Japan’s reliance on foreign workers increases amid deepening labour shortage, ageing population

Japan’s foreign workers topped 2 million for the first time ever, underlining the nation’s growing reliance on external manpower to mitigate its labour shortage
Vietnam was the biggest supplier of workers as of the end of 2023, accounting for about 51 per cent of people that entered the country as ‘technical interns’

Japan

Bloomberg

Published: 6:18pm, 26 Jan 2024

Why you can trust SCMP

Japan’s foreign worker population broke the two million mark for the first time ever, underlining the nation’s growing reliance on external manpower to mitigate its deepening labour shortage.

The number of foreign workers in Japan reached about 2.05 million as of October 2023, the most on record, the Labour Ministry reported on Friday. The number grew by 12.4 per cent from a year earlier, an acceleration compared with recent years but slower than in some years before the pandemic.

Japan is increasingly reliant on foreign workers as its labour shortage worsens in line with broader demographic trends. The nation’s working-age population has been shrinking since it peaked in 1995. A think-tank study last year projected that the country will face a shortage of more than 11 million workers by 2040.

02:18

Japan’s greying population: 1 in 10 now 80 or older as country’s birth rate continues to fall

Small and medium-sized enterprises are among those most severely affected. The number of bankruptcies attributed to manpower constraints reached a record high last year, with 75 per cent of those businesses employing fewer than 10 people, according to a report by Teikoku Databank.

Friday’s report also showed that small businesses were more likely to rely on foreign staff. About three out of five of the roughly 319,000 establishments that hire non-Japanese staff have no more than 30 employees in total.

According to the latest tally, the manufacturing sector had the largest number of foreign workers, followed by the service and retail industries. Construction workers also increased by 24 per cent over the previous year, the largest hike for any industry. That is consistent with a labour ministry survey that identified the building sector as one reporting the second most serious labour shortage after the healthcare sector.

Vietnam was the biggest supplier of workers as of the end of 2023, accounting for about 51 per cent of people have entered the country as “technical interns.”

In response to criticism over human rights concerns, the government is now revamping the programme. It was initially designed to teach foreigners new skills, but some workers claim they weren’t paid or faced other kinds of abuse. The government expects the numbers of interns to continue to grow under the scheduled revision.

Workers from other Asian nations, including Indonesia, Myanmar and Nepal, also surged last year, especially in the unskilled labour category, suggesting Japan remained a relatively attractive destination despite the weak yen.

Post