Boosting Japan’s Workforce (& Womenomics) through Immigration

By Abigail Freeman & Elizabeth Keller —

Commuters transit Shibuya station during the morning rush in Tokyo, Japan. Source: Shibuya246's flickr photostream, used under a creative commons license.

Commuters transit Shibuya Station during the morning rush in Tokyo, Japan. Source: Shibuya246’s flickr photostream, used under a creative commons license.

Early in his tenure, Prime Minister Shinzo Abe of Japan made increasing female participation in the Japanese workforce an essential element of his efforts to revive the Japanese economy. Drawing on research led by Kathy Matsui of Goldman Sachs, Abe argued that through Womenomics, as the policy is known, “Japan could increase its gross domestic product by as much as 15% simply by tapping further its most underutilized resource — Japanese women.” The logic was simple: given Japan’s dwindling and ageing population, the country needs more workers to grow its economy; with a public and political class averse to foreign labor, boosting the number of Japanese women in the workforce seems the best option.

Three years on, Womenomics is showing results. Women are entering the workforce in record numbers, and while not a direct correlation, the Japanese economy is recovering. The women’s labor force participation rate in Japan has risen from 60 percent in 2010 to a high of 66.7 percent, comparable to the figure in other developed countries. The overall capacity of day-care facilities rose from 2.16 million to 2.29 million as of 2013, and the number of women who leave the workforce upon the birth of a child is starting to even out.

But these figures can be deceiving. The nature of the work women are taking on is often part-time and low wage, more so than is the case for their male counterparts. The persistent gap in workforce gender parity suggest that Womenomics alone will not be enough to compensate for Japan’s labor shortage. For Japan to reach its gross domestic product (GDP) growth targets, the Abe government will need to add a labor immigration strategy into the mix. The choice is not “either/or.” Rather, the pool of foreign workers in Japan needs to be expanded in a way that bolsters rather than undermines Womenomics.

The statistics are grim for Japan’s economic future. Approximately 27 percent of the Japanese population is age 65 or older, and that elderly population is projected to grow to 38.8 percent of the population by 2050, when there will be just one working-age person for every senior or child. The Organization for Economic Cooperation and Development estimates that if workforce shrinkage remains unchanged, Japan’s working population will be 21 percent below that needed for 1.2 percent GDP per capita growth. Maintaining Japan’s current pension and health care benefits for an aging population would consume an extra 7 percent of the country’s GDP by 2030.

With an ageing population as backdrop, the Japanese government zeroed in on gaps in the workforce. In 2009, Japan’s female employment rate (60 percent) was lower than that of most other developed countries; a whopping 70 percent of Japanese women were leaving work after their first child; and only 65 percent of college-educated women were employed. In response, the Abe administration instituted a thoughtful, comprehensive set of reforms. Womenomics set targets for women’s workforce participation and professional advancement. It increased the availability of day care and after-school care and expanded child care leave benefits. It set targets to help fathers play a larger role at home, including through paternity leave, and drew attention to the gap in the number of hours that Japanese men spend helping out with household chores compared to men in other developed countries. Perhaps most important, Abe made women in the workforce and work-life balance a topic of national conversation.

Yet even with the progress to date and Prime Minister Abe’s political will, Womenomics alone will not be enough. Estimates of Japan’s labor shortage vary, with one government study projecting a 9.5 million workforce contraction between 2010 and 2030, bringing the workforce down to 56.8 million workers, while another study estimates the Japanese workforce will drop to 55.8 million by 2030. Womenomics, even if entirely successful, only envisions bringing an additional 7.1 million employees into the workforce. Moreover, not enough women are entering the workforce in a full-time capacity at a sufficient rate to fill Japan’s labor needs. Finally, more research needs to be done on the nature of the labor shortage and how this aligns with the skill set of the existing female labor pool. Although Abe has rejected a significant increase in immigration, his administration is moving forward to expand labor immigration in a piecemeal fashion, in what has been referred to as a “closed front door, open back door” approach. Some foreign labor immigration efforts now underway include a goal to double the number of foreign information technology (IT) workers (to 60,000 by 2020) and to expand the hiring of foreign students graduating from Japanese universities and vocational schools.

How does this piecemeal approach to immigration intersect with Womenomics? So far, the two policies appear to be on different tracks. Maintaining Japan’s existing restrictive immigration policy with exceptions carved out for categories such as foreign “trainees” and “technical interns” has not proven successful in meeting needs identified under Womenomics. Goldman Sachs, in its most recent report on Womenomics, calls for immigration reform to expand the number of foreign caregivers, to help working women (and men) meet their child care and elder care responsibilities. A comprehensive, reasoned approach to immigration, synched with Womenomics, might also consider ways in which to support other aspects of that agenda, such as foreign mentors to support women in leadership, foreign women on corporate boards, and IT or other training that would better position women for advancement in the workforce. Not all of these require changes to the existing immigration laws. But they do require a broad vision and coordination among the various ministries and Japan’s Gender Equality Bureau in the Cabinet Office.

For years, assumptions unsupported by data held back Japanese efforts to put in place policies that would have increased the number of women in the workforce. The same risk is present in Japan when it comes to immigration. It is common, for example, to hear explanations that immigration is out of the question in Japan because Japan is a homogeneous society culturally resistant to immigration. And yet, Japan has proven pragmatic with labor immigration in the past and, more recently, has been bringing in more foreign workers as construction demands rose. Moreover, a number of local communities in Japan are eager to welcome immigrants and foreign labor but are held back by national restrictions. The issue is not whether to allow labor immigration but rather for Prime Minister Abe to lead on the issue, just as he has done with Womenomics, and present a new vision and strategy for Japanese immigration that would work synergistically with Womenomics and realize the vision of a “globalized” Japan.

Ms. Abigail Friedman, a senior associate (nonresident) with the Simon Chair in Political Economy at CSIS, is founder and CEO of The Wisteria Group. Ms. Elizabeth Keller, program coordinator and research assistant with the CSIS Simon Chair in Political Economy, assisted with research on this article. This post also appeared as a CSIS Commentary here.

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