Coming to Japan

Japan to Open Doors to 500,000 New Workers by 2025 to Alleviate Labor Shortage

The government announced on May 29th that it has put forth a draft law which will create a new framework for accepting foreign workers into Japan. This represents a policy shift, in that the law would create a new work visa status for lower-skilled workers and lower the bar on the level of Japanese required for workers applying to enter the country. It would also designate five industries where the government aims to allow more than 500,000 workers to be admitted by 2025.

The number of foreign workers in Japan hit a record of 1.28 million in October 2017. If it is fully implemented by 2025, the new visa regime would increase this number by thirty-nine percent.

Essentially, the new policy recognizes that the Japanese economy faces severe labor shortages in a wide range of industries and marginally loosens the requirements for a specific set of workers, in an otherwise extremely strict immigration regime.

The government plans to clarify the basic outline of the law in June and further details on specific requirements are expected to follow.

Overview of new policy

For now, the following is what we know about the new policy and what it changes about the current system.

Technical Intern Program

Japan currently issues work visas only to relatively high-skilled workers. Workers in lower-skilled jobs are brought into Japan under the Technical Intern Training Program, which was introduced in 1993. Nominally, under this program, Japanese firms accept trainees from developing countries to help them acquire job skills, but many cases have been reported of trainees being subjected to illegally long work hours and not being paid proper wages. For this reason, the technical intern program has been criticized as a thin cover to exploit cheap foreign labor.

Also, under the current program, interns are allowed to remain in Japan for a maximum of five years, after which time they have to return to their home country. There is currently no way for a technical intern to change their visa status to a working visa. Thus, the program does not create a long term solution for alleviating labor shortages.

The new policy would allow interns who have successfully completed their training by April 2019 to apply for a working visa, which would allow them to remain in Japan for a maximum of an additional five years.

Which industries would be affected

The new policy aims to allow foreign workers into five industries: construction, agriculture, lodging/hospitality, nursing care, and shipbuilding.

By April 2019, industry associations in each of the five industries will be required to establish an industry-specific test for evaluating workers wishing to apply for a work visa in that field. The test will evaluate candidates on practical industry-specific skills and Japanese language level.

Japanese Language Level

In principle, applicants will be expected to have a Japanese language level equivalent to “N4” on the Japanese Language Proficiency Test. At the “N4” level, candidates can understand conversations encountered in daily life and generally follow the contents, provided that the conversation is carried on slowly. One should also be able to read and understand passages on familiar daily topics written in basic vocabulary and kanji. The “N4” level can be reached with about 300 hours of learning.

However, in the fields of agriculture and construction, applicants would not necessarily have to meet the “N4” standard in order to get a work visa. For example, candidates in agriculture would be deemed to have sufficient Japanese if they can point to the correct picture card in response to a request such as “Please bring the herbicide.”

How bad is the labor shortage?

The new policy aims to bring in over 500,000 workers under the new visa status by 2025.

To put that number in perspective, it is estimated that in the construction industry alone, there will be a shortage of between 780,000 and 930,000 workers by 2025. Under the plan, the government only hopes to secure about 300,000 foreign workers in construction. In the agricultural industry, due to the aging of workers, there will be a projected shortage of between 46,000 and 103,000 workers by 2023. The new policy aims to recruit between 26,000 and 83,000 foreigners to fill these vacancies.

In the field of nursing care, the government projects a shortage of 550,000 workers by 2025. The government has implemented targeted wage increases for nursing care workers but still hopes to bring in about 10,000 foreign workers under the new visa to supplement the shortage.

Is is widely recognized that Japan’s demographic shift is the single most critical issue facing the economy. By 2040, the population of fifteen to sixty-four year olds in Japan is expected to drop by some 15 million people, and the new visa status is one way the government hopes to deal with this dramatic population drop off.

Participants in the current Technical Intern Program are nominally “vocational trainees” but they have de facto become an indispensable part of the Japanese labor force. By the end of 2016, there were about 229,000 trainees in Japan. Vietnamese accounted for the largest group (about 88,000), followed by Chinese at 81,000, Filipinos at 23,000 and Indonesians at 19,000.

It remains to be seen the extent to which the newly announced visa status will ameliorate the labor shortage in the next few years.

Source: Nikkei Shinbun, May 29, 2018

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