How Japan's Abe is taking care of business

How Japan's Abe is taking care of business

Japan’s basic policy on economic and fiscal management and reform 2018, endorsed by the cabinet on 15 June, should reassure investors that Prime Minister Shinzo Abe has not lost his passion for structural reform. 

Entitled ‘realising sustainable economic growth by overcoming the decreasing birth rate and ageing population’, the policy includes several key themes, such as ‘work style reform’, ‘improvement of productivity’ and ‘acceptance of foreign workers’.

Accepting foreign workers is an unavoidable and realistic option to mitigate the current labour shortage.

Article continues after advert

The Japanese government has announced the establishment of a new working visa requirement that will come into force in April 2019 to increase the number of foreign workers in a range of industrial sectors.


The dependence of Japanese companies on foreign workers is currently quite low, but is steadily increasing.

According to government statistics, foreign workers accounted for 0.9 per cent of the total workforce in 2009 but rose to2 per cent in 2017.

The number of foreign workers was 1.3m as of October 2017, up 18 per cent from the previous year.

Under the new working visa requirement, workers will be certified as ‘fit to work’ after passing a number of tests and, if deemed to possess a conversational level of Japanese, will be allowed to stay for up to five years in Japan.

What is more, if their level of expertise can be recognised as ‘high’ during their stay, in accordance to the new regulation, they can be transferred to a different residency status, enabling them to bring their family to the country with no limit on how long they stay.

Looking ahead, after the new status of residence is established, the number of foreign workers is expected to increase in the agriculture, construction, nursing care and shipbuilding sectors, which all fall within the new working visa requirement.

The inflow of foreign workers will, without doubt, improve overall Japanese labour supply capacity and in particular, we expect that there will be a significant impact on the construction industry, which has been facing a serious problem due to tightened labour supply and demand, ahead of the Olympic Games in 2020.

Companies that are able to hire labour at a lower cost can be winners, so investors need to look out for businesses that prove themselves better able to integrate and retain domestic and foreign workers.

Another key theme of the new policy, the ‘improvement of productivity’, can bring more immediate results.

Utilising the latest technology, the government is aiming to become the first country in the world to achieve ‘society 5.0’, where social problems, including labour shortages, are solved by a system that integrates the virtual and real world.

In the basic policy, the government shows its commitment to realise these ends by establishing several flagship projects that include automation of logistics, building a nationwide healthcare information database and the digitalisation of public administration.