to be checked off by the end of the year below. As long as companies are aware of these points and check them off one by one, the My Number system should kick off without incident:

  1. Employee training and education: Provide training targeted at administrator in charge of My Numbers and general employees.
  2. Formulate basic guidelines and regulations: Clear up administrative and ledger preparation for My Numbers; define mission and extent of My Number administrator’s responsibilities; review common issues with My Number administrative work.
  3. Implement safe management measures: Review and implement organizational, personal, physical, and technical safe management measures based on guidelines.
  4. Review of commissioned work on My Numbers: Review relationships and contracts for commissioned work based on guidelines.
  5. Revamp My Number-related systems: Ensure systems such as HR payroll and legal documents are My Number-compatible.
Notes:

1) “My Numbers Won’t Wait”, Nikkei Computer 4/30/2015. Survey data from Nikkei Computer and Nikkei BP Consulting, March 2015.

2) NTT East Japan survey conducted April 2015. Link

3) Even if a company has fewer than 100 employees, it is not considered a SME if it falls into one of the following categories: businesses which handle personal information, businesses which receive commissioned work on My Numbers, financial businesses, or businesses which directly handle ID number work.


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