July 19, 2016 6:30 pm JST

Japan loses its shine for foreign workers

KOJI OKUDA, Nikkei staff writer

TOKYO -- With wages across Asia rising, Japan is gradually losing its appeal as a destination for foreign workers.

The number of foreign workers in Japan is on track to top 1 million by the end of this year, but this trend may not last, even if the country adopts a more welcoming immigration policy.

One reason is that South Korea and Taiwan are fast gaining on Japan in terms of wages and other working conditions for foreign workers. Another is that job opportunities are improving in China, a major source of overseas workers in Japan.

The owner of a long-established Chinese restaurant in Tokyo's Akasaka district is already feeling the effects of these changes.

When he was looking for a new part-time worker recently, a young Chinese applicant demanded a monthly wage of 300,000 yen ($2,833), twice the amount he has traditionally paid such employees.

"I can't afford monthly wages that high," the owner grumbled.

The applicant said the restaurant's current pay level is no different from what he could earn back in China. The average monthly income of workers in Shanghai reached 5,451 yuan ($813) in 2014 and has continued to rise.

Rising wages in China are also affecting rural Japan, where a shrinking working-age population is causing serious problems.

Ehime Prefecture in western Japan is a prime example.

Chinese nationals once accounted for more than 70% of foreign workers in the prefecture. But the minimum monthly wage for full-time workers there is about 110,000 yen, not much different from pay levels in urban areas of China.

"Coming to Japan no longer benefits Chinese workers," said an official at an Ehime prefectural association supporting small and midsize companies.

To offset the decline in the number of Chinese workers, the association signed an agreement with the government of Myanmar in January this year to accept "technical intern trainees" from the Southeast Asian country.

There were 907,896 foreign workers in Japan as of October 2015, according to the Ministry of Health, Labor and Welfare, hitting a record high for the third straight year. Roughly one-third of them were from China.

But while Chinese workers still represent the biggest percentage of foreign workers in Japan, the ratio is declining. In their place, more workers are arriving from Southeast Asia.

Other options

Taiwan and South Korea have also seen a sharp rise in the number of foreign workers in recent years.

There were some 590,000 foreign workers in Taiwan at the end of 2015, an increase of 80% in a decade. The comparable figure for South Korea is about 940,000, higher than that for Japan.

The gap in wages between Japan and its two neighbors has narrowed in dollar terms, due partly to the yen's depreciation.

The minimum monthly wage in Japan is about $1,060, the same level as in Seoul, according to calculations made using January's exchange rates.

The Japanese government's basic policy is to not accept unskilled foreign workers, though its Technical Intern Training Program allows trainees to stay in Japan for up to three years.

South Korea, meanwhile, already accepts unskilled foreign workers in some industries facing chronic labor shortages, mostly manufacturing ones. The country is expected to accept 58,000 unskilled foreign workers this year, including 12,000 re-entrants.

There were some 277,000 foreign nationals holding "E-9" non-professional employment visas in South Korea at the end of October 2015, according to the country's Ministry of Employment and Labor.

E-9 visa holders can stay in South Korea for up to four years and 10 months. If they acquire certain skills, they are eligible to change to "E-7" visas for specially designated activities and extend their employment contracts.

Unskilled foreign workers can stay in Taiwan for up to 12 years.

Japan's Technical Intern Training Program has been implemented as part of the country's international contributions, but it has significant flaws, with some companies illegally employing trainees participating in the program.

Some people in Japan have advocated accepting immigrants to cope with the country's shrinking population and declining growth potential. But the reality is that Japan "is losing its appeal" in the eyes of overseas workers, said Hisashi Yamada, chief economist at the Japan Research Institute.

Nikkei staff writer Koishi Kato in Seoul contributed to the article.

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