Japan: labour shortage increasingly becoming a problem

Japan’s labour market has been in particularly good shape for some time now. The unemployment rate has remained constantly below 3 percent for a year, but this May it reached its lowest level since October 1992 of 2.2 percent. Other indicators are also sending out similar signals of an extremely stable labour market. For example, the number of offered vacancies exceeds the number of job applicants by 60 percent. At the end of 2013, both figures were still on a par.

The extremely low unemployment rate is not evidence of an exuberant economy but rather of a demographically-related labour shortage. Japan’s population has been shrinking for seven years. The baby-boomers of the post-war era are now reaching retirement age and are only partially available to the labour market. At the same time, the number of career starters can no longer compensate for those entering retirement. The number of available workers in working age (15-64 years) is therefore also declining. Their share of the total population has already fallen from 66 to only 60 percent since 2008.

This situation, which will soon become even more acute, raises the question as to whether and to what extent Japan will accept increased immigration in the future. Japan is not an immigration country and politics avoids this discussion. Nevertheless, changes have indeed taken place in Japan with regard to access for foreign workers. Since 2012, their number has approximately doubled to currently 1.28 million persons. Many companies in labour-intensive sectors are increasingly hiring „technical interns“ or foreign students who are allowed to stay in the country for up to three years. Their share has risen particularly sharply.

However, the companies also need more regular employees. In a political change in direction in June, Prime Minister Abe declared his intention, as of next spring, to increasingly recruit less-qualified foreigners as regular workers by offering longer lengths of stay, bureaucratic simplifications and greater on-the-spot integration aid. By 2025, 500,000 additional foreigners are to enter the country on a temporary basis in order to fill the most urgent personnel gaps in the agricultural, construction, catering, nursing and healthcare sectors. However useful this initiative may be, it should at best be viewed as an interim solution.

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