Understanding the Landscape of Foreign Labor in Japan

Growing Numbers of Foreign Residents

According to Japan’s Ministry of Justice, the number of foreign residents in Japan reached a record high of 3.07 million by the end of 2022, marking a significant milestone as it surpassed the 3 million mark for the first time. This increase reflects Japan’s shifting demographics and the increasing integration of migrants into the local fabric of society.

The Role of Foreign Workers in the Economy

Among the foreign residents, many contribute to the nation’s economy by participating in the labor market across various industries. Notably, 325,000 individuals hold the status of “technical intern trainees,” while 131,000 are classified as “specified skilled workers.” These roles are designed to allow individuals to work while acquiring valuable skills. However, criticisms have arisen regarding the reality of these programs, as many argue that these workers are often leveraged as cheap labor without adequate training or support.

Issues of Exploitation and Labor Shortages

In 2019, BBC journalist Stephanie Hegarty shed light on the exploitation faced by migrant workers under Japan’s Technical Intern Training Program. Many are employed in sectors experiencing significant labor shortages, such as food and beverage manufacturing, construction, and agriculture. Japanese society relies extensively on these foreign workers to perform jobs that local populations are increasingly unwilling to do.

Reforming the Technical Intern Training Program

By April 2023, a government panel was advocating for the abolition of the current program in favor of newer, more robust systems. A final report is expected later this year, with plans for implementation outlined for 2024. This suggests an urgent need for reform, driven by both ethical considerations and practical labor needs.

The Vietnamese Labor Presence

Vietnam stands out as the largest source of migrant labor, accounting for a substantial portion of the foreign workforce — 54% of technical interns and 59% of specified skilled workers. Over the past decade, the number of Vietnamese residents in Japan has nearly increased tenfold, reaching 490,000. While the future of this influx seemed promising, the depreciation of the Japanese yen is altering recruitment dynamics.

Economic Pressures and Recruitment Challenges

As of October 2022, the yen had hit a 32-year low against the US dollar, creating a ripple effect that decreased the attraction of Japan for Vietnamese workers. The decline in salary, falling by approximately 10–20%, combines with the high cost of living in Japan, further complicating the recruitment of foreign labor.

Wage Discrepancies and the Cost of Living

Although the average wage for foreign workers in Japan, around 180,000 yen (approximately US$1,250), may still appear attractive compared to Vietnamese wages, living costs in Japan significantly diminish this advantage. With living expenses four times higher than in Vietnam, many foreign workers find that a substantial portion of their earnings is consumed by necessities, including housing and taxes.

Future Prospects: A Decreasing Wage Gap

Forecasts indicate a narrowing wage gap between Japanese salaries and those in Vietnam. By 2025, the average monthly wage for specified skilled workers is expected to drop to 5.9 times higher than in Vietnam, down from 9.7 times in 2021. If this trend continues, by 2031, it is projected that the wage disparity will close further, making Japan less appealing as a destination for migrant workers from Vietnam.

The Need for Systemic Change

Given these economic pressures, Japan must implement strategic reforms to maintain its essential workforce. One proposed solution is the elimination of brokers, who often charge exorbitant fees to migrant workers for securing employment in Japan. This burden disproportionately affects Vietnamese workers, compelling them to take loans that can exceed 1 million yen, far surpassing amounts required by laborers from other nations.

Learning from Global Models

Japan could benefit from observing the employment permit system implemented by South Korea, which streamlined processes by reducing reliance on brokers and allowing for job flexibility within certain sectors. Such measures could foster a more conducive environment for foreign labor while ensuring protections against exploitation.

Recognizing Migrant Workers’ Status

It is also essential for Japan to redefine the classification of technical intern trainees and specified skilled workers as “migrant workers.” This change may enhance their workplace rights and mitigate abuses occurring under the current framework, where their trainee status leaves them vulnerable.

Supporting Returnees and Skill Development

Finally, an essential aspect often overlooked is the post-return integration of migrant workers. Many leave Japan with skills and knowledge but lack support systems to use these effectively in their home countries. Establishing job placement services and recognizing Japanese qualifications would greatly enhance their post-migration prospects.

By addressing these issues, Japan can continue to attract and retain the foreign workforce that is crucial to its economic survival while implementing fair treatment and support for all migrant workers.