The population decline and aging, which mainly cause a decline in the workforce as a fundamental element of economic growth, are one of the most urgent demographic issues facing Japan today (Lam, 2009). At present, Japan has an elderly population aged 65 or over, accounting for 28 percent, and has entered a super-aging society since 2007, in other words, one out of every four Japanese is an elderly person (Green, 2017), and by 2030, one in three people will be aged 65 or older (Muramatsu and Akiyama, 2011). Furthermore, Low fertility refers to a phenomenon in which the fertility rate falls below the fertility rate required for population maintenance. Japan has had a declining fertility rate for the 37th consecutive year since 1980 (Jiji, 2018). The birth rate in 2018 has been at a record low for the past century and is less than a million for the past three years (McCurry, 2018). An aging society and low fertility do not simply mean an increase in the number of elderly people and a decline in total population. These problems mean huge economic and social changes that can change adversely the way of life in various aspects such as production, culture, and economy especially for labour forces (Coulmas, 2008; Lam, 2009; Muramatsu and Akiyama, 2011). To solve these problems, the government has carried out various efforts such as, raising the retirement age, womenomics, childcare systems that encourage economic growth and promote the economic participation rate of female and the elderly (Colacelli and Corugedo, 2018). Additionally, as one of the solutions, immigration policy which has been opposed by the belief in the single ethnicity of Japanese society, is now a major issue between the ruling Liberal Democratic Party and the opposition parties as well as the Japanese society.
Therefore, this essay will evaluate how this immigration policy affects the demographic challenges facing Japan today and can be a solution to the problems. First, this article will explore the main problems of demographic issues to better understand of the current environment. Second, it will discuss how this new immigration policy can serve as a solution to these embedded problems in japan where has a single ethnic background.
Firstly, it is seen as an increase in social security cost due to Japan's aging population and low fertility. Japan is expected to see its social security spending increase 1.6 times (190 trillion yen) by the year 2040 (Masahiro, 2018). The estimate is that a quarter of Japan's GDP will be spent on social security in 2040, mainly due to snowballing costs for supporting the elderly. With the proportion of senior citizens in the structure of the population reaching a maximum of more than one-third, the cost of the elderly in the economically participating population leads to heavy burdens not only on the government's finances but also on the nation's growth engine. Also, the per capita tax burden will increase as the national budget spent on social welfare for the elderly increases significantly, while the portion of tax payers will be lowered. After all this increase in government spending on social security will reduce the government's long-term investment funding capacity, as well as tighten fiscal pressure and significantly reduce the economic growth potential in japan (Halter and Hemming, 1987; Kitao, 2015). Furthermore, the issue of reducing and ageing population negatively affects GDP growth due to the implications of a downward trend in labour input as a less productive workforce may cause fall in capital asset (Lam, 2009). This result in a decline in private savings which in turn depreciates current account interest rates leading to a further decrease of tax revenue and increase of government expenditure.
Secondly, the low fertility rate, which rarely shows signs of recovery, is also fueling the shortage of workers. In order to maintain and increase the population, the fertility rate should be at least 2.07 or higher, but as of the end of 2017, Japan's fertility rate stood at 1.43-points. (The Japan Times, 2019a). To address the ever-decreasing labor shortage, the Japanese government is implementing a variety of measures, including expanding the recruitment of foreign students while granting parental leave to male spouses in order to secure female labor force and raising the retirement age from 60 to 65 years old (Sadafumi, 2017). However, the Japanese Ministry of Health, labour and welfare, which has seen its workforce shrink due to its aging and low birthrate, reported an average of 159 jobs per 100 job seekers in 2017 (The Japan Times, 2019b). This is the highest figure since 1973, leading to a decline in the number of productive people due to demographic challenges. Additionally, the working-age population is estimated to decline by 2040 from the current 65 million to 52 million, indicating the seriousness of a chronic labor shortage (The Japan Times, 2019b). In order to tackle this issue, one of the ways the Japanese government may solve this problem is by relaxing its immigration policy and overlooking its current ethnically homogenous culture.
Japanese society is on the verge of a big change. This is because the Japanese society, which has a strong anti-immigrant sentiment and homogenous society(Green, 2017; Kondo, 2002; Roberts, 2018), has amended the law and decided to open the doors so that foreign workers can accept immigration. Japan is known to be the one of the least ethnically diverse countries with a 98% ethnically homogenous rate. In addition, the number of foreign nationals working in Japan accounts for only 2 percent of the country’s labor force (Cooke and Kim, 2017). However, the root cause of this change is that as the birth rate and the aging of the population have progressed, the national workforce growth rate has also shrunk, which in turn has negatively affected the perception of economic size and living standards (Buchholz, 2019). Factors such as these mentioned have been the main cause of unreliability of economic sustainability and has led people to disbelieve in and be pessimistic about Japan’s future. Hence, on December 8, 2018, the Japanese Immigration Control Act was passed at the meeting of the Supreme Court of Japan with a lot of opposition and controversy under the bill. In the revised bill with new types visas, 14 business sectors, including agriculture, construction, shipbuilding, caregiving, etc will accept up to 345,000 foreign workers over the next five years (Yoshida, 2018a). The new category type 1 visa is granted to low-skilled foreign workers and they can stay for up to 5 years if they pass the Japanese and simple functional exam and can upgrade to a type 2 visa with certain exam. By contrast, only workers with a high level of skill in a particular field will be able to bring their family and receive the type 2 visa for up to 5 years. Particularly, this visa is renewable so these workers can ultimately get permanent residence (Toshihiro, 2019).
First, through the amended immigration control policy, immediate economic benefits can be achieved by serving industrial needs with the type 1 visa. Fundamentally, the first visa is designed to meet the industry's demand for blue-collar workers (Toshihiro, 2019). The measure, which expanded the acceptance of foreign workers to make up for a serious labor shortage in Japan, is particularly in labor-poor industries where foreign workers can be accepted in 14 business sectors. Especially, in the nursing care sector, more than 60,000 workers will be recruited to supply the most effective workforce in the ageing society (Koizumi et al., 2019). Several of these sectors are said to see a 10-fold increase in total workers accumulated in the five years (Mainichi, 2018). Although many workers divided into 14 categories cannot immediately resolve Japan's serious labor shortage, it has become a starting point to fill the shortage through the acceptance of immigrants. Although there is a limited period of five years for unskilled workers with visa type 1, it must be of great help to economic growth by continuously increasing the proportion of productive households being replaced by other new foreign workers and shrinking as a sustainable migration.
Nevertheless, opposition parties criticized that foreign workers are likely to focus on metropolitan areas with higher paid jobs, and it remains to be seen whether the influx will address a deficit of manpower in areas outside of the city (The Japan Times, 2019c). Additionally, there are some voices that this is not much different from the one that has used the simple foreign labor force since 1993 under the name of Technical Intern Training Program (Toshihiro, 2019). This was initiated when Japan provided help in the form of training to developing countries through boosting the technology industry and promoting expertise to foreign nationals but it was criticized for its purpose in securing cheap manpower with abusing human right and labour exploitation (Lee and Park, 2005; Mori, 1997). In fact, opposition parties argue that this passage of the amendment is a testament to the fact that it has been passed without sufficient discussion and fishing, food and farming sectors do not require special practices and that discrimination and wage problems in these areas are feared to draw international condemnation in the past (Tomohiro, 2018; Yoshida, 2018b). Although more than 50 percent of the country’s citizen’s support the acceptance of foreign workers, it remains to be seen how the government will change compared to before, as labor conditions, rights and welfare of foreign workers are related to integration with Japanese society (Ebuchi and Takeuchi, 2018).
The second type of visa, which focuses on foreign workers with higher qualifications or experience in the job field, will not only increase immigration to high-end workers and build a firmer foothold in global competition but will also allow the diversification of races to take a step closer to sustainable competitive advantage in many areas (Toshihiro, 2019). Also, Immigrants largely play a role in easing the financial burden of the future, claiming that their taxes and job contributions are more effective than the costs and benefits they receive from government welfare and public services (Grisworld, 2012; Storesletten, 2000). For example, the United States has been steadily receiving labour force through the influx In addition, the type of visa 1 can be changed to type 2 visa depending on certain test and technical qualifications (Mainichi, 2018). That would allow workers to live permanently in Japan even if they do not return home in five years and continue to increase the number of economically involved people, thereby increasing GDP and contributing greatly to tax security. In addition, Japanese companies with insufficient manpower can train foreign workers to continue to manage the formation of skills and human resources of foreign labor legally without returning home five years later. Thus, there is also the effect of reducing the cost of retraining and training of new foreign workers.
However, Professor Junichi Goto, an expert on immigration affairs, says no one is against importing more foreign experts to boost the economy, adding that more regulations should be eased to accept highly skilled workers (in Yoshida, 2014). On the other hand, he argues that “the influx of unskilled foreign workers will benefit consumers by lowering labour costs and prices of goods and services”, but “the cost of education, health care and other public services here will increase” (in Yoshida, 2014). In other words, the benefits of bringing in foreigners will far outweigh the deficiencies unless there is an influx of millions of workers. Furthermore, Inoguchi (in Coulmas, 2008, p. 122) asserts that it is important to develop immigration policies as part of a long-term strategy to address the declining population and aging. However, he opposes the influx of unskilled workers and these unskilled workers are the most likely to be “laid off during the economic downturn, and they would be difficult to form and promote skills at work”. He also pointed out that these workers are highly likely to end at the “bottom of the social pyramid”. As before the measures were adopted late last year, Japan had no significant immigration policy, even though 2.6 million foreign residents already reside in Japan (Toshihiro, 2019). In addition, studies show that “343,000 immigrants must be accepted every year by 2050” to offset the current population decline (Coulmas, 2008, p. 119; Tsuya, 2014). Due to this rapid expansion of the workforce, having said that, the number would be a far-fetched influx. Also, the emergence of various problems caused by the policy has never been received by the government before (Toshihiro, 2019), and with the implementation of the policy, it may be a matter of time before all the social and political problems that will occur in the future. While it may contribute in part to child care subsidies, an increase in the productive population and efforts to enhance Japanese labour productivity (Yoshida, 2014), the likelihood of how much such a number can address the labour shortage seems low over the next five years.
In conclusion, Japan's aging society has already entered a super-aged society at the fastest pace in the world, whereas the birth rate is the lowest in the world. These demographic trends are emerging in a variety of socio-economic aspects. To solve the problems, Currently, the issue in Japan is that there is a lack of labour force despite the debate of accepting foreign workers (Lam, 2009). In order to face this issue, the government may need to consider accepting foreign help by putting aside the social criterion which is deep rooted within the country’s culture. With the demographic challenges leading to a sharp drop in labour force participation rate, immigration policy may be seen as a good solution as an alternative workforce to the problems. As it certainly can contribute greatly to Japan's GDP growth, supply of workers, tax revenue (Maestas et al., 2016), and the view on immigration policy in Japanese society may be as easy to accept as before. However, it is clear that the system on immigration policy has not been properly established in Japanese society, which has a strong ethnicity. if the Japanese government further complements and institutionalizes immigration policies and changes its views on immigrants in the Japanese society so that it can accommodate a large number of foreign workers, it could be one of solutions to address the demographic problems. Nonetheless, the current number of immigrants does not make it easy for policy writers as it may prove difficult to uphold the current size of the population while inviting new workers in to the country. A 345,000 increase in foreign workers does not guarantee a solution to the demographic problem, yet it also may become challenging the government to accommodate this large income of people. This calls for a reevaluation of the current immigration laws and the accepting of foreign workers.