Declining Birthrate, Aging and Foreign Workers

Abstract

This paper argues that Japan needs to expand foreign workers in view of the declining birthrate and a growing proportion of elderly people. Since the end of 1980s, Japan has expanded the number of foreign skilled workers, but it continues to prohibit foreign unskilled workers. In spite of such policy, presently Japan still endures with a large pool of illegal foreign workers. Against this background, this paper contends that the declining birthrate and continuous growth in the proportion of aging people, Japan has to improve its labor productivity through technical progress in order to offset the contraction of labor force. In this regard, this paper maintains that relying on female and elderly people is necessary, but it is not sufficient in achieving economic growth in a sustained basis. For this reason, this paper argues that Japan should liberalize its labor market to foreign workers. Therefore, this paper suggests that Japan should abolish the policy based on the concept of “skilled” and “unskilled” for foreign workers, and instead it should transform the existing policy to encompass all level of job categories. For this purpose, this paper proposes a mechanism on “quantitative control” and “migration circulation” to avoid unlimited influx of foreign workers on the one hand, and to prevent an unwarranted long period of stay in Japan by foreign workers on the other hand. In addition, this paper also suggests the establishment of a “Repatriation Fund,” which is a form of monetary incentive in encouraging foreign workers to return to their home country when their employment contracts expire.