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Opinion

Why large-scale immigration would be bad for Japan

Abe's expansion of foreign worker schemes risks creating social and political tensions

Japan should learn from mistakes in Europe, where large-scale immigration has led to social tensions.   © Getty Images

Is Japan about to follow the countries of Western Europe and North America and morph into a full-blown multicultural society? Until recently that would have seemed an unlikely scenario, but the loosening of immigration controls recently proposed by the Japanese government could well lead to that outcome.

If Japan does copy the Western precedent without due attention to the problems, the result could be social and political conflict and heightened geopolitical risk. Without doubt, what it means to be Japanese would undergo significant change.

The sensible course, surely, would be to expand the current arrangements in which residency is on a time-limited basis and citizenship conferred on a restricted number of highly skilled people.

Under this approach, the number of foreign workers in Japan has risen from 100,000 to over 1 million over the past 25 years. It has been a win-win solution for both sides. Japan gets a larger labor force. The mostly young workers from poorer countries who are now a common presence in restaurants and convenience stores acquire fluent Japanese and make good money.

When they return to their homelands, they may work for Japanese companies or use their language skills in other ways. Meanwhile, others replace them and the global pool of Japan-savvy workers increases. Inevitably, the system has various gray zones, but it has the great merit of being flexible and provisional.

As an island nation, Japan can police such an approach much more effectively than, for example, Germany where a similar policy -- the guest worker system -- was tried and failed.

Tokyo's new plan paves the way for significant numbers of foreign manual workers to come to Japan on five year working visas, together with their families. These visas would be rolled over for another five years if a simple test is passed and the path to citizenship would be made much easier. The proposal calls for an additional 500,000 workers by 2025, but the European experience has been that politicians massively underestimate the potential inflows. Since 2004, the foreign-born percentage of the population of the U.K. has doubled to 14%. London is now 38% foreign-born. European countries are particularly relevant to Japan because like Japan they have very old, deeply rooted national cultures unlike immigrant-based societies such as the U.S.

In his book "Exodus: Immigration and Multiculturalism in the 21st Century," professor Paul Collier of Oxford University shows that migration accelerates as the size of an unassimilated diaspora community increases. The more migrants you already have from a country or ethnic group the more you will get in the future -- until the migrant community blends into the host population, and that can take generations. In fact the instant communication and cheap travel of today's world allow migrants to stay in close touch with their mother countries much more easily, thus reducing the need to assimilate.

Presumably, it was Japanese business that lobbied for a larger, permanent stock of immigrants.

Undeniably, the corporate sector can benefit from the increasingly availability of low-paid workers. Over the last two decades, the new supply has come from Japanese women and, to a lesser extent retirees, willing to work on part-time terms. These sources are about to run dry, so it comes as no surprise that companies are looking for a different solution. They will reap the profits, but the externalities (indirect costs) of mass immigration will be borne by the public sector and society at large.

Labor shortages are a problem for corporate managements, but they could well have a positive effect on the economy as a whole. When workers are plentiful and cheap, companies can throw them at suboptimal projects without regard to efficiency. When workers are in short supply, companies need to maximize their productivity by training and equipping them with leading technology. In a tight labor market, you can expect higher capital investment, better working conditions and rising wages and thus rising consumption.

To the extent that the demand for low-paid workers is particularly strong, as is the case in Japan today, you would also see a decline in income inequality.

In contrast, if certain types of manual job come to be viewed as the preserve of people of a different ethnicity, the result will be erosion of the social capital that kept Japan socially and politically stable throughout the lost decades and the triple disaster of March 2011. Professor Collier puts the point as follows:

"Empathy comes from a shared sense of identity. A common way of building common identity is common membership in a network of reciprocal obligations. The immigration of culturally distant people who disproportionally occupy low-income slots in the economy weakens this mechanism."

Large-scale immigration is hardly a lasting solution to Japan's problem of an aging and shrinking population either. Immigrants also age. If they bring young families with them and spend their working lives in low income jobs, they are unlikely to make a net positive contribution to Japan's public finances.

Over the long-term one of two things will happen. If immigrants have higher fertility than native Japanese and fail to assimilate, then their share of the total population will inexorably rise.

On the other hand, if they do assimilate and their fertility drops to Japanese levels, then yet more immigrants will be required to support them in their old age. Large-scale immigration is ultimately a demographic Ponzi scheme. Certainly, the alternative is population decline. But at the end of the Second World War, the Japanese population was 70 million, 50 million less than now. Japan would be returning to a more comfortable equilibrium, with more per capita resources. Other countries would follow in due course.

The final problem is geopolitical. Japan has a close neighbor with an enormous population and, despite the stellar growth of recent decades, a large gap in gross domestic product per capita with Japan. With mass immigration, it is not possible to pick and choose the countries of origin. Does Japan really want to allow the nationals of its major strategic rival to settle en masse in its major cities?

Never in human history has it been so cheap and easy to up-sticks and move to another country. That is why immigration is fast becoming one of the major political issues of the 21st century, setting off populist reactions from Scandinavia to Italy. In the Mediterranean and coastal waters of Australia, navy craft are regularly deployed to deal with migrant boat people. The U.K. security services currently hold information on over 20,000 Islamists posing potential terrorist threats.

Rather than committing to an ill-considered program of radical, irreversible change, Japan should maintain as much flexibility and discretionary power as possible in immigration policy. Over the years Japan has learned much that was useful from Europe. Now it has an opportunity to learn from Europe's mistakes.

Peter Tasker is an analyst with Tokyo-based Arcus Research.

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