Economists welcome rise in foreign workers in Japan: Nikkei survey
Nikkei, in collaboration with the Japan Center for Economic Research, asked nearly 50 economists to form an Economics Panel in 2024. The economists were chosen based on their academic achievements and influence, taking into account their areas of expertise and the importance of diversity. The panel took up questions related to fiscal and financial issues, as well as Japan's policies regarding overseas nationals.
Among the panelists, 66% agreed that an increase in the number of foreign residents in Japan could improve the nation's fiscal balance. They pointed out that having more young foreign workers will help alleviate labor shortages and that such workers will contribute significantly in terms of tax payments and social security premiums. Many panelists emphasized the importance of creating institutional frameworks to make it easier for foreign residents to live in Japan and to address their needs as they grow older.
As of the end of last year, Japan had around 3.7 million foreign residents, an increase of 11% from the previous year. While many in Japan believe welcoming foreign workers is essential for the domestic economy, there are concerns that their presence may lead to competition with Japanese workers for jobs and could negatively affect civic order.
Nikkei and the JCER surveyed 47 economists about whether increasing the number of foreign residents would improve the living standards of the typical Japanese citizen. The survey was conducted from July 18 to July 28.
Seventy-six percent of respondents agreed that it would. Of these, 6% strongly agreed, while 70% agreed. Mari Tanaka, an associate professor of labor economics at the University of Tokyo, said, "An increase in foreign workers will help alleviate shortages of goods and services, as well as rising prices."
Most of those surveyed predicted that competition for jobs between Japanese and foreign workers will be limited. Chiaki Moriguchi, a professor of comparative economic history at Hitotsubashi University, stated, "Empirical research has shown that foreign and Japanese workers primarily have complementary relationships [and] that [foreign workers] do not negatively impact the wages or unemployment rates of Japanese workers."
Many economists emphasize the benefits of diversity in terms of raising economic growth. "New ideas introduced in workplaces [by foreign workers] can enhance productivity," said Taisuke Nakata, an associate professor of macroeconomics at the University of Tokyo.
Concerns have been raised about how having more foreign residents may affect the fiscal balance, particularly welfare payments and nonpayment of social security premiums. However, the survey conducted by Nikkei and JCER revealed that 66% of respondents believe having more foreign workers will help Japan's fiscal balance.
A significant proportion of respondents predict a positive impact on Japan's fiscal balance because foreign residents are mostly young. According to statistics released by the Ministry of Justice, people in their 20s and 30s made up 55.9% of all foreign residents in Japan as of the end of 2024.
"Greater acceptance of foreigners will boost the ratio of prime-age labor force and result in higher tax revenue and social security contributions," said Hiroyuki Kasahara, a professor of international trade at the University of British Columbia in Canada. Motohiro Sato, a professor of public finance at Hitotsubashi University, added, "Many foreign residents are part of the working generation and contribute more in taxes and insurance premiums than they receive in benefits."
Future institutional design will be crucial in determining whether the acceptance of more foreign workers contributes to the stability of Japan's economy and finances over the long term. Sato emphasized that Japan "needs to provide adequate education for foreign nationals' children, and ensure benefits for them in old age."
At present, people born overseas make up 3% of Japan's population, while the average in OECD member countries is 11%. In many European countries and others with a long history of accepting immigrants, the costs associated with immigration, particularly the challenge of social integration of foreign residents, have become a concern.
"To build a society where individuals from diverse backgrounds can coexist sustainably, it is essential to implement multicultural coexistence policies that include fiscal spending," said Yoshifumi Konishi, a professor of empirical microeconomics at Keio University, emphasizing the need to create long-term institutional arrangements.
When the fiscal balance worsens, "paying the insurance premium in advance could be made a requirement for the issuance of resident status, similar to the case in Britain," said Toru Kitagawa, a professor of econometrics at Brown University.
The Economics Panel program began in November 2024, with approximately 50 economists evaluating various policies. They respond to questions on topics such as fiscal and financial issues. The program conducts monthly surveys of panelists, who respond according to categories such as "I agree" or "I disagree."
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