Japan faces critical foreign worker shortage by 2040

TOKYO, JAPAN — Japan is projected to face a shortage of nearly one million foreign workers by 2040, according to the Japan International Cooperation Agency (JICA).

The think tank has estimated that at the current rate, Japan will need 5.91 million foreign workers to sustain an annual economic growth target of 1.24%. However, this figure falls short by approximately 970,000 workers.

Japan’s widening gap in foreign labor

The foreign labor gap has more than doubled since JICA’s previous estimate in 2022, primarily due to slower economic growth in countries like Vietnam, Myanmar, and Cambodia, which are major sources of foreign labor for Japan.

“We must discuss accepting foreign workers with a greater sense of urgency, as the competition for workforce would grow in the future against countries like China,” JICA president Shinichi Kitaoka said in 2022.

“We need to take actions to make Japan attractive in the longer term, a country to be chosen by foreign workers.”

Challenges and efforts of Japan to attract foreign workers

Japan’s rapidly aging population and declining birth rate have led to a severe labor shortage, making foreign workers crucial to the country’s economy. 

To address this issue, the Japanese government has been expanding work visa permits across various sectors, including blue-collar jobs and skilled positions. However, the country still faces hurdles in attracting and retaining foreign talent, including a weakening yen, traditionally low wages, and human rights concerns.

Prime Minister Fumio Kishida has expressed commitment to creating an inclusive society and making Japan more appealing to foreign workers. The government is also planning to replace its controversial Technical Intern Training Program with a new system designed to enhance skills and protect workers’ rights.

According to the Ministry of Health, Labor, and Welfare, the number of foreign workers in Japan reached 2.05 million for the first time in October 2023.

Aside from Japan, South Korea faces a similar problem of a rapidly aging population and shrinking workforce, leading the country to seek foreign talent to fill crucial skilled labor roles.