Japan's need to open up

After decades of a long slugfest to tide over labour shortages, Japan – a country known for its antipathy to foreign workers – opened the nation to foreign workers with mega reforms in immigration. On December 7, 2018, the Japanese parliament made a bold reform by passing an immigration law to attract 345,000 foreign workers over a period of five years.

Accordingly, with effect from April 1, 2019, Japan decided to issue two sets of visa to foreign workers – Technical Intern Class 1 and Class 2 in 14 designated industries, such as agriculture, construction, healthcare, hotels, restaurants, food and beverages, fisheries, industrial machinery, electronics, shipbuilding, vehicle maintenance, airport maintenance, etc.

Technical-1 refers to marginally skilled workers, who meet the basic criteria. They will be given a five-year visa but will not be allowed to bring their families. Technical-2 is directed to a higher level of skilled workers with experiences in designated fields, offering a 10-year initial visa for working. They will be allowed to bring their families, along with the benefits of making them entitled to permanent residency. To this end, Japan went a step ahead of other countries. It is the first time that a nation welcomed marginal workers for jobs in its country.

Juxtaposed by a deceleration in birth rate and high growth in its ageing population, Japan is facing a serious problem of labour shortage. With working-age shrinking, many jobs remain unfilled. According to an estimate by Japan's Institute of Labour Policy and Training, if the ratio of Japanese workers' participation remained at the 2006 level, only 55.84 million workforces will be available by 2030, against 66.57 million in 2006. Currently, only 1 per cent of the population in Japan comprises foreigners.

Across Japan, hotels, farms and construction sites are witnessing an extreme labour crunch as the worker pool shrinks and demand rises ahead of the 2020 Olympics. Shinichiro Tsukada says that his small plastering company would not have survived without 22 Chinese and Vietnamese workforces, who make up half of his workforce.

Japan is also in dire need of foreign workers in its IT industry. Currently, it faces a short of 170,000 IT professionals and the number will take a big leap to 600,000 by 2030. Given the impending crisis for Indian IT workers after Trump's "America First" backlash and India garnering an impressive reputation in the IT sector, Japan's easing of migration law will be a timely succour for the Indian IT workforce.

The case of Fujifilm Software Company, a subsidiary of Fujifilm Corporation, is a case in point. More than half of its sales come from overseas. It says this is indispensable to raise completion by employing superior workforce from across the globe. The USA is the source of new technology. Indian IT professionals have an edge over the Japanese as they have greater command over the language. To this end, the company has high expectation from Indian IT professionals, besides the low-cost advantages.

The influx of semi-skilled and migrant workers will be another area of opportunity for India workers seeking jobs in Japan. This will open a new opportunity for non-IT semi and skilled Indian workers to seize in the foreign workers' pool in Japan. For example, ample opportunities will arise for Indian semi-skilled and marginal workers in construction, agriculture, healthcare and other service sectors with the attraction of low labour cost.

Foreign workers will be of great help to the ageing population in Japan. The ageing population is creating more jobs in Japan. But, few Japanese are available for such jobs as careers. According to The Economist, there are more than 60 per cent of jobs vacant than people looking for work. Industries, such as agriculture, construction and nursing are increasingly dependent on foreign workers. Indian nurses have earned global repute. They have already replaced the Philippines in UK and Ireland. According to a survey, three-quarters of employers surveyed in these countries advocate India as the primary source country of registered nurses.

"Invest Japan" is a prime scheme of Japanese Prime Minister Shinzo Abe to revitalise the economy. Manufacturing is the main boost for the Japanese economy, which made it the second biggest economy in the world before China outplaced it to the third rank. Despite this, foreign investment in Japan is moving at a slow pace. One of the major obstacles is "finding human resources". This is because Japanese workers bogged down by cultural taboo, are reluctant to work for foreign firms. According to a survey for Invest Japan in 2015, over 68 per cent foreign investors attributed "finding Japanese workers" as a major problem in Japan.

The reasons cited for their unwillingness to work in foreign companies in Japan was a reluctance to deviate from traditional values of working. Japanese work culture is dominated by factors like a lifelong employment system, loyalty to the workplace and reluctance in adopting seniority by performance rather than seniority by age. Performance and productivity have little weight in determining the position and salary of job seekers. A dismissal is a rare event in Japanese corporate.

Given this close human resource management system, which has deeply been instilled among the Japanese workers, it has become an uphill task for foreign investors to find Japanese workforce for their plants. This leaves foreign investors with option open for bringing workers, either from their home countries or from other countries where they have their plants.

Hitherto, restrictive immigration debarred foreign investors to employ expatriates, excepting in high skilled jobs. With the liberalisation in immigration, the obstacles for finding workforce in multiple categories for their plants in Japan will be eased. This will be boon to foreign investment in Japan. Eventually, foreign investment in 14 sectors will find some hey-days. To this end, the demand for foreign workers will rise in Japan.

Language is a barrier, but not a major impediment. With the growing Japanese investment in India, a number of short and medium course for Japanese languages were established in the country.

(The views expressed are strictly personal)