Success of ‘Abenomics’ hinges on immigration policy


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.

  • 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

  • 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.

  • 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.

  • 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.

  • dante darlington

    I feel really bad for people in this economy, I like everyone have been struggling. But I tell you what I’ve done I’ve taken life into my own hands being responsible for myself. I knew trading was the answer for me and I’ve purchased different courses at different places and the best course I’ve found by far is at the website Gold Trading Academy, just Google them and find them and do like I did they get started trading for yourself and take life into your own hands.

  • 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!