Immigration is the only quick solution to Japan’s declining workforce. But is Japan ready for a large influx of foreigners?

The issue of non-Japanese living long-term or even permanently is a controversial topic in modern Japan. Nonetheless, Japan has a growing labor shortage brought on by a declining population.

This is the fifth article of a six-part series on Japan’s Rural Revitalization. Together with each article, we’re also discussing each topic on Japan Unleashed, Parthenon Japan’s new official podcast.

The good news is that increasing numbers of non-Japanese are now long-term residents of Japan. Due in part to enhanced immigration procedures, there are over 3 million residents of foreign nationality who call Japan home. This means that today, roughly 2.2% of Japan’s population is foreign. While this might sound like as a minuscule number, it is a historic high. This is despite the challenges of living in Japan, which include not just the usual challenges of living in a foreign country but also issues like natural disaster risk and being accepted as an equal partner in a largely homogenous society.

Even so, the numbers speak for themselves as more people see Japan as a land of opportunity. While most gravitate to urban areas, others are headed to the countryside. But are they breathing new life into areas striving for revitalization?

Japan’s countryside, which has suffered from population decline for decades, needs helping hands for everything from growing food to manufacturing products. After all, there is only so much robots can do.

While we have highlighted other reasons for Japan’s rural decline in previous pieces in this series (such as Real Estate Realities, Government Initiatives, and Energy Independence), let’s look at the impact of non-Japanese workers in rural areas.

Policy Shift

Wanting to fill the gap created by young people who increasingly shun menial work and manual labor, the government has long been aware there are advantages to bringing low-skilled non-Japanese workers into Japan. While there is consistent talk about the potential of technological innovations in customer service, farming and transportation, Japan continues to embrace limited immigration.

Even so, there has been a growing tendency to permit non-Japanese to enter based on perceived market needs. Chinese and Vietnamese alone make up almost half of the total number of current immigrants, but that does not take into account those migrants of Korean heritage who also participate in Japan’s workforce.

How is the government enticing those seeking a better life in Japan but with limited skills? Among the more notable programs set up by the government is one started in 2019 when Japan initiated an immigration reform policy. It is designed to bring 345,000 new workers to Japan to fill a low-skilled labor gap in 14 sectors including agriculture and nursing care. Though only permitted to stay for up to five years, it is an ambitious program that may, in time, prove effective. As of August 2022, there were 88,000 people who entered Japan under the program. That number is far below targeted projections. The COVID lockdown is partly to blame.

What about “highly-skilled” workers? This year, the government has proposed establishing a new program to lure highly-skilled professionals from overseas (who also have an income of ¥20,000,000 or more). Let’s think about that. Whereas low-skilled workers are generally given a visa shelf life of five years, those with skills deemed important to Japan, such as finance and technology, may obtain Permanent Residency in only one year.

In short, if you have limited skills and money, Japan wants you for a few years. If you are educated and rich, Japan welcomes you with open arms. Other countries such as Canada do essentially the same thing, but if that is Japan’s main plan, then the future is bleak.

Whereas Canada openly welcomes non-Canadians in large numbers, Japan does not. By 2050, Japan’s population is expected to shrink from 125 million now to around 105 million people, a decline of about 400,000 per year. Alarm bells must be ringing in Kasumigaseki.

Visa stats for foreign residents of Japan.

Adapting to Japan

For those who choose to come to Japan from overseas, Japan’s Immigration Services Agency confirms that 35,000+ non-Japanese highly-skilled nationals have been accepted into Japan since 2012. That sounds nice on paper, but it remains a paltry number compared to Japan’s real needs. The Mitsubishi Research Institute estimates that by 2030 there will be a shortage of about 1.7 million people in specialized technical occupations. The problem is real. Is the solution on the table, namely to allow small numbers of non-Japanese in long-term, truly viable? We don’t think so, and we don’t see substantive change on the horizon.

Japan is unable to sustain itself by relying solely on women, robots and AI and there is only so much Japan’s vibrant illegal labor market can do. The obvious solution, embracing immigrants and migrants as sincere partners in prosperity, makes complete sense but what about the issue of assimilation?

It is no secret that some non-Japanese entrants face both cultural integration and cultural segmentation issues. This raises the fair question of how can Japan meet its labor needs as it seeks to maintain its cultural uniqueness? More to the point, can Japan hope to maintain its traditions and customs with people who enter the country bringing with them cultural baggage? It is a global issue for all nations. Can you have both?

Should I Stay or Should I Go?

Fitting in is necessarily hard when 98% of the population are not immigrants themselves. Even so, there are many reasons why non-Japanese immigrate or even migrate to Japan. The obvious appeal of a prosperous, civil society with limited crime, courteous people with manners, and delicious food (with no tipping!) provides adequate enticement. But there are other issues that make immigration more challenging, chief among them Japan’s expensive inheritance tax that makes dying in Japan something to think twice about.

As compared to the US, where one is permitted to pay zero tax on most inherited assets up to US$12,000,000, Japan’s tax rate currently kicks in from US$250,000 (depending on the currency rate). This applies not only to assets in Japan, but worldwide for long-term residents. Convincing non-Japanese with something to lose to overlook this distasteful reality makes Japan very unappealing to those of means. When combined with global income reporting requirements, it is no wonder many reluctantly leave.

Like everywhere else, immigration brings with it stories of merits and demerits. Take the issue of crime. It is often assumed that immigrants/migrants commit more crime on a percentage basis than Japanese do. We were unable to find reliable statistics to back this assertion up. There does not seem to be a substantive change in the numbers, but certain media would lead you to believe so. Hyperbole aside, the way in which crime statistics as a whole are counted leaves room for doubt. Perhaps we can discuss that in another piece.

One area with plenty of evidence of challenge is linked to the maltreatment of temporary workers and trainees. Activist groups report continuing instances of racist slurs, beatings, and passport confiscation. Fortunately, when juxtaposed to the West, the numbers are miniscule in comparison.

The road to acceptance is long and winding. In response, the government has established dozens of consultation centers where workers can seek reprieve. Efforts to address issues such as overtime work, adequate pay and a safe work environment are necessary to assure worker integration and labor rights. The Ministry of Health, Labor and Welfare (MHLW) has its “Employment Center for Foreigners” website which is among the better resources we found available. There are others with the aim of protecting and defending workers, many of which are non-governmental.

Next Steps

Japanese in search of a better life with work-life balance, equality, and better pay always have the option of moving overseas altogether. Migration works both ways. Young Japanese who stay are in a good position for employment in Japan as virtually every sector of the economy needs workers. The labor shortage means jobs are plentiful with or without skills.

For non-Japanese in Japan, one thing is clear; they will continue to change the face of Japan from one of ethnic homogeneity to increasing diversity. Like it or not, as this number grows, cultural norms will change. Is Japan ready? We don’t think so. But is it the responsibility of the government (national, regional or local) to provide cross-cultural adaptation training to immigrants and migrants? There is nothing wrong with offering a concerted helping hand.

There are institutions with programs already in place that assist with adaptation. One place we like is the Japan Municipal Training and Research Center. Having already worked with 270,000 people, additional adaptation programs could easily be added. Another one is the “Project for Acceptance and Retention of Foreign Workers in Provincial Areas”, a noble effort that matches those with skills and language ability to employers seeking workers in rural areas.

These programs are a step in the right direction. Yet it is clear that Japanese organizations would benefit from more systemic strategies to effectively integrate people from around the world as they remain true to core values, attitudes and beliefs. Most of all, new and dynamic ideas for integration such as meaningful investments from overseas into Japan’s dying property sector or other infrastructure would be a smart way of breathing new life into rural areas and slowing the population decline.