Commentary / Japan

A demographic time bomb has Japan thinking the unthinkable

Is immigration the answer?

by Stephen R. Nagy

On Sept. 21, while in New York for U.N. meetings, Prime Minister Shinzo Abe was quoted as saying “I have absolutely no worries about Japan’s demography” arguing instead that “Japan may be aging. Japan may be losing its population. But these are incentives for us.”

Despite this optimistic viewpoint, the facts about Japan’s demographics and their impact on the economy are clear. According to the Committee for Japan’s Future, a government task force, Japan’s total labor force will decline to 55 million by 2060, even with the elderly working to age 70. Furthermore, the National Institute of Population and Social Security Research in Japan projects that an elderly population that teeters on 40 percent of the total population will heavily burden the remaining workforce. These labor shortages will result in decreased economic dynamism, a smaller tax base and emasculate Japan’s ability to promote its national interests both domestically and internationally.

Currently, Japan’s labor shortages are not being felt equally across the economy. Labor shortages are more acutely experienced in particular sectors such as construction, transportation, commerce and the services sector for several reasons. First, these sectors are characterized as blue collar or kitsui, kitanai and kiken (difficult, dirty and dangerous) and have been unattractive to university graduates since at least the 1980s. Second, these jobs are by-and-large low paid and subject to irregular hours compared to full-time, white-collar jobs. Third, in concert with a declining number of new graduates entering the workforce, and a relative improvement of the Japanese economy for middle class workers, the unemployment rate has dropped to 3 percent.

To combat the labor shortage trend, the Liberal Democratic Party’s special committee on labor force policy has proposed increasing the number of foreign workers while assiduously avoiding any discussion of immigration. The proposal sees myriad migration categories broadly trifurcated into three streams: the highly-skilled foreign professional, non-skilled workers and targeted migration steams.

In the highly skilled foreign professionals stream, migrants who work in international firms, set up innovative businesses and invest in Japan are generally welcome. Their entrance into the country is facilitated and they are encouraged to adopt permanent residency through various migration schemes. Abe has even decreased the wait period from five years to less than three years for certain categories of legal foreign residents wishing to apply for permanent residency.

Targeted migration schemes are generally oriented toward occupations such as artists, teachers and other areas in which native Japanese people would be unsuited or where there is a shortage of workers, such as in health care. Their migration status can be renewed indefinitely or in some cases, such as with health care providers from the Philippines and Indonesia, they can move from being a secondary health care provider on a three-year contract to being registered nurses in Japan after passing the national qualification examination that is conducted in Japanese. To date, retention of health care providers has been very low, both because of the exam but also as a result of workplace integration challenges.

In the non-skilled stream, migrants work as trainees in the services sector in part-time jobs while studying at Japanese universities and colleges.

Importantly, these migration categories ensure that migrants do not take jobs away from middle-class Japanese. They ensure that the migration status is temporary for non-skilled workers and that positions in those sectors of the economy with the greatest labor shortages are filled. In short, temporary migration schemes have been at the center of the labor shortage debate as a way to target sectors of the economy that are unattractive to average Japanese workers.

This strategy may be able to mitigate labor shortages in sensitive sectors while the government attempts to mobilize more workers through increasing the age of retirement and by “womenomics,” the Abe administration’s plan to increase the representation of women in the workplace, management positions and leadership roles. A crucial part of this approach to deal with labor shortages is policies to increase the productivity of Japanese workers through structural change, technology and a more open economy.

Long-term, these approaches may not be enough to fully mitigate the challenges of Japan’s demographic conundrum. Even the benefits accrued from increasing the birthrate per family to two to three children would not stem Japan’s demographic decline or remedy labor shortages. Prominent immigration thinkers, such as former Tokyo Immigration Bureau Chief Hidenori Sakanaka, are instead left to ponder the unthinkable — a future where immigrants are accepted at a level equivalent to 10 percent of the Japanese population.

Sakanaka’s vision of an immigration nation in which migrant workers contribute to Japan’s demographic, economic and cultural renaissance, although praiseworthy, is as unrealistic as Abe’s comments in New York were insincere. Japan’s demography is quite clearly a concern, regardless of whether or not the government is willing to admit it. Immigration will not be the ultimate answer to solving Japan’s urgent labor shortages.

Dealing with the much greater challenge of Japan’s demographic implosion will require an immigration strategy with Japanese characteristics that has appropriate and robust integration policies to maximize the human capital that comes to Japan but also minimizes intercultural and interethnic friction in a country with little ethnic and cultural diversity in mainstream society.

Stephen R. Nagy is an associate professor in the Department of Politics and International Studies at International Christian University. This article was first published in Policyforum.net.