Priorities for the Japanese Economy in 2019 (January 2019)

Foreign Workers: Can They Be the Saviors of Japan?

KONDO Keisuke
Fellow, RIETI

In 2019, a new status of residence named "designated skills" will be established as a step toward accepting more foreign workers into Japan. As the number of foreign workers in Japan is expected to continue increasing, in this column I hope to contribute to future policy planning by discussing problems that could occur in the future while reviewing the current situation.

Background to the Expansion of Acceptance of Foreign Workers

The labor shortage is one of the most worrisome problems for Japan, which has entered a new demographic stage of a rapidly aging of society with a low birth rate and a shrinking population. One goal that the government has set in this situation is resolving the labor shortage, and various policy measures are now under discussion as methods of achieving this.

Policy measures to achieve the goal of resolving the labor shortage are being discussed based on the following five concepts, broadly speaking (Note 1). Each of the measures has distinct aspects that contribute to both its potential for success and drawbacks in providing solutions to the labor shortage as follows.

  1. Raising the birthrate.
    Its effect in resolving the labor shortage will take a long time to appear and although the government has been providing policy support for a significant period, the birthrate remains low.
  2. Promoting engagement in the workforce by women and elderly people
    It may not be very quantitatively effective in resolving the labor shortage. However, qualitatively, it is expected to be very effective in resolving the labor shortage in that it promotes engagement in the workforce by people who commonly leave the labor market despite possessing a high level of capabilities and skills.
  3. Promoting engagement in side jobs and concurrent jobs
    It may be only modestly effective in resolving the labor shortage in quantitative terms, but it is a policy measure that addresses the labor demand-supply gap by increasing the liquidity of the labor market.
  4. Introducing advanced technologies, such as artificial intelligence and robotics
    It is based on the idea that cutting-edge technologies can make up for the shortage of human labor capacity.
  5. Expanding the acceptance of foreign workers
    It is considered to produce effects more quickly and be more effective in resolving the labor shortage in quantitative terms than other measures. In some business sectors, the labor shortage is already conspicuous, making it difficult to resolve under the current immigration system (Note 2). It is against this backdrop that the latest legislative amendment has been fast- tracked.

A New Legal System to Promote the Acceptance of Foreign Workers

Starting in April 2019, it will become possible to permit foreign workers to work in Japan under the new "designated skills" status of residence. While there are other statuses of residence for foreign workers in Japan, the granting of the status of residence of "designated skills" is limited to workers in business sectors facing serious labor shortages.

The status of residence of "designated skills" is divided into Type 1 and Type 2 categories. Workers with the "designated skills 1" status of residence are permitted to stay in Japan for up to five years without the possibility of renewal. They are not permitted to bring family members to stay with them in Japan. In the case of workers with the "designated skills 2" status of residence, the residency status may be renewed for a new term and they are permitted to bring family members to stay with them in Japan. Even so, some factors with respect to the acceptance of foreign workers with the status of residence of "designated skills 2" are yet to be decided. The acceptance of this category of workers depends also on how well-prepared the companies that plan to employ the foreign workers in the eligible business sectors are in terms of creating a suitable employment environment. For a period after the start of the new foreign worker residency status program, it is expected that the operation will focus on the employment of workers eligible for the "designated skills 1" status of residence.

The government is emphasizing that the latest amendment to the Immigration Control Act is not an immigration policy measure, to fend off the domestic criticism (Note 3). Presumably, the government will insist that the new status of residence of "designated skills" has been created with the aim of resolving the labor shortage. In other words, it will be based on the idea that an immigration policy measure should be primarily one that permits foreign workers to stay in Japan from a more comprehensive perspective, rather than merely for the narrow purpose of resolving the labor shortage.

Over the long term, it is expected to become inevitable, sooner or later, that Japan will accept foreign workers in a broad range of business sectors and occupations. The important point is that the government should conduct debate in a manner that satisfies the Japanese people in terms of minimizing the kind of immigration-related problems that have occurred in other countries and how the immigration system should be designed in order to bring benefits both to Japan and to foreign workers.

Japan's Past Experience

After the amendment of the Immigration Control Act in 1990, foreign nationals of Japanese descent became eligible to stay in Japan with the "long-term resident" status of residence. At that time, the Japanese government decided to accept foreign workers of Japanese descent as a way to resolve a labor shortage caused by the economic boom. As a result, many foreigners of Japanese descent, mainly from Brazil and Peru, came to Japan to work here.

I will discuss two points based on Japan's past experience in order to provide advice for future policy development. The first point is a problem related to the loss of jobs due to recession. The second point is a problem related to workers with the "designated skills 2" status of residence, who are permitted to invite family members to stay with them in Japan.

With respect to the first point, the number of Brazilian and Peruvian workers of Japanese descent gradually increased, but a serious problem emerged after the Great Recession in 2008 and 2009. As the acceptance of foreign workers of Japanese descent was premised on a labor shortage, the need to employ those people disappeared when the Japanese economy entered recession. In particular, foreign workers of Japanese descent, most of whom were working as non-regular employees, lost jobs and in many cases were unable to find new work. In the end, the government announced a program that supported jobless foreign workers of Japanese descent from the program who were unable to return to their home countries for financial reasons, in returning to their countries of origin, by covering part of the travel expenses, on the condition that the people who received the support would be prohibited from staying in Japan again under the status of residence of "long term resident" (Note 4).

The lesson of this experience is that the acceptance of foreign workers as unskilled labor is significantly impacted by economic fluctuations. An immigration system premised on the optimistic assumption of the continuation of the labor shortage due to the shrinking population will encounter problems in times of recession. Given the experience of the United States and Europe, it is conceivable that similar phenomena may occur in Japan as well. Social conflict may occur if Japanese workers, rather than foreign workers, are dismissed due to recessions, or if only foreign workers are targeted for dismissal, and this could pose a significant risk to Japanese society. It is essential to discuss the matter sufficiently in advance on the kind of problems that may occur, including the possibility of Japan no longer facing a labor shortage, and on the ways of dealing with these problems (Note 5).

Concerning the second point, Brazilians and Peruvians of Japanese descent who came to Japan to work as guest workers invited family members to stay with them after settling down in the country. Naturally, some families had new babies while in Japan. One problem related to this was that Japan's public education system was not well prepared to educate these children.

Here, I cite one example from my personal experience. At a seminar on multicultural society that I attended in 2006, I met a Japanese woman, Ms. Masami Matsumoto, who opened a school for foreign children in order to resolve this situation. The school, called Mundo de Alegría, is located in Hamamatsu City, Shizuoka Prefecture. In 2006, I visited this school in person.

It is not easy to start from scratch and manage a school for foreign children. If volunteers had to pay expenses themselves, they would struggle to make ends meet. In addition, it is desirable to provide education recognized in the Japanese education system for children aiming to advance to higher education in the future. Ms. Matsumoto overcame these problems, with the involvement of many other people who were been moved to action by her passion. The Mundo de Alegría achieved accreditation as a "miscellaneous school" in the Japanese education system and also provides opportunities for higher education (Note 6). So far, the Mundo de Alegría has helped a large number of children of Brazilians and Peruvians of Japanese descent learn, graduate from school and start life in Japanese society.

In the future, the number of foreign workers with the "designated skills 2" status of residence will increase in Japan. The number of foreign workers with other types of residency status is also expected to rise. Those workers' children will receive education in Japan. Having decided to work overseas of their own free will, foreign workers and their families bear some responsibility for educating their children. However, if education for foreign workers' children is neglected in Japan, it will become difficult to attract foreign workers to Japan that have a strong sense of responsibility and serious interest in the education of their children.


The acceptance of foreign workers could cause social, economic and cultural problems, depending on the local communities' circumstances. Until now, Japanese society has managed to cope with the stress from accepting foreign workers because of the goodwill and volunteer efforts of high-minded people. In the end, the burden of dealing with the institutional drawbacks will fall on the shoulders of local residents, companies and administrative officials, rather than people in the central government discussing the legal framework. Naturally, it is all but impossible to design a perfect system and therefore, to have broader understanding and cooperation, it is essential to conduct policy discussions in a way that enlightens the general public (Note 7).

December 28, 2018
  1. ^ Of course, the five concepts cited here may be also related to policy goals other than "resolving the labor shortage."
  2. ^ For example, one problem being pointed out is that enforcement concerning the status of residence of "technical intern training" is not adequate. It is reported that foreign nationals granted this status are forced to work under the conditions outside the institutional purposes and motives. Under the current immigration system, foreign nationals granted the status of residence of "student" are eligible to work part-time jobs. Although this status is primarily intended for foreign nationals staying in Japan for the purpose of academic study, it is possible to work part-time only if the permission for extra-status activity is granted. However, there are restrictions on the scope of positions that may be held, and engagement in jobs outside the scope is considered to be illegal.
  3. ^ The Prime Minister's Office, a press conference by Prime Minister Abe, December 10, 2018 (in Japanese)
    (As viewed on December 13, 2018)
  4. ^ The Ministry of Health, Labour and Welfare, "Regarding Implementation of the Program to Support the Return-Home of Jobless Foreign Nationals of Japanese Descent," March 31, 2009 (in Japanese)
    (As viewed on December 13, 2018)
    Later, in response to criticism against a governmental measure that prohibited foreign nationals of Japanese descent who received support under this program from re-entering with the status of residence "long term resident," the government relaxed the re-entry condition as a measure limited to approximately three years from April 2009.Currently, applicants for re-entry with a "long term resident" visa are required to certify in advance the existence of a contract for employment in Japan for a duration of at least one year. Refer to the following.
    The Ministry of Foreign Affairs, "Concerning Treatment of Foreign Nationals of Japanese Descent Who Received Return-Home Support," September 27, 2013 (in Japanese)
    (As viewed on December 13, 2018)
  5. ^ For example, it will be necessary to specify in advance whether there is a possibility of being dismissed prematurely and the possibility of changes in place of employment during the residency period.
  6. ^ "Mundo de Alegría" (website in Japanese, Spanish and Portugese)
    (As viewed on December 13, 2018)
    I would like to express my heartfelt appreciation to Ms. Matsumoto for permission to mention the case of her school in this column. This website provides detailed information on the background to the establishment of the school, providing valuable insights for people and organizations facing the growing wave of internationalization in the field of education in Japan. Refer also to the following URL.
    The Ministry of Education, Culture, Sports, Science and Technology, "List of designated schools for foreign nationals equivalent to high schools in Japan (as of March 13, 2015)" (in Japanese)
    (As viewed on February 6, 2019)
  7. ^ Hashimoto (2018) discusses important viewpoints regarding future policy governing foreign workers.

February 12, 2019

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