Japan is facing a looming labor shortage of nearly one million foreign workers by 2040 if the government wants to achieve its economic growth goals, according to an estimate from a state-backed think tank.
Projections of foreign workforce falling short
At the current pace, the research arm of the Japan International Cooperation Agency (JICA) projects that 5.91 million foreign workers will be employed in Japan by 2040. This falls almost one million short of the foreign workforce needed to sustain the government’s targeted average annual growth rate of 1.24 percent.
Widening demand-supply gap for foreign labor
The demand-supply gap for foreign labor has more than doubled since JICA’s previous estimate in 2022. Researchers updated their data to account for slower-than-expected economic growth in key emigrating countries like Vietnam, Myanmar, and Cambodia.
Crucial role of foreign workers in Japan
Foreign workers are crucial to Japan’s economy, helping to address a severe labor shortage driven by rapid population aging and a declining birth rate. Over the past 15 years, the number of foreign workers in Japan has more than quadrupled, reaching 2.05 million as of last October – around 3 percent of the total workforce.
Read more: Japan’s exports reach $53 billion in May amid weak yen, robust global demand
Efforts to expand foreign labor, but challenges remain
To meet labor demands, the Japanese government has expanded work visa programs across blue-collar sectors and skilled jobs, with growing public acceptance of immigrant labor. However, experts warn that challenges like the weakening yen, traditionally low wages, and human rights issues mean Japan must redouble efforts to stay competitive in the global race for talent.
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