Japan faces shortage of almost a million foreign workers in 2040

Japan faces a shortage of almost 1 million foreign workers in 2040 if the government wants to achieve its economic growth goals as the population dwindles, an estimate from a state-backed think tank showed on Thursday.

At the current pace, 5.91 million foreign people will be working in Japan in 2040, almost 1 million short of the foreign workforce needed to sustain the targeted average annual growth rate of 1.24%, the Japan International Cooperation Agency (JICA)’s research arm said.

The demand-supply gap in foreign labor widened more than twofold from JICA’s previous estimate in 2022, after the researchers updated the data to take into account slower than expected economic growth in emigrating countries like Vietnam, Myanmar and Cambodia.

Foreign workers are crucial to Japan’s economy as they help to fill a severe labor shortage due to the rapid aging and plummeting birthrate.

The number of foreign workers in Japan more than quadrupled in the past 15 years to 2.05 million, or about 3% of the entire workforce, as of October last year.

The government has expanded work visa permits to a number of blue-collar sectors and skilled jobs amid easing public opinions on accepting immigrant labor.

But with hurdles including the yen’s weakening, conventionally low wages and human rights issues, Japan has to ramp up its efforts to stay competitive in the global race for talents, experts have said.