How should Japan deal withthe shrinking population?
Suguru Nakamikawa
Yasumasa Urao
Takamasa Hara
Keisuke Nishioka
Seiya Tanefuji
Azusa Suzuki
Keita Kagami

Japan Center for Economic ResearchJanuary, 2018

Table of contents
1.Current Situation-Declining birthrate and aging progresses in Japan.
2.What’s the Problem ?
-Labor shortage will be more serious.
3.Importance of Foreign Workers-Labor force can be augmented by foreign workers.
4.Acceptance situation of foreign workers in Japan-The Japanese government is aggressively recruiting foreign workers.
5.The Problems of Employment Policy for Foreigners in Japan-There are problems with “technical interns” and “highly-skilled workers”.
6.The Problems of the Working Environment for Foreigners in Japan-For foreigners, the working environment in Japan is not always attractive.
7. The Problems of Japanese English ability- Japanese people has to take measures to improve English ability.
8. Conclusion
9. Members Introduction

1.Current Situation【Japanese population forecast】(million persons)

140
120
100
80
60
40
200

127
108
88
Median
2015

2025

2035

High birth rate
(Calendar year)

2045

2055

2065

(Notes) ''High birth rate'' line shows the positive scenario in which the birth rate will be 2.00 in 2065. In both case, the mortality
rate will be medium.
(Source) National Institute of Population and Social Security Research【Changes in Japan's population pyramid】〈2017〉（Age）85 ～80 ～ 84
75 ～ 79
70 ～ 74
65 ～ 69
60 ～ 64
55 ～ 59
50 ～ 54
45 ～ 49
40 ～ 44
35 ～ 3930 ～ 34
25 ～ 29
20 ～ 24
15 ～ 19
10 ～ 14
5 ～ 9
0 ～ 4

〈2065〉
85 ～80 ～ 84
75 ～ 79
70 ～ 74
65 ～ 69
60 ～ 64
55 ～ 59
50 ～ 54
45 ～ 49
40 ～ 44
35 ～ 3930 ～ 34
25 ～ 2920 ～ 24
15 ～ 19
10 ～ 145 ～ 90 ～ 4

Total population
126 million people

0500

10001500

Total population
88 million people0（Source）Ministry of Internal Affairs and Communication of Japan “Census” “Population estimate”
National Institute of Population and Social Security Research “The Population Prospects of Japan”

500

1000

1500

（Ten thousand people）

2.What’s the Problem ?
Demand (domestic consumption)
Shrinkingpopulation

Supply (labor force)
Others (tax revenues and so on)

Japanese companies face labor shortages…

The potential growth rate will decrease…
【Potential growth rate forecast】【Judgement of employment conditions】
50(Index）
ManufacturingNon-manufacturing251.5(％）

10
Excessive

0.5-25
Insufficient

-50
00:1

03:1

06:1（Quarterly）

09:1

12:1

15:1 17：3（Note）The gray area represents the recession period.
（Source）The Bank of Japan

017202530(calendar year）（Source）JCER , “The 44th Medium-Term Economic Forecast for
the Japanese Economy (Baseline scenario)”3.Importance of Foreign Workers

Labor shortage

Foreign workers【Changes in foreign workers in Japan】【Impact of increase in foreign workers】（%）（million persons）
1.4
1.2

30

Foreign workers
Foreign workers(YoY)(right)（million persons）
1
Addition of foreign workers(increase by 7% each year)25

1Population of 15-64 years(in Slide1 "Median")
0.8

20
0.6

0.8
15
0.6

0.4
100.4

50.200
2014

2015

2016

2017
(Calendar year)（Source）Ministry of Health, Labour and Welfare"Summary of foreign employment
situation"
t0.20
2017

2035

2065
(Calendar year)（Source）Ministry of Health, Labour and Welfare"Summary of foreign employment
situation"
National Institute of Population and Social Security Research4.Acceptance situation of foreign workers in Japan
Government policy
We actively accept foreign high‐skilled talent .
However, the acceptance of foreigners engaged in manual labor will be examinedwhile taking into account the national consensus.
（H29.2.22 the Council for the Realization of Work Style Reform ）In fact, technical intern trainees and international students who are not primarily for
employment purposes are engaged in manual labor.

Efforts toward expansion of non-skilled foreign workers①“Technical Intern Training Act”
→ Improvement of Protection Measures for Trainees and Extension of Practice Period.
→Added nursing career to Technical Intern Training Program.
②“The Revised National Strategic Special Zones Law”
→Acceptance of foreign workers in the agricultural sector of National Strategic SpecialZones.

5.The Problems of Employment Policy for Foreigners in Japan
The period of stay is too short—“Technical Intern Training System” in Japan
1st year

2nd year

3rd year

4th year

5th year

Practical Exam

Practical Exam & Writing Test

Technical Intern Training(1)classtechnical training

Technical Intern Training(2)technical training

Technical Intern Training(3)technical training

Extension of theperiod of stay

Entry

Practical Exam

Extension of theperiod of stay

Return Home(and cannot re-enteragain in principle)

Return Home Temporarily(more than 1 month)(Source)Ministry of Health, Labour and Welfare

A limit to accepting interns—Take a look at the case of Chinese workers in Japan
20.0（Y on Y, %)500
Students

15.0High skilled professionals

300

Total workers from China

5.0

200

0.0100（Calendar Year)

-5.0
2009

1011121314（Source）Ministry of Health, Labour and Welfare

CHINA: Disposable Income per Capita*Urban（2002＝100）

400

Technical Interns

10.0（Ｉｎｄｅｘ)

151617（Calendar Year)02002 030405（Source） CEIC Data

0607080910111213141516

6.The Problems of the Working Environment for Foreigners in Japan【Image of working environment in Japan】【Percentage of employees working very long hours】

Not attractive
4.7

0

16.4

28.6

60

15.5

（％）
100

…

(Note)Excerpt of answers with full‐time work experience at Japanesecompanies in Japan.
(Source)Japan Association for Promotion of Internationalization

%
0.45
1.11
2.09
2.20
2.69

…

80
Slightly attractive
Not very attractive

CountryNetherlands
SwedenLatvia
Denmark
Estonia…

2040
Very attractive
NeitherNot attractive at all

34.7

Rank
1234533

Japan
OECD ‐ Total

21.81
12.62

(Source)OECD, Better Life Index, 2017

Problems of the working environment for foreigners
Overtime workSeniority system

No job description

Uncertain evaluation system

Required high level Japanese language skills

Many relationships outside of work

It is necessary to create a pleasant working environment.
Ex) Fuji Xerox Co., Ltd.
 Reduce working hours by 10% 75% of workers evaluate that Fuji Xerox is a company capable of demonstrating abilities
regardless of sex, nationality, disability or age.
(Source)Ministry of Economy, Trade and Industry, Fuji Xerox Co., Ltd.

7.The Problems of Japanese English ability
Japanese workers should study business EnglishRankCountry

1Netherlands

2

Sweden3Denmark

4

Norway5Singapore

Companies
engaged inEnglish

Rakuten, FAST RETAILING, SUMIDA CORPORATION
Honda, Cyber Agent, Bridgestone, Asahi
SMBC, Sojitz, Mistubishi Corp, Mitsui Fudosan

Government should give companies tax incentive

…

…
37

Companies should force employees to learn English tosome extent

JapanIt is necessary to improve the quality of English teachers

EF EPI 2017・80 countries joined・Japanese proficiency
level declined for 7 years
・9th in Asian countries【Concrete goal for English ability by government】

EIKEN grade Pre‐1Goal

ActualJunior high school teachers

50%

32%

High school teachers

75%

57.3%

English teachers should take the ability test at least once a year

To attract foreign workers, Japanese must study English more.

8. Conclusion
Shrinkingpopulation

Labor
shortage

Potential
growthForeign workers
The problems in Japanfor accepting foreign workers
Employment policy
Improvement ofTechnical Intern Training System
×Limited Duration
×Re‐entry Banning

Language‐barrier
Working environment

Improve JapaneseEnglish ability

・Productivity improvement
・Work style reform

By solving problems shown above and increasing foreigners 7% each year,
Japan’s labor force population in 2065 will be kept the same level as now.

9.Members Introduction

Name

Affiliation

Suguru Nakamikawa

Ashikaga Bank, Ltd.

Yasumasa Urao

Osaka Gas Co., Ltd.

Takamasa Hara

Yamato Group Research instituteKeisuke Nishioka

Central Japan Railway Company

Seiya Tanefuji

Akita Bank, Ltd.

Azusa Suzuki

Secretariat of the House of Representatives

Keita Kagami

Daido Life Insurance Company, Ltd.

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