Amid a labour crunch, Japan, South Korea open up to foreign workers

East Asian neighbours Japan and South Korea have been opening up to foreign worker inflows lately, in a bid to deal with crushing labour shortages,  as they strive to improve the state of their economies amid falling birth rates and a fast ageing population. Here’s a closer look at their efforts:

Japan

Japan recently doubled the entry cap for certain skilled foreign workers to 820,000 over the next five years, starting in fiscal 2024.

The 820,000 limit is in response to Japan’s expected “debilitating” labour shortages, Nikkei Asia reported. The shortages threaten several industries—among them construction, manufacturing, farming, and health care. Employers located outside major metropolitan areas, which have been facing a steep population decline, have been hit especially hard.

The new cap was approved without major pushback.

“Work can’t get done without those workers,” said Hiroshi Tokoro, chairman of the Suzuki Suppliers Association, as quoted in the same article. “Becoming eligible for the programme is a matter of life and death for the industry.”

More than half of the 70-member Suzuki Suppliers Association already have skilled foreign workers, with the total reaching about 1,300.

A specified skilled worker residency is granted to foreign nationals with required skill sets in industries with severe labour shortages. This type of status grants a residency of up to five years. The programme started in 2019 and had 200,000 people by the end of 2023.

In accommodating more foreign workers, the cabinet decided to add four new industries eligible for Type 1 residency status under the programme: ground transportation, rail, forestry, and lumber. This expands the number of industries to 16 from 12.

Meanwhile, a survey commissioned by Asahi Shimbun conducted between February and April revealed that 62 % of respondents supported granting more visas to skilled workers, compared to 44 % in a 2018 poll. The latest survey was conducted by mail among 3,000 randomly selected voters nationwide.

Despite the public’s more positive perception of hiring more foreign workers, conservatives still urge caution and have called for limits on the foreign worker influx, citing concerns about ‘different values.’

Ken Kato, a politically conservative businessman from Tokyo, said Japan should choose “very carefully” the people who come to the country, according to an article in the South China Morning Post. “We need skilled workers, but we do not need people with radical ideologies who will try to change our society and cause problems.”

A record 2,048,675 foreign workers were in Japan as of October 31 last year, an increase of 225,950 from the previous year and the first time the figure has breached the 2 million threshold, according to a report published by the Ministry of Health, Labour, and Welfare on March 1.

Almost 600,000 are on visas linked to their profession or technical skills in areas like business, law, research, or medicine, with another 412,000 on technical internship visas.

Workers from Vietnam accounted for the largest number of arrivals at 518,364, followed by those from mainland China, Hong Kong, and Macau at 397,918 and about 227,000 from the Philippines.

About 27 % of workers were employed in the manufacturing sector, followed by nearly 16 % in the service industry and 12.9 % in the wholesale and retail sectors.

Masataka Nakagawa, a senior researcher with the government-run National Institute of Population and Social Security Research, thinks that public perceptions have become more accepting of foreign workers as a result of Japanese people being more exposed to overseas tourists in recent years. But he agrees that caution needs to be exercised to limit the impact of an influx of foreign workers.

“We have to be careful as if we let in large numbers of low-skilled workers then that will have a negative impact on the wages of Japanese people in that sector,” he explained, as quoted in the SCMP report. “On the other hand, there is strong demand at the moment for semi-skilled workers, such as in the care sector, so more visas would help alleviate those shortages.”

The challenge, he said, would be for Japan to “hit the sweet spot” of issuing sufficient visas to meet the labour shortfall while not allowing one too many arrivals, as that could cause an imbalance in society and cause conflicts with locals.

Kato, on the other hand, asserted that Japan will not need more workers in the long term. “Japan may be short of workers right now, but AI, robotics and other advanced technologies are making quick progress, so there will be no need for people to do those jobs in 10 or 20 years.”

“Businesses say they are desperate for staff now, but that will not last, and I feel that inviting more workers into Japan now is a short-sighted policy.”

South Korea

Japan is not alone in the competition to woo foreign talent as other countries are also facing labour shortages, such as Australia and next-door neighbour South Korea.

South Korea’s working-age population is projected to shrink by a quarter in the next two decades according to a report from the Korean Peninsula Population Institute for Future, a private think tank in the nation’s capital.

The working-age population, which Seoul defines as economically active people aged between 15 and 64, will stand at about 27.17 million by 2044, down by 9.4 million from 36.57 million in 2023. The dismal figures project a grim outlook for Asia’s fourth largest economy, resulting in a situation South Korea has never before experienced, the Korea Herald reported.

With the shrinking number of working-age individuals comes a labour shortage. In an interview with the Herald, Kim Young-Jung, president of the Korea Employment Information Service, mentioned that South Korea is now in “more need” of all kinds of labour.

“The manpower shortage in Korea is not necessarily limited to manual or nonprofessional labour, but highly educated workers are also needed,” he said.

According to the article, starting in 2028, the country’s economically active population, which has remained steady over the years, will start to decline. In particular, due to the falling birth rate, South Korea’s youth population will shrink by one million as soon as 2030.

Kim explained that currently, labour from overseas is concentrated in low-paying unskilled jobs, but in the future, many will be hired to perform highly skilled jobs which may include engineers, scientists, teachers, managers, and IT professionals.

The former senior policymaker in the Labour Ministry, however, added that Korea could still rely on tapping into potential workers from the economically inactive population, including retirees and stay-at-home parents, for the next few years.

Alongside, the South Korean government is reviving a programme to support foreign workers with a bachelor’s degree or higher to work in small and medium-sized enterprises (SMEs) in the country, after a decade-long hiatus, the Chosun Ilbo reported.

According to reliable sources, the Ministry of SMEs and Startups is re-launching the “Support Programme for the Introduction of Foreign Professional Workers,” which aims to facilitate the employment of skilled foreign workers by local SMEs. The plan for the latter half of the year involves recruiting companies wishing to hire foreign workers and then deploying the necessary manpower.

Originally introduced in 2001, the programme was discontinued in 2016 due to criticism that it was taking jobs from young South Koreans. It is now being reinstated as the labour shortage in SMEs shows no signs of abating.

This time around, the government is focusing on foreign university students who have come to study in the country rather than bringing in workers from overseas.

The article explained that students studying in South Korea have already adjusted to Korean life and are proficient in the language, making them preferred candidates for companies. This approach also reduces the effort and cost associated with recruiting from abroad.

In this regard, the Ministry of SMEs and Startups is in discussions with relevant ministries such as the Ministry of Education and the Ministry of Economy and Finance, and has also commissioned related research projects.

Kim encouraged people from other countries to work in Korea, saying it would be a good experience. “As a country that owns Samsung, Korea is not only a country with a well-developed technology industry but also a cultural powerhouse that owns all kinds of content such as K-pop, K-drama, and K-movies,” he said.

“This attractive country needs all kinds of labour. So I hope more people will be interested and look for employment in Korea.”

Johanna Añes-Dela Cruz

Digital sub-editor & reporter, Asia News Network