Japan's Resilient Demand for Foreign Workers

In Japan, employees of all ranks, including managers in well-established large firms, are now at risk of risutora -- quasi-forced retirement or even outright dismissal under corporate "restructuring" measures. The country's decade-long economic downturn has hit native and foreign workers alike. However, the impact of the recession on Japan's low and unskilled foreign labor is less than clear. Trends show that Japanese firms have filled lower-paid, short-term jobs with overseas recruits, particularly with South Americans of Japanese ancestry. These new legal laborers, who have benefited from liberalized immigration laws for people of Japanese descent, are rising in number as the population of unauthorized workers, such as visa overstayers, dwindles.

Growing Numbers of Foreign Workers

It's common knowledge that Japan's economy has fallen on hard times. Unemployment has steadily increased over the past decade, from 2.1 percent in 1991 to 3.4 percent in 1996 and then to 5.0 percent in 2001. Despite the bursting of the 'bubble economy" in 1991, the number of foreigners living and working in Japan continued to grow in the past decade. In March 2002, the Ministry of Health, Labor and Welfare estimated the number of foreign workers in Japan at the end of 2000 to be at least 710,000, up 6 percent from the previous year and accounting for just over 1 percent of the Japanese workforce. This figure includes approximately 100,000 professionals and other highly skilled workers, as well as 54,000 people holding "entertainer" visas. Excluded are permanent residents such as "old-comer" Koreans and a small segment of Brazilian Nikkeijin (Brazilians of Japanese descent).

Immigrant workers continue to bolster Japan's low-skilled and semi-skilled labor pool. In particular, South American Nikkeijin and visa overstayers make up the largest proportion of these workers. Added to this are trainees and technical interns who participate in special government-sanctioned programs. Each of these groups has carved out a unique niche in Japan's stressed economy.

South American Nikkeijin

The number of South American Nikkeijin rose sharply in the early 1990s, encouraged in good part by the revised Immigration Control Law of 1990, which allowed second and third-generation persons of Japanese descent easier access to residential visas with no employment restrictions. Aggressive recruitment by employers also played a role. According to the Ministry of Justice, Brazilian nationals constituted the largest group, which grew to reach 250,000 in 2000, followed by Peruvians with a population of 46,000.

The current economic recession has dealt a blow to the Nikkeijin, who have seen long-term employment opportunities dwindle. The great majority of Nikkeijin workers have found what is referred to as "indirect employment" in the manufacturing sector, meaning they are employed by labor contractors and dispatched to production lines. With contract periods limited to three months or even shorter, Nikkeijin workers have provided a key source of reliable, flexible labor for many businesses and have helped cut personnel costs.

In fact, annual Ministry of Health, Labor and Welfare surveys on businesses employing foreign workers show a steady increase in the ratio of "indirect employment" to "direct employment." Indirect, or contract labor, accounted for over 40 percent of the total number of foreign workers included in official records. The same surveys indicate an overall decrease in the number of Nikkeijin in the "direct employment" category by 18 percent between 1997 and 2001.

In addition, some studies have found a decline in monthly earnings by Brazilian Nikkeijin due to cutbacks in wages, decreased overtime work, or because they moved to less well-paid, non-manufacturing sectors. In short, the Nikkeijin's employment opportunities continue to exist, but the nature of that employment has changed in the current economic climate. By providing a surge tank of flexible labor and accepting less-than-favorable working conditions, the Nikkeijin provide a cushion for manufacturing industries and others that need the flexibility to expand and reduce production to cope with unpredictable market conditions.

Visa Overstayers

Liberalizing the admission rules for the Nikkeijin in 1990 was one policy instrument designed to halt the growth of unauthorized immigration; official estimates placed the number of visa overstayers alone at nearly 300,000 in 1993. (The category of unauthorized immigrants also includes those who have arrived in Japan legally but who may be working without permission to do so, such as foreign students, as well as a much smaller group of immigrants who have arrived at Japan's shores illegally.) The vast majority of visa overstayers came from other Asian countries, such as Korea, China, the Philippines, Thailand, Malaysia, and Iran, and took so-called "3K jobs" -- kitsui (demanding), kitanai (dirty), and kiken (dangerous).

The immigration authority, lacking manpower and mindful of such workers' role in keeping firms afloat, could not apprehend them on a massive scale. In fact, the majority of deportations took place after the overstayers themselves surrendered to authorities. Their reasons for turning themselves in varied: some had earned enough and decided to go home; others had lost a job and their future looked grim; still others were panicked by a change in the law.

The large inflow of legal Nikkeijin after the 1990 legislation, along with the impact of the recession, gradually displaced visa overstayers from their illegal jobs in many sectors of the economy. Some visa overstayers had to move from construction and manufacturing sectors to the service sector, where wages tend to be lower. Others, unable to find jobs, returned to their country of origin. Nonetheless, many of the long-term overstayers have established firm footholds in Japan, acquired skills and expertise in the workplace, and thus become even more indispensable for employers.

The estimated number of visa overstayers has decreased slowly. Most of the decrease has been in the number of Iranians, whose numbers dropped sharply from 40,000 in 1992 to 5,000 by 2001, and in the population of Thais and Malaysians. With a total population of 230,000 at the beginning of 2001, however, visa overstayers still constitute a major group of foreign workers, according to the Ministry of Justice.

Trainees and Technical Interns

Following the changes in Japan's immigration policy in 1990, the government launched its Technical Internship Training Program (TITP) in 1993. This was designed to be part of a larger effort to facilitate the transfer of technical skills to neighboring developing countries through trainee and technical intern programs while also allowing Japanese employers to avail themselves of a new pool of workers on an interim basis. Today, foreigners entering Japan with a trainee visa can apply for the status of technical intern a year later, and remain in Japan for a total of three years.

At its core, the trainee system is another mechanism for recruiting "unskilled labor." Despite the stated goal of fostering the transfer of technical skills, numerous studies have indicated that the majority of businesses accept trainees to lower personnel costs and to offset labor shortages. While the number of trainees appeared to reach a plateau in the mid-1990s, it increased by 36 percent between 1999 and 2000. According to the Ministry of Justice, of the 36,000 trainees registered at the end of 2000, 61 percent were Chinese, followed by Indonesians (12 percent) and Filipinos (8 percent). Keeping pace with the increase in trainees has been the notable growth in the number of trainees applying for technical internships -- from 5,300 in 1996 to 12,400 in 1998 and then to 16,100 in 2000, according to the Japan International Training Cooperation Organization (JITCO).

Trainees are not protected by labor standards and receive "allowances" that are often significantly lower than the minimum wage. Although technical interns are "workers" in the legal sense, they too have found their wages cut back due to a series of deductions unilaterally imposed by employers. JITCO statistics show that approximately half of the 16,100 prospective technical interns in 2000 were expected to receive a monthly wage of less than 120,000 yen (US$900), and those who could expect 150,000 yen or more accounted for only 3 percent. These figures are substantially lower than the average wages of Japanese workers, aged 20-29, in the manufacturing sector: approximately 240,000-280,000 yen for males and 190,000-210,000 for females, according to the 2002 Japan Statistical Yearbook.

Growing product and price competition from abroad, particularly from China, is one of the factors driving the increase in the number of technical interns and trainees. While some businesses in Japan have relocated their production lines to China, others have had no choice but to maintain their facilities in Japan, retain their place in the Japanese production and supply chain, and recruit young Chinese trainees. Nearly half of the technical interns are employed in the textile and clothing industries, the section of Japanese manufacturing that is most vulnerable to losing market share due to international competition.

Changing Economy, Changing Strategies

In sum, the long economic downturn has not simply led to an overall decrease in the demand for foreign labor. Rather, as Japanese businesses have developed strategies to cope with the recession and with the pressure to maintain competitiveness, specific forms of demand for foreign labor have emerged. Legal and administrative changes, such as the revision to the immigration law in 1990 that allowed employers to recruit and employ the Nikkeijin, along with the expansion of trainee and technical internship programs, have provided businesses with new channels for accessing foreign workers.

Japan is not alone in this quest. Recruiting and retaining foreign labor even in tough economic times has proven a necessity for most advanced industrialized countries. If and when the Japanese economy begins to rebound, labor shortages in some sectors will become even more acute. The prospect of significant population decline in the decades ahead will also continue to pose severe challenges to Japan's social and economic health. The debate about whether and how the country should admit more and diverse migrant foreign workers, or even immigrants for permanent settlement, is thus likely to intensify in the not-too-distant future.

Sources

Japan Statistical Yearbook 2002. Statistics Bureau, Ministry of Public Management, Home Affairs, Posts and Telecommunications.

JITCO (Japan International Training Cooperation Organization), statistics on trainees and technical interns, http://www.jitco.or.jp/eng/index.htm.

Komai, Hiroshi. 2001. Foreign Migrants in Contemporary Japan. Melbourne: Trans Pacific Press.

Ministry of Health, Labor and Welfare. 2002. "On the compilation of a document, 'On measures against illegally-employed foreigners', based on an agreement among the National Police Agency, the Ministry of Justice, and the Ministry of Health, Labor and Welfare."

_____. 2001. "On the compilation of reports from businesses employing foreign workers as of June 1, 2001."

Ministry of Justice. 2001. Statistics on the Foreigners Registered in Japan.

Sellek, Yoko. 2001. Migrant Labour in Japan. Houndmill and New York.

Yamanaka, Keiko. 2000. "'I will go home, but when?' Labor migration and circular diaspora formation by Japanese Brazilians in Japan." Pp. 123-152 in Mike Douglas and Glenda S. Roberts eds., Japan and Global Migration. London: Routledge.