There are about 3 million foreigners living in Japan, of which 1.66 million are employed. This is a 13% increase from the previous year1 . The reason for this is the increase in technical intern trainees from Asian countries in recent years due to the conclusion of the Economic Partnership Agreement (EPA) 2 . 70% of Japan's foreign labor market is made up of workers from Asian countries, many of whom come to Japan alone as technical intern trainees. According to the Immigration Services Agency, as of December 2019, 400,000 foreigners were residing in Japan on technical intern trainee visas, more than half of whom were Vietnamese, followed by China, Indonesia, the Philippines, and Nepal3 . On the other hand, there are foreigners residing in Japan as workers. There are 130,000 Brazilians (8.2%) and about 30,000 Peruvians (1.8%), less than 10% of the total foreign workers.
The residence status of technical intern trainees is quite different from that of Japanese descendants in Latin America, and they can only work in industries specified by intergovernmental agreements. Even if they wish to stay long-term or settle there, the procedural hurdles are high and the chances are slim. Foreigners are employed at 240,000 establishments, with 20.4% in manufacturing, 17.4% in wholesale and retail, 14.2% in accommodation and food services, 10.7% in construction, and 4.8% in medical and welfare. Most of those from Latin America work mainly in manufacturing, and many are indirectly employed by temporary staffing agencies . Technical intern trainees from Asian countries work in a fairly wide range of industries, from agriculture, forestry, fisheries, and livestock, which are suffering from serious labor shortages, to the textile and food processing industries.4
Japan does not allow immigrants as a policy, but workers of Japanese descent from Latin America have gone from being "migrant workers" to "permanent residents" and are now completely rooted in Japan5 . Their visas are based on preferential status, and when they were first accepted, it was thought that they would return to their home countries after a few years, but it has already been 30 years. Currently, many technical intern trainees from Asian countries, especially international students, hope to stay in Japan for a long time, and in the future, some of them are likely to become permanent residents in Japan like the workers of Japanese descent from Latin America6 . In Korea, China, and Southeast Asian countries, there are not many employment opportunities for university or graduate school graduates, so they study in Japan in order to find employment after that. In recent years, the number of vocational school and university graduates of children of Japanese descent in Japan has been increasing, and they are almost always employed, and we can see them gradually succeeding.
Japan's current "serious labor shortage" is due to a declining birthrate and aging population, but some believe that as advanced technology is introduced and productivity improves, there may be a labor surplus in a few years.7 In particular, the COVID-19 pandemic has caused a drop in demand for workers, and the unemployment rate is expected to rise in the future.8
After the Immigration Control Act was revised in 1990, over 300,000 Japanese workers from South America came to Japan. The background to this was the "serious labor shortage" in the export industry caused by the bubble economy. However, the Asian currency crisis at the end of the 1990s caused exchange rate fluctuations (strong yen), and many large companies relocated their production bases to China, Vietnam, Thailand, and other places. Since then, the labor shortage in caregiving and agriculture has become even more "serious" due to the aging population, but there is a possibility that if the supply-demand mismatch in the labor market is resolved and the introduction of AI and robots continues, there may be a labor surplus.
The COVID-19 pandemic is likely to lead to a review of overseas supply chains, a contraction in exports (a drop in overseas demand), and a shrinking inbound industry that was oversupplied, so it is clear that the Japanese economy will be forced to make significant adjustments in the future. Think tanks both in Japan and abroad are warning that the introduction of AI will lead to the automation of work, leading to the disappearance of many jobs and a surplus of workers, and that even university graduates will have a much narrower range of career options. Some of these are extreme, but they are a warning that cannot be ignored. This does not mean that foreign workers, including those of Japanese descent, will suddenly become unnecessary, but those engaged in unskilled labor in the manufacturing industry will be the first to be subject to employment adjustments.
In October 2019, I gave a presentation on the topic of "AI and Robots: Japan's Working Environment" at the Japan Studies Society of the University of Zaragoza in Spain9 . At the meeting, I noted that Japan is a robotics powerhouse in terms of production, use, and export10 , and that robots have already been introduced in many production sites, and that their integration with artificial intelligence is reducing the burden on workers. I also stated that in the future, robots will become more prevalent not only in industries with labor shortages, but also in many other areas of innovation. In fact, websites for robots and AI introduce good examples of their introduction in various fields, and highlight the fact that the Japanese government is also providing subsidies for these cases11 .
However, the impact on employment cannot be ignored. The World Economic Forum announced in 2019 that the introduction of AI will cause 75 million workers to lose their jobs by 2022, while 130 million jobs will be lost.12 The International Labor Organization (ILO) and Japanese experts have also pointed out that if things continue as they are, robots will affect at least half of employment, and the impact will be even greater in some fields and occupations, and that the nature of economic activity in the future will also change significantly.13
In order to deal with this situation, Europe is considering a robot tax to help the unemployed, but in Japan, the idea of a robot tax has hardly been discussed. 14 Perhaps because Japan's unemployment rate is still low, 15 or because young people and white-collar workers believe that robots will not have much of an impact on them, Japanese society is optimistic that robots and AI can coexist with human society, and there is no sense of crisis like in Europe. 16 Companies are developing various robots and AI systems through their own research or in partnership with universities and other research institutions, and there is an emphasis on the view that if these systems could be fully introduced, the labor shortage would be largely resolved. 17 It is interesting to note that even if AI and robots are introduced, many jobs will not disappear completely. 18 It is simply that the way of working and the way of doing things will change. 19 This perspective is also important for foreign workers in the manufacturing, construction, and service industries, and it is urgent that they improve their professional skills, including Japanese language skills, in the meantime, as future changes will be gradual. Since the Lehman Shock in 2009, Japanese workers have been taking Japanese language courses and obtaining qualifications in nursing care and welding as part of their job preparation training, but to maintain their employment in the future , they will need to study more Japanese and aim to obtain qualifications that can be used in the service and logistics sectors.20
However, for small organizations, even with government subsidies, the introduction of robots is a major hurdle in terms of cost. Even after introducing robots, subsequent maintenance and regular updates must not be forgotten. In nursing care, agriculture, and the construction industry, it is necessary to avoid contact with people and equipment in the vicinity, and the AI systems required for this will be quite advanced. The robots will be trained to memorize various situations, and this learning process is called deep learning21 .
The impact on employment opportunities in each industry will vary depending on the pace at which AI is developed and introduced, but traditional employment relationships and the Japanese concept of a "full-time employee" may change significantly. Although it is an extreme view, management advisor Keisuke Nakahara suggests that most employees will become "daily laborers" and that the current social security system will not be able to cope with them. The gradual increase in the pension age represents this, and reflects the serious distortions of Japan's aging society.22
That said, it can be said that Japan has been able to maintain relatively stable employment precisely because it has not pursued productivity improvement alone. Thanks to stable employment, a progressive tax system, and a social security system, the poverty rate is lower and inequality is smaller than in other developed countries. There is also universal health insurance, which provides medical care to all citizens. Non-regular employees account for about 40% of the working population, or 21 million people, and although many of these are low-income earners, they are not uninsured. Part-time workers can apply for unemployment insurance under certain conditions , so all workers can be covered by workers' compensation insurance.23 However, the increase in non-regular employees is inevitable in the future, so a more simplified and digitalized social security system that can accommodate this will be required.24
The introduction of AI will also expose past assumptions, such as that Japanese agriculture is poor, the workforce is aging, and there are no successors. Currently, the average income level of agricultural workers is higher than that of ordinary salaried workers, and it has been pointed out that the introduction of robots will further increase efficiency and profits.25 Similarly, the occupations in which foreign trainees are engaged are said to be labor-intensive, low-productivity, and low-profit, but the introduction of information and communications technology (ICT) and AI will almost certainly eliminate the current labor shortage, and there may even be a surplus of workers in these occupations.
The government's "Council on Investments for the Future" 26 proposed a vision of the future called "Society 5.027 " for the future of Japan, based on discussions among many experts. The idea that emerged as a breakthrough was the "Super City Concept28 " of a next-generation future city in a special zone where existing regulations can be abolished. A system that allows the introduction of AI and robots to be imagined for each industry is drawn up, but to realize it, adjustments in supply and demand for time and labor will be necessary. In 20 years, Japan's population will decrease to just over 100 million, and the elderly over 65 years old will account for 35% of the population, up from 26% today. The low birth rate and aging population will become even more serious, but it is also necessary to design society based on the assumption of such a population decrease29 . That is why we must create a system for comfortable living with new standards through innovation and technology. The Super City Concept is a large-scale experiment in this regard.
In the future, the assumptions of happiness and life goals will undoubtedly change, and new ideas that come from the diversity and intercultural exchange of Japanese workers from South America, technical intern trainees from Asia, international students, etc. may be more necessary than ever to confront the many challenges that are looming. There are approximately 3 million foreigners living in Japan, of which 1.66 million are employed, making up only 2.5% of Japan's current total population and 2.9% of the working population, but these foreigners will surely be able to continue to contribute in some way to fostering the values of diversity and tolerance that Japanese society needs.
Notes:
1. Ministry of Health, Labor and Welfare: " Summary of reporting status of "Employment status of foreign nationals" (as of the end of October 2019) "
2. According to statistics from the Ministry of Health, Labor and Welfare, of the 1.66 million people, 410,000 (25.2%) are Chinese, 400,000 (24.2%) are Vietnamese, 180,000 (11%) are Filipino, 90,000 (5.5%) are Nepalese, and 50,000 (3.1%) are Indonesian.
Ministry of Health , Labor and Welfare: "Accepting foreign nurse and care worker candidates from Indonesia, the Philippines and Vietnam "
An EPA (Economic Partnership Agreement ) is equivalent to a free trade agreement (FTA) between two countries, and allows people from some Asian countries to come to Japan under the status of residence of technical internship or specific skills as part of human resource development, and to train and work in Japan for several years. They are required to acquire Japanese language skills in their home country before traveling, and the agreement is managed by a designated management organization.
Although Japan has concluded EPA agreements with Mexico, Chile, and Peru, it does not allow the acceptance of technical intern trainees from these countries.
3. Statistics on foreign residents (formerly known as registered foreign residents) by the Immigration Services Agency (December 2019)
4. According to the Japan International Trainee and Skilled Worker Cooperation Organization (JITCO), technical intern trainees have been placed in various industries in regional areas in recent years.
" What is the Foreign Technical Intern Training Program? "
The Ministry of Justice and the Ministry of Health, Labor and Welfare announced a new technical intern training program in 2018, which will mainly accept trainees from Asian countries, and established the Organization for Technical Intern Training (OTIT), which has stronger supervisory authority than JITCO.
5. Since the revision of the Immigration Control Act in 1990, more than 300,000 people from South America have come to Japan. At the time, there was a serious labor shortage in the automobile and electronics industries, and the door to foreign workers was opened on a limited basis.
6. According to the Ministry of Justice, 25,000 foreign students changed their residence status to work in Japan in 2018. By nationality, they were from China, Vietnam, Nepal, South Korea, and Taiwan, making up 95% of Asian countries.
Ministry of Justice: " Employment status of international students in Japanese companies in 2018 "
7. " Takuro Morinaga: 'Reiwa' will be an era of surplus manpower, not labor shortage! " NewsOnline, May 3, 2019
Soichiro Tahara, " Possibility of 'surplus' in 10 years, the government should explain: The revised Immigration Control Act has big problems ," Nikkei Business, January 11, 2019
Keisuke Nakahara, " Will unemployment rate worsen after the Tokyo Olympics? " livedoor news, 2018.10.26
8. Koichi Washio, " The Future of the 'Era of Mass Unemployment' and 'Employment Ice Age' Approaching as a Reality ," Foresight, July 13, 2020
It is expected that the unemployment problem will worsen significantly in the future not only in Europe but also in Latin America.
9. Grupo de investigación Japón - A research group run by Professor Carmen Tirado of the Faculty of Law at the University of Zaragoza. Every October, many Spanish Japanese researchers and Japanese scholars gather at the university to give presentations and hold discussions. The university also has a master's degree program in Japanese studies, and there are many enthusiastic Japanese researchers and Japanese language students.
10. According to statistics from the Japan Robot Association (2019), Japan produces 200,000 industrial robots annually (32,000 of which are produced overseas), and 140,000 are exported. The number of robots in operation domestically is approximately 320,000, accounting for 20% of the 1.5 million in Asia. Currently, 650,000 robots are in operation in China, 300,000 in South Korea, and approximately 70,000 in Taiwan. Approximately 2.5 million robots are in operation worldwide.
Estimated number of industrial robots in operation worldwide (manipulative robots only)
Manipulators and robots statistical trends table - Japan's robot production and export numbers, etc.
11. The Japan Robot Association website (Robot Utilization Navigator) introduces various uses and implementation examples. Subsidies from the Ministry of Economy, Trade and Industry are planned.
The Ministry of Health, Labour and Welfare also provides support for nursing care robots.
Robot Introduction Subsidy Site: " Use subsidies to introduce robots! What you need to know about eligible businesses and points to note when applying "
12. Andrés Ortega, " Robot intelligence: the great governor and consultant with machines ", El País , August 25, 2019
The jobs that will be lost will be office workers, factory workers, and accountants, while jobs for scientists, data managers, analysts, and AI specialists will increase dramatically. It will be even harder for workers with low skills to be rehired, and they will end up in low-paying jobs. The International Labor Organization (ILO) is concerned that in the future we will see a 30-30-40 society. This means that the top 30% will have good jobs with high pay, the middle 30% will have a lot of work but low pay, and the bottom 40% will have jobs that are not very necessary and pay very little.
13. Greg Williams (Translation by Miho Amano),
What kind of society will the introduction of robots lead to an increase in "human job losses" ? Wired , 2019.10.27
Ken Yamazaki, " How will technological innovations such as AI and IoT affect employment? ", Japan Institute for Labor Policy and Training, Overseas Labor Affairs Focus, February 2019
Hiroshi Sakai, " Employment Issues in the Age of AI and Robots ," Mitsubishi Research Institute, March 2019.
Masayuki Morikawa, " Artificial Intelligence, Robots, and Employment: Analysis from Individual Surveys ," RIETI Research Institute of Economy, Trade and Industry, February 2017.
14. Since 2017, Spanish newspapers have published numerous interviews with experts about the robot tax.
Javier Sampedro, "The power of robotics: without impuestos," El País , March 3, 2017
Ana Carbajosa, "Robot capitalism," El País , April 5, 2017
Miguel Angel García Vega, "The Impuestos that are necessary in the world," El País , May 20, 2018
Juan Diego Quesada, " The man who killed the horse: the man against the horse, " El País , May 29, 2018
Pedro del Rosal, "The Laws of Robotics," El País , July 20, 2018
Celia Luterbacher - translated by Kaori Yui, " Should robots that steal jobs be taxed? ", swissinfo.ch 2017.3.20
Yuri Kanno (Nishimura & Asahi Law Offices), " The impact of artificial intelligence (AI) on employment and working styles and issues in labor law ," Journal of Law and Economics, March 14, 2018.
15. The unemployment rate in 2019 was 2.4%. Even in June, amid the COVID-19 pandemic, it was only 2.8% (the number of unemployed people was 1.95 million). Some have pointed out that if all furloughed people were included, it would be about three times that amount. The unemployment rate does not include people who are furloughed of their own volition and not looking for work, so taking into account employment maintenance measures such as employment adjustment subsidies for companies, it is likely to be in the 6% range. In any case, there are concerns that the employment situation will worsen by the end of 2020. ( Labour Force Survey (Basic Tabulation) Results for June 2020 (Reiwa 2) )
Takahide Kiuchi, " Unemployment rate rises to 6% with 2.65 million more unemployed, worst since war: 11% including hidden unemployment ," NRI, May 11, 2020
16. " The spread of robots is not proportional to the unemployment rate. Work organization and employee training are issues ," January 23, 2019
Masakazu Kobayashi, "The Future of Work: The Trap of Job Automation and the Reality of the Gig Economy - Will the Future Opened Up by AI Really Make People Happy?", Kodansha Gendai Shinsho, April 2020
17. Shinya Ouchi, "Working Styles and Methods in the AI Era: Considering Labor Laws in 2035," Kobundo, 2017
18. Kenta Konomi and Ikuko Morikawa , " A big misunderstanding of the theory that 'machines will take over most jobs': 5 reasons why Japanese people are less likely to become 'digitally unemployed' ," Toyo Keizai, April 8, 2019
19. Masakazu Kobayashi, The Future of Work, Kodansha Gendaisho, 2020
20. This is a training course for foreign workers implemented by the Japan International Cooperation Center (JICE) under the commission of the Ministry of Health, Labor and Welfare. It has now become a project called " Training to Support the Employment and Settlement of Foreign Workers ," and what was originally only for Japanese South Americans has expanded to include all foreign workers.
21. AINOW site
22. Takashi Matsuzaki, "AI Introduction to Create an Economy of 100 Million Day Laborers," Business Journal, August 2, 2018
This is an interview with Keisuke Nakahara, author of "Japan's Difficulties: Wages, Employment, and Companies from 2020 (Kodansha, 2018)". His blog: Keisuke Nakahara's "Reading the Economy"
23. Statistics Bureau, Ministry of Internal Affairs and Communications, " Labor Force Survey (Detailed Tabulation) Average Results for 2019 (Reiwa 1) "
24. This app was developed by Doreming, a fintech company based in Fukuoka that has a proven track record abroad, where the informal economy is widespread. Eventually, apps like this will become popular in Japan, and taxes and insurance will be automatically deducted when wages are transferred. Using such a system will reduce tax evasion by individuals and prevent fraud by companies that pay wages.
25. Kazuhito Yamashita, " Farmers are no longer the weak: Huge profits from farmland conversion, Japanese livestock farming increases medical costs... Strong agriculture does not need protection ," Canon Institute for Global Studies, January 30, 2020.
Kazuhito Yamashita, " Farmers are no longer the weak, " Ronza, January 15, 2020
Tomoyuki Watanabe, "Smart Agriculture: A Guide for the Next Generation of Farmers," Industrial Development Organization Co., Ltd., 2018
26. Council on Investments for the Future
27. Society 5.0
28. National Strategic Special Zone " Super City Concept ":
On May 27, 2020, a bill to amend the National Strategic Special Zone Act was enacted to realize this vision, and future developments are being closely watched.
Towards the realization of the "Super City" concept (1 minute 40 second video, English version )
29. White Paper on Aging Society, " Chapter 1, Section 1, 1 (2) Japan in 50 Years' Time Based on Future Projected Population ," Cabinet Office
In recent years, the population has been declining at a rate of about 500,000 people per year. By 2040, the population will be equivalent to Tokyo's 13 million people, so even if we accept hundreds of thousands of foreigners every year, it will not be enough to catch up.
Hiroi Yoshinori, "Designing a Declining Population Society," Toyo Keizai Inc., December 2019
© 2020 Alberto J. Matsumoto
