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Success of ‘Abenomics’ hinges on immigration policy

by Reiji Yoshida

Staff Writer

In March, Hidenori Sakanaka, a former director of the Tokyo Regional Immigration Bureau, was contacted by — and met with — a group of people he had never dreamed of crossing paths with: asset managers from global investment firms.

Sakanaka, who now heads the Japan Immigration Policy Institute in Tokyo, was asked to explain Japan’s notoriously tight immigration policies and his proposal to drastically ease them to save Japan from the severe consequences of its rapidly aging and shrinking population.

Sakanaka said the asset managers showed strong interest in a remark made the previous month by Prime Minister Shinzo Abe, and that they were wondering if they should buy Japanese assets, such as stocks and real estate.

In February, Abe indicated he is considering easing Japan’s immigration policies to accept more migrant workers to drive long-term economic growth.

The asset managers reportedly included representatives from investment giants BlackRock Inc. and Capital Group.

“Global investors have a consistent policy of not investing in a country with a shrinking working and consumer population,” Sakanaka told The Japan Times.

“If the working population keeps shrinking, it will keep pushing down consumption and the country will be unable to maintain economic growth. In short, this means the growth strategies of ‘Abenomics’ can’t be successful without accepting immigrants,” Sakanaka said.

Abe is set to revamp in June the elusive “third arrow” of his economic program — structural reforms and subsidies that could boost Japan’s potential for mid- to long-term growth.

Whether drastic deregulation of immigration is part of the third arrow is something that both the public and the foreign investment firms want to know.

Japan’s population will dramatically shrink over the next five decades, from 117.52 million in 2012 to 87 million in 2060 — if the fertility rate doesn’t climb. The rate is expected to hover at 1.39 this year before dipping to 1.33 through 2024 and edging up to 1.35 for the foreseeable future.

Gross domestic product is expected to shrink accordingly, which could reduce the world’s third-largest economy to a minor player both economically and politically, many fear.

“Whether to accept (more) immigrants or not is an issue relevant to the future of our country and the overall life of the people. I understand that (the government) should study it from various angles after undergoing national-level discussions,” Abe told the Lower House Budget Committee on Feb. 13.

On May 12, members of a special government advisory panel on deregulation proposed creating six special regions where visa regulations would be eased to attract more foreign professionals and domestic helpers and baby sitters to assist them.

The daily Nikkei reported the government is likely to insert visa deregulation for certain types of foreigners in the Abenomics revamp due in June, but how many he is willing to let in remains unclear.

The conservative politician has so far appeared reluctant to promote heavy immigration and risk transforming Japan’s stable but rather rigid and exclusive society.

Abe has argued Japan should give more foreigners three- to five-year visas rather than let a massive number of immigrants permanently settle in Japan.

“What are immigrants? The U.S. is a country of immigrants who came from all around the world and formed the (United States). Many people have come to the country and become part of it. We won’t adopt a policy like that,” Abe said on a TV program aired April 20.

“On the other hand, it is definitely true that Japan’s population will keep shrinking and Japan will see a labor shortage in various production fields,” Abe said, adding he will consider easing regulations on issuing three- to five-year visas.

“It’s not an immigrant policy. We’d like them to work and raise incomes for a limited period of time, and then return home,” Abe said.

Among the core supporters of LDP lawmakers, including Abe himself, are nationalistic voters opposed to welcoming large numbers of unskilled foreign laborers, who are now barred from Japan. They fear that bringing in such people would increase the crime rate and deprive Japanese of job opportunities in the still-sluggish economy. This concern seems to be shared by a majority of Japanese. According to a poll by the daily Yomiuri Shimbun in April, while 74 percent of the 1,512 polled said they believe population decline will hurt Japan’s economy and contribute to its decline, 54 percent said they opposed bringing in more foreigners versus 37 percent who backed the idea.

Two high-ranking officials close to Abe, speaking on condition of anonymity, have said they are aware that foreign investors are interested in potential changes in Japanese immigration policy.

But their main interest appears to be to keep foreign investors interested in Japan, and trading on the Tokyo Stock Exchange, rather than transform Japan into a multicultural society by accepting more immigrants.

One of the two officials has repeatedly suggested he is paying close attention to foreign investors, pointing out that it is they, not Japanese investors, who have been pushing up stock prices since Abe took office in December 2012.

“We won’t call it an immigration policy, but I think we should accept more foreign workers,” the official said in February.

Hiking immigration is a sensitive issue for the conservative Liberal Democratic Party, the official said. But the idea of using them to fill shortages in medical, nursing, child care, for example, would be more palatable to such politicians, the official added.

Abe’s call for more short- to midterm migrant workers might help the short-handed construction, medical and nursing industries, among others. But it is unlikely to solve Japan’s long-term population crisis.

Junichi Goto, professor of economics at Keio University and an expert on immigration issues, said few people are opposed to bringing in more foreign professionals to reinvigorate the economy and that deregulation is urgently needed.

When it comes to unskilled workers, however, Goto is opposed to flooding Japan with cheap labor and says that a national consensus on the issue hasn’t been formed yet.

According to Goto’s studies and simulations, bringing in low-wage, unskilled foreigners would benefit consumers by pushing down domestic labor costs and thus prices for goods and services, thereby boosting consumption. On the other hand, he says the cost of domestic education, medical and other public services would rise.

The benefits of bringing in foreigners will far outweigh the demerits, unless Japan ships them in by the millions, Goto’s study says.

“If the Japanese people wish to accept millions of foreign workers, that would be OK. But I don’t think they are ready for such a big social change yet,” Goto said.

Instead, Goto argued that Japan should first encourage more women and elderly to work to offset the predicted shrinkage. It should then ease regulations to lure foreign professionals rather than unskilled laborers, and reform the rigid seniority-based wage system to make it easier for midcareer foreigners to enter the labor market, Goto said.

At any rate, the rapid demographic changes now hitting Japan are unlikely to leave much time for the people to make a decision.

The proportion of seniors 65 or older will surge from 24 percent to as much as 39.9 percent in 2060, raising the burden on younger generations to support social security.

The Japan Policy Council, a study group of intellectuals from various fields, estimates that in 2040, 896 of Japan’s municipalities, or virtually half, will see the number of women in their 20s and 30s decline by more than half from 2010 as they flock to big cities.

Such municipalities “could eventually vanish” even if the birthrate recovers, the group warned in a report May 8.

Sakanaka praised Abe’s February remarks, saying it is a significant change from Japan’s long-standing reluctance to accept foreign workers.

But if Abe decides to open Japan only to short-term migrants, rather than permanent immigrants, Abenomics will end in failure, Sakanaka warned.

  • Steve Jackman

    I have to unfortunately agree with Abe that Japan does indeed need to restrict immigration. As much as I am personally in favor of immigration and creating a multiethnic society, the fact remains that Japan is simply not ready to accept even limited numbers of immigrants, let alone mass immigration. Opening up Japan to immigrants can only end badly, for both the Japanese and the immigrants.

    I’ve been lucky enough to have had many immigrant/foreign workers as close personal friends and colleagues at work in both my home country of America and here in Japan. The difference in the way they are treated in both countries could not be starker.

    For example, when immigrant/foreign workers are placed in a professional office setting in the U.S, it often has a reinvigorating effect on the team by bringing out the best in everyone. If the immigrant/foreign worker is smart and capable, it raises the bar for everyone by bringing out a healthy competitive spirit in a very positive way within the group. This creates a win-win situation where everyone comes out ahead by pushing themselves harder to do their best than they otherwise would have done on their own.

    Now, compare this to when an immigrant/foreign worker is placed in a professional office setting in Japan. This generally brings out the worst in Japanese workers. Chances are that it would create great anxiety and insecurity among the Japanese workers around him (the more capable the foreign worker, the greater the anxiety and insecurity felt by his Japanese colleagues). They view this as an incursion into their predictable and insular world and their reaction would most likely be to gang-up against the foreign worker and do everything possible to sabotage and undermine him. He would be treated as the proverbial fly in the ointment and no one around him will rest easy until he is taken out and the status quo is restored.

    This is not conjecture, but is based on my many years of experience working and living in both the U.S and Japan. I firmly believe that Japan should not open itself to immigrants until it can undergo a cultural shift, and the Japanese people and institutions can demonstrate that they are worthy of accepting immigrants.

    • zer0_0zor0

      You say that

      Japan should not open itself to immigrants until it can undergo a cultural shift

      which is reasonable, but it is not clear what is meant by a “cultural shift”. I, for one, see no reason for Japan to under such a shift except insofar as they learn more about the modern history of their country so that they can become more progressive and no elect people like Abe, Aso, etc. with connections to the Meiji Oligarchy. Culturally, Japan is a popular country around the world, whose star is rising as that of the USA wanes.

      Insofar as there are few apparent cultural reasons–outside of political awareness, it’s not clear why you

      I am personally in favor of immigration and creating a multiethnic society

      If people don’t have the ability or the desire to learn to speak and become literate in Japanese, it is hard to see why they should come here other than to visit. Globalization is weakening the dominant position of the US economically, so cultural affinity matters almost as much as economics. In fact, your analysis of the work place is indicative of the fact that cultural affinity is necessary to facilitate inter-working and integration into the work force.

      • Taro-nechan

        We could also look into what kind of “cultural shift” was responsible for the rise of Masayoshi Son, who is ethnic Korean yet founder of one of the most dynamic companies in Japan.

      • zer0_0zor0

        He went to UC Berkeley and met Steve Jobs while there.
        There might be a CIA connection, like there is with Koreans and other ヤンキー(yankii = Japanese slang) in the yakuza…
        His first investment was in yahoo, right? His business is dynamic, but he has connections outside Japan, just like Livedoor did with backing from Western finance companies in their attempt to takeover that television station.

    • JTCommentor

      I think you, lets say, white wash the immigrants experience in your country. I have had the benefit of being both an immigrant in the US (I’m Asian), and in Japan. My experience in professional settings in both countries is not so different. By some people in the US I was treated great, by others I was avoided and treated badly and condescendingly. In Japan, its not so different – there are people who like to have me here, and people who basically ignore me. One thing I found, the outward racism against me as an Asian in the US was worse, for example being called names or yelled at for my appearance.

      • Steve Jackman

        Facts do not lie. More than half the S&P companies in the U.S were founded by immigrants or children of immigrants. Asians and other minorities/immigrants make up a significant percentage of senior/executive management at U.S companies, ranging from Microsoft to start-ups. This is clear validation of the openess of American companies, their meritocratic culture and their recognition of the benefits of diversity.

      • JTCommentor

        Yes, nobody is debating that the US is more of an immigrants society, land of the free and land of opportunity – but you were not talking about those things, were you? You gave a (seemingly) white person’s view of what being an immigrant in the US is like on a day to day level, and compared it to (presumably) your experience in Japan. Unless you have been in the shoes of the minority / immigrant in the US (and my apologies if you have), I dont think your comparison is so accurate. I was simply trying to say that minority, anywhere, face the things you attribute to Japan. It doesnt mean they also cannot achieve great things in the US, but you can be sure that those at the top also dealt with the day to day adversity you described. Perhaps the difference is those people at the top didnt take to the internet to complain about their poor treatment as some kind of excuse for failure, and instead used those tough experiences as a driver to succeed.

        This is just my opinion, and not meant as any kind of personal attack. My apologies if I am being offensive.

      • Tomu Bdm

        There’s a lot of over-generalisations going on here, which we need to be careful of. To illustrate:

        I’m British myself, and have worked in both Japan (Tokyo) and the US (San Antonio, TX).

        See here, the geographical location itself is also hugely important : I found myself welcomed, considered and aided massively by the Japanese during my first month-or-so whilst getting used to the working conditions. Most likely because this was Tokyo, and foreigners are becoming more and more apparent. Conversely, working stateside down South was a world of xenophobia and racism the like of which I have never experienced in any developed country. Of course, the irony of a country founded by immigrants who’ve then produced this (predominantly southern, I would say) brand of close-minded half wits is not lost on me… but that is not to say that I think all Americans are racist, just as neither are all Japanese.

        (I mean, hell, same for the British! Have you been keeping up to date with our immigration policy debacle? Woah.)

        So, I agree with the original comment, that perhaps Japan in its entirety isn’t ready to open up its borders. While places like Tokyo, Osaka, Kyoto, Hokkaido etc. continue to familiarise themselves with a foreign presence, it will take some years yet before this foreign presence becomes commonplace for those Japanese from less-populated, less urban areas. This must be kept in mind.

        But so, too, must the standard of the immigrant, as per the second comment. My own belief is, if you want to go and work somewhere like Japan, you need to know the LANGUAGE, and the CULTURE, at least to a liveable level.

        Look at England. Our borders were a bit ‘too open’ for a bit too long (i.e. we let too many people come in far too easily), and now the most common piece of anti-immigration hate you hear touted daily by news sources is the horrid “they come here, take our jobs, and can’t even speak a bloody word of English”. Fair enough, for (asylum seekers notwithstanding) it does take a government’s resources to essentially train a foreigner how to exist within British society… whereas, had they learnt the language a bit beforehand, and had a genuine interest and appreciation for the way of life in Britain, the transition could be much smoother. But this idea, that immigrants are “uncultured, illiterate”, that pervades the common British mindset… well, it had a foundation! And because this foundation (still) hasn’t been addressed, this unfortunate idea of what an immigrant is in Britain continues to circulate.

        Look at Japan. Their experience of Brits/Americans is probably limited, in a lot of cases, to large, loud, overweight tourists, who think shouting in their own language (DESPITE. BEING. ABROAD.) is some form of respectful communication. And while there are many foreign folk working out in Japan that have integrated fine and speak the language beautifully, even I have friends in Japan that do not speak a word of Japanese, but have jobs. This all adds to the negative impression of the foreigner.

        If Japan’s impression of immigrants could change from one of “white people we can’t talk to because they come here with no understanding of Japanese life nor language”, to perhaps one of “white people, but who know, respect and inhabit Japanese customs and the Japanese language”… That would certainly help the cause.

        The general perception of immigration within Japan is changing, granted. But it’s up to those that want to move in to change as well.

        If you ruled a country, who would you pick: some exotic foreigner who understands nothing of your life? Or one who shows genuine interest, is prepared, and ready to be dropped in and start?

        The immigration policy needs a change. But so too do the policies of the immigrants in question.

      • Charismatron

        JT,

        You’re not being offensive, so there’s no need to apologize. While Steve has some points to support his opinion, he errs by considering his experience more valuable than yours. It is not.

        Your experience is equally valid. Don’t apologize for it. Steve needs to recognize that he doesn’t have to be right all the time; moreover, on the Internet always having to be right is a losing battle.

      • Taro-nechan

        You are confusing cause and effect.

    • TokyoMommy

      I agree with a lot of comments posted on here and have a bit more of a 360 angle. Living in Japan for 20 years, I have found that every company, every neighborhood, every area has it’s own “culture” and “language” not unlike anywhere else. Learning the cultural customs and lingo of every area takes living here, learning here and gathering information. You cannot just “plop” into any culture period and expect to know it all, and even assuming you do is dangerous (take me for example, I accepted all kinds of things that were unacceptable in the name of “culture” and it took me down a bad path till I wised up! I see foreigners do it all the time!). It takes years and years and years..and even Japanese themselves do not have it all understood and many have been crushed and abused under their own system. I have worked for the same company for 15 years here in Japan and can tell you, they have gone from giving foreign workers cushy positions to downright violating rights. It all depends on the “foriegner” they hire and the management at the time. True that a lot of Japanese accept having their rights violated, some to a steeper degree than others. Some foreigners can and will expect their rights to be violated, and some will simply not tolerate it and fight it to the end. For me, it has been one confusing mess. What Japanese companies needs before they even consider hiring any worker PERIOD is..quality leadership, a sound company policy, proper training, a good understanding of labor laws and a willingness to work within those laws, proper human resource management, flexibility to grow, expand and try out new ideas. As for the culture, sure, be polite (but in this culture, interrupting people in the middle of something is not considered “impolite” so be prepared for that) and the language? That will take time here as it takes time for any other foreigner anywhere else. Best we all learn to create the best “culture” that fits our mission and goals of the country and business and try to help each other understand each other in a globalized world.

  • Kazuhiro Shino

    Even reduced 87m 2060 Japanese population is larger than similar land size UK major hindrance of Japanese immigration is language barrier, unconscious xenophobia cultural intolerance peculiar education system which very little concern of foreign culture. Tide wave of low skilled worker is just create animosity Japan should bond EU & US high tech engineering pharmaceutical biotech etc. professionals research & development centre & create high paid jobs is right direction. Many Europeans professionals are interested in for work in Japan but immigration barrier is too high

    • Col/Jap in UK

      If you double check Immigration law in both geographies you will understand immigration barrier in Japan and EU is at the same level. moreover, being a naturalized Japanese citizen living in the UK currently I find it even more difficult to get working visa here that I did when I was looking for Job in Japan after university graduation there. At least in Japan companies do not have specified quotas by the government for foreign nationals as UK and US do. Even for people with high degrees as MBA or PHD as myself. For Japan you just need to speak fluent Japanese and find a full time job.

      • itoshima2012

        Very well said!

  • Steven R. Simon

    Simon says Brother Abe could repatriate young adult members of the Japanese diaspora by creating an English language commerce and trade zone.

    • Ron NJ

      Or, you know, start small and simple by getting rid of that dumb single citizenship policy that serves little purpose but to permanently disenfranchise and disconnect a huge portion of the Japanese diaspora abroad.

      • Steve Novosel

        No way. Choose the country where you wish to be a citizen. It’s not hard. I’m a very strong supporter of a single citizenship policy for immigrants.

        For those born into two citizenships, the mandate to choose one and only one is extremely poorly enforced already, so this is only affecting those who wish to immigrate to Japan. And if you really do, become a citizen.

      • Mike Wyckoff

        I would choose Japanese citizenship if there wasn’t so much blatant in-your-face racism… alas, never gonna happen

      • Steve Novosel

        I’ve been here for quite a few years and work in a Japanese office – I’ve never experienced blatant in-your-face racism. There’s far less racism in Japan than in the US, for sure.

      • Mike Wyckoff

        I find it hard to believe, but I guess it’s a good thing I have no interest/intention of applying to become American.

  • A.J. Sutter

    If the issue is immigration sufficient to make a dent in the working population, not just to inflate some monetary measure, then one needs lots of workers, not just a few professionals. In that case, it’s mistaken to think the success of this depends only on a cultural shift among Japanese.

    The reason large-scale immigration succeeded in the US historically is that the immigrants arrived with a desire to be full participants in their new home’s society. They came not just for economic reasons, but with a desire to integrate politically, at least, and even to die defending America during two world wars. The reason they did so was because America symbolized something much more than economic prosperity — it stood for political and religious freedom, and perhaps other sorts of freedom as well.

    It’s suicidal for a country to accept large numbers of economic immigrants who aren’t interested in devoting their political allegiance. Today few countries would elicit that devotion. And few countries encourage it — the US is certainly more divided than it used to be about this issue.

    The only immigration that should be encouraged is of people who come here with the idea of becoming permanent members of Japan’s society, and preferably naturalizing. (I speak as someone who is the grandson of an immigrant to America, and who is currently permanently resident in Japan, not yet naturalized but without any intention of ever moving back to the US.) There’s no question that the Japanese government should do more to make naturalizing easier for those who want it.

    To think of immigration solely in terms of economics and the target country’s “xenophobia” is an error. The political health of the country must also be considered. The current debate about workforce size would be better-served by considering what labor policies and attitudes make it so discouraging for couples who are already in Japan to raise families — and by questioning whether perpetual economic growth really is a necessity in order for a stabilized population to lead flourishing lives into the future.

    • Taro-nechan

      Thanks for the good write-up/ideas.

      I’ve always believed that one of the best ways (though not the only way) for Japan to push immigration is to encourage more “family member” visas. I think these type of visas could deeper tie in family, economics and social integration of the immigrant. This is because I assume it is easier for an immigrant to integrate if they already have family here.

      Of course, it might work the opposite way, too: The immigrant does not exert effort to integrate with society beyond his immediate family. However, I think the former would happen more than the latter.

      • Col/Jap in UK

        Totally agree with you

      • itoshima2012

        Looking at Europe the opposite is true. Most large cities I. Europe have now ghettos of people coming from the same countries, they don’t speak the language of teh host country and they live off social welfare. Family visas are extremely bad for integration. Family visas should not be allowed, visas should be base on skills and cash, that it. Either you got the money or you got teh skills needed.

      • Grim Fandango

        “Family visas should not be allowed”

        You don’t think that’s a bit extreme? If I live and work in Japan as an integrated professional, and I have a wife & children I want to bring with me, I’d be in a pretty awful bind wouldn’t I? Zero family allowance is rather heartless. Limited, maybe, but zero?

  • Factchecker

    This title is misleading. The article paraphrases Sakenaki-san as saying the “success of ‘Abenomics’ hinges on immigration policy”, not someone with the power to make real decisions about the national immigration policy. His words should be paraphrased in the title.

    On top of that, the population of Japan was around 127 million in 2012, not 117.52 million as reported here.

    Japan Times despite the time pressure of this age it will help to pay a little bit more attention to detail in your reporting.

  • ErikKengaard

    “The severe consequences of its rapidly aging and shrinking population.” What severe consequences? Improved quality of life? Less crowded conditions? More affordable land? The article is not just misleading, it’s propaganda for the benefit of the 1% who need more workers, and more tenants for their rentals.

    • Steve Jackman

      No, the severe consequences are Japan’s extremely high debt (at 250% of GDP the developed world’s highest) and its ability to take care of a rapidly aging population (pension payouts, medical costs). As Japan’s population shrinks, it becomes more likely that Japan will default on its financial obligations, since it will not have enough of a tax base.

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  • http://getironic.blogspot.com/ getironic

    The title of this article is misleading. The reality is no matter what foreign worker policy is chosen, nothing can bail out the sinking ship of debt and spending that continues to increase.

  • Mike Wyckoff

    “It’s not an immigrant policy. We’d like them to work and raise incomes for a limited period of time, and then return home,” Abe said.

    I’m not sure Abe understands that very few people will accept jobs in Japan and invest their hard earned money into the J-economy if they are aware that they’ll be sent packing (or denied visa extensions) in a couple years. The old govt cronies need to be put down for there to be any hope for this wonderful country.

  • itoshima2012

    The immigrants bring nothing you so…. so so, I’m an immigrant myself and I can assure you that I brought and still bring a lot to Japan! Be it knowledge and (especially) my taxes!! You have to look carefully at the immigrants, that’s what Japan is doing! It’s very easy to come here but you need to have the skills! “trying to drain” that’s only true if you let in everyone, like Europe, but not here, Japan’s welfare is almost zero so in this country either you work or you perish, which is fine for me!