A New Outlook for the Japanese Foreign Labor Market

Starting in April 2019, Japan will release a new foreign worker visa permit, which is certain to change how business has been conducted in the country up until this point. The proposed visa structure has been revised to accommodate and cope with the nation’s impending severe labor shortages.

Due to Japan’s aging population and falling birthrate, their options of securing more workers are very limited, with virtually the only expansion potential coming from foreign workers.  However, with these proposed changes to the structure of visas in Japan, small and mid-sized organizations will have to be weary of the potential benefits that larger organizations will receive.

With these proposed changes, small companies will continue to struggle to hire capable workers for a variety of different reasons. One of the biggest issues small and mid-sized organizations will face is associated with the cost of paying laborers. Large organizations can simply afford to pay employees more than small and mid-sized organizations. Larger firms can also provide benefits and relocation packages that are more comprehensive than what most small to mid-sized organizations would be able to afford.

With two different types of labor visas now available, workers with current visas can decide whether they would like to renew under their current visa limitations or re-apply under the new legislation. Current foreign workers can apply to switch their visas to the newly created ones without any additional testing necessary. The first of the two new visa types was created for those with proficiencies in 14 different labor driven divisions, such as nursing and agriculture. The second type is for individuals who are specifically in construction or shipbuilding. The new visas will also allow workers to transfer jobs as long as they are within the same industry. This leads to the belief that the retention of foreign workers will be lower than it has been in previous years as they now have the opportunity to seek better employment terms at other organizations as long as they are within the same employment sector mandated by their visa.

It is becoming harder to recruit Japanese people for many of these roles, as the ones available are traditionally for lower level positions. All organizations have benefited from hiring laborers from foreign countries as they have traditionally been seen as a source of cheap labor. However, Japan is not the only country hoping to recruit more international employees. Other countries all over the world are finding the same reasons and benefits to encourage international hiring practices for many different industries. Therefore, small and mid-sized firms are no longer just competing with large organizations to secure talent; the competition is now international across many countries. It was also announced by the Japanese government that employers of foreign workers under the new visa recommendations will be required to pay wages that are equivalent or higher than those already paid to Japanese nationals. Once again, this will greatly affect small businesses much more than their larger counterparts.

The new visa recommendations are a fresh way that the country is working hard to protect foreign workers from being seen as cheap labor. Now, each foreign hire is most likely going to cost more than they would have in the past, as companies are now required to support their daily lives. Now with the new legislation, foreign workers will have to be paid through bank accounts to make sure that there are evidential records of their payment in the event of any formal inquiry.

With the impending goal of accepting nearly 350,000 foreign workers in the next 5 years, it is apparent that many organizations are going to need to do some work when preparing to accommodate more foreign workers. Whether it is by offering better benefits packages, increasing rates of pay, or helping to relocate foreign workers, the labor industry is going to see some immense changes very soon in order to support the current growth assessment of this market.

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