Issues Over Accepting More Foreign Workers

Transcription

1 Issues Over Accepting More Foreign Workers 28 March 2014 Foreign Press Center Japan Jun Saito Senior Research Fellow Japan Center for Economic Research

2 Structure of My Presentation Background Current state of foreign workers Policy in accepting foreign workers Magnitude of necessary foreign workers Concerns over accepting more foreign workers Merits of accepting more foreign workers Concluding remarks 2

3 Background (1) Economic impacts of aging and decline of population Decline in population over the age of 15 Increasing share of the aged Fall in aggregate labor participation rate Decline in labor force Decline in potential growth rate Deterioration of the sustainability of fiscal and social security system 3

4 Demographic Projection (million persons) Total Population 15~ 15~64 0 (Data Source) National Institute of Population and Social Security Research, Population Projection for Japan, January

5 Old-Aged Dependency Ratio (Population of 65~)/(Population of 15~64) X (Data Source) National Institute of Population and Social Security Research, Population Projection for Japan, January

6 Background (2) Policy response to economic impact of the aging and decline in population Raising participation rate female workers (M-shaped curve) the aged and the young Raising fertility rate Child-care facilities, child-care allowance, work and life balance Accepting more foreign workers Highly skilled professionals Unskilled workers 6

7 Background (3) Recommendations by economic organizations Japan Business Federation (Keidanren) Recommendations on Accepting Non-Japanese Workers (14 April 2004) Second Set of Recommendation on Accepting Non-Japanese Workers (20 March 2007) Kansai Association of Corporate Executives Revitalization of Japan by Promoting Acceptance of Foreign Residents (8 May 2013) Discussions by the Council for Economic and Fiscal Policy Committee on Choosing the Future Started the discussions from 30 January

8 Current State of Foreign Workers (1) Foreign Residents at June 2013 Total 2,049,123 (1.6 % of total population) Medium and Long Term Residents 1,671,434 Special Permanent Residents 377,689 Short stay visitors are not included 8

9 Current State of Foreign Workers (2) Situation of Notified Foreign National Employment Status (at October 2013) Total 717,504 (1.1% of total labor force) Status of residence based on personal status or position 318,788 Technical intern training 136,608 Status of residence in specialized/technical field 132,571 Permission to engage in an activity other than that permitted under the status of residence previously granted 121,770 Designated activities 7,735 Unknown 32 Special permanent residents are not included Illegal residents are not included 9

10 Current State of Foreign Workers (3) Status of residence based on personal status or position (318,788) Permanent residents (Brazil, China, Philippines etc.) 170,238 Long-term residents (Brazil etc.) 72,238 Technical intern training (China, Vietnam etc.) (136,608) Status of residence in specialized/technical field) (132,571) specialist in humanities/international services (China etc.) 54,259 Engineer (China etc.) 39,244 Permission to engage in an activity other than that permitted under the status of residence previously granted (121,770) Study (China etc.) 102,534 10

11 Current State of Foreign Workers (4) International difference in the acceptance of foreign workers (in percent of total labor force) Japan 1.1 percent (2011) Germany 9.4 percent (2009) France 5.8 percent (2009) UK 7.6 percent (2010) USA 16.2 percent (2009) Korea 2.2 percent (2011) Singapore 35.7 percent (2011)» (Data source) Japan Institute for Labour Policy and Training, Databook of International Labour Statistics 2013, March

12 Current State of Foreign Workers (5) Cities and towns with high proportion of foreigners (Proportion of foreigners in total population at 1 April 2012) Oizumi, Gumma (15.3%) Minokamo, Gifu (8.6%) Kikugawa, Shizuoka (6.5%) Kani, Gifu (5.7%) Kosai, Shizuoka (5.2%) Komaki, Aichi (5.1%)» (Data source) Report of the Tokyo 2012 Meeting of the Conference of Cities with Concentration of Foreign Workers. 12

13 Policy in Accepting Foreign Workers (1) Foreigners who will be engaged in jobs which make use of their specialized technology, technique, or knowledge will be accepted. On the other hand, foreigners who does not fall into this category will not be accepted. 13

14 Policy in Accepting Foreign Workers (2) In particular, entry of highly skilled foreign professionals will be encouraged by points-based preferential immigration treatment. On the other hand, entry of workers who do not work in specialized/technical field are accepted only in a limited manner. Permanent residents and long-term residents are able to work Foreign students can work under certain conditions Foreign workers for technical intern training are accepted in a limited manner. Within the EPA framework, nurses and long-term care workers are accepted in a limited manner. 14

15 Magnitude of Necessary Foreign Workers (1) United Nations (2000) Stabilizing population of Japan only by accepting more foreign workers. (1) In order to stabilize total population, a total of 17.1 million persons by 2050 (annual average of 340 thousand persons) is required. (2) In order to stabilize working age population, a total of 32.3 million (annual average of 650 thousand persons) is required.» United Nations, Replacement Migration: Is it a Solution to Declining and Ageing Population?,

16 Magnitude of Necessary Foreign Workers (2) Japan Center of Economic Research (2013) (1) Stabilizing working age population by raising fertility rate as well as accepting more foreign workers. (2) Raising fertility rate to 1.8% and by increasing acceptance of foreign workers towards 2050, acceptance of 200 thousand persons every year after 2050 is required. Total population will stabilize in 2100 at around 90 million persons. Proportion of foreign workers in total population will rise from current 1.8 percent to 6 percent in 2050, and to 13 percent by 2100.» Japan Center for Economic Research, Vision 2050: Maintain Position As a First-Tier Nation (December 2013) 16

17 Concerns Over Accepting More Foreign Workers (1) Economic concerns It may reduce wages of Japanese workers? To the contrary, wages of unskilled workers have risen: Nakamura (2009) Japanese male workers moved out to other districts. Japanese female stopped working. In areas where many foreign workers are employed, share of unskilled labor-intensive production is high, and demand for unskilled workers tend to increase.» Jiro Nakamura, et al. Foreign Workers in Japan, 2009 (in Japanese) 17

18 Concerns Over Accepting More Foreign Workers (2) Economic concerns It may delay the shift of resources to highproductivity firms? It did lead to increase in firms that employ unskilled labor intensively: Nakamura (2009) In industries which is more labor intensive or where ratio of unskilled workers to skilled workers are high, probability that firms would be able to continue their business is high. In industries which is more labor intensive or where ratio of unskilled workers to skilled workers are high, entry of firms have increased. 18

19 Concerns Over Accepting More Foreign Workers (3) Fiscal concerns Fiscal situation of local governments may worsen? However, fiscal situation would worsen even without foreign workers. Decline of population in the rural area in the medium-term will worsen fiscal situation of local governments. On the other hand, increase of foreign workers may make a positive contribution to the fiscal situation. Increase in tax payments by foreign workers. Increase in tax payments by firms that was able to remain in business. 19

20 Merits of Accepting More Foreign Workers (1) It may enhance economic growth. Innovation may be stimulated. Not only foreign immigrants tend to innovate and startup themselves, but they also tend to stimulate others and promote innovation by them. Investment in human capital may be stimulated. Enrollment to universities has risen: Nakamura (2009) Skilled labor becomes relatively scarce and its rate of return becomes higher. They will go to universities in order to get a job as skilled workers. 20

21 Merits of Accepting More Foreign Workers (2) Japan Center for Economic Research (2013) Argues that growth will be stimulated by accepting foreign workers in the necessary but labor-intensive and low-productivity sectors, like long-term care, and shifting Japanese skilled workers to high-productivity sectors. Labor force will also increase. Thereby real growth rate will be higher than the case where no further foreign workers are accepted. Japan Center for Economic Research, Japan s Changes in Industrial Structure and Economic Growth- Twin Deficit Concerns Arising, March

22 Concluding Remarks (1) Discussion has just started. Questions that should be asked What should be compared? What should the policy assignments be? What are the choices? 22

23 Concluding Remarks (2) Even if we open the door, nobody may come. Competition for workers has become fierce. Neighboring countries are also aging. Need to be an attractive destination for foreign workers. Who should make the decision? Decision should be made by the young who live in the future rather than the aged of today. 23

24 Thank you for listening Japan Center for Economic Research Jun Saito