Japan's Prime Minister Sanae Takaichi wants to invest 370 trillion yen ($2.3 trillion) over the next 14 years, but the plan runs straight into a labor shortage that could leave the country 10 million workers short even under a more feasible productivity scenario.
Who Pays for the Plan
The people at the bottom are already carrying the weight. The plan is supposed to turbocharge growth and boost wages enough to vanquish households’ inflationary pain, yet projections from the Ministry of Health, Labour and Welfare suggest rapid ageing will shrink the country's employed population of 68 million by 7% by the end of the plan. That means output per worker would need to rise at around 1.5% annually just to keep up, a pace the article says looks wildly optimistic given the historical average of less than 0.2%.
Even the softer math is brutal. Assuming a more feasible 0.5% expansion in productivity, Japan would still face a shortage of 10 million workers, and that could rise to 16 million if fewer migrants and women join the workforce. The state can announce grand targets all it wants. The bodies to make them real are missing.
What the Bosses Want
Employers and prefectural politicians argue Tokyo needs to plug the gap by attracting more overseas workers. That runs into the ruling Liberal Democratic Party, which is headed in the opposite direction and increasingly eschews promoting acceptance of foreigners in favor of strict policing. The result is a work visa regime under strain, even though Shinzo Abe implemented it in 2019 to grant longer-term residence to foreign blue-collar workers in sectors hit by severe labour shortfalls.
Takaichi's own LDP leadership campaign was suffused with anti-foreign rhetoric meant to win over the party's right wing, and she has failed to see off the threat from upstart xenophobe parties like Sanseito, which nabbed over a dozen parliamentary seats in February's snap election. The machinery of electoral competition keeps rewarding the same poison. Different faces, same border panic.
Japan's politics in this regard resemble early populist swerves in other developed countries like Italy, the Netherlands and Denmark, where nationalist fringe parties successfully pushed ruling coalitions right or toppled them entirely. The difference is stark. In those nations migrants exceed 10% of the population, World Bank data shows, while their ratio of over-65s to active workers ranges between 33% and 40%. In Japan, migrants make up just 3% despite an old-age dependency ratio over 50%, underscoring a far more pressing need to replenish the workforce.
What People Actually Need
The urgency is especially clear in elder care. Any growth boom requires employees in Japan's most productive sectors working at full steam to offset the drag from a shrinking population, meaning finding care homes for elderly parents. Despite hiring over 100,000 foreign care staff, a dearth of manpower forces many providers to turn away clients, and officials project the shortfall will more than double to 570,000 workers by 2040.
No sector looks safe. The auto industry, where heavyweights like Toyota Motor and Honda Motor employ about 1 million people, must triple the foreign share of its workforce to 27% by 2040 to maintain production at its current level, according to a Nikkei analysis. Counter to Takaichi's hopes of boosting food security, the Mitsubishi Research Institute estimates Japan's rapidly shrinking pool of farmers will severely reduce agricultural output, with the value of production falling more than half to 4.3 trillion yen by 2050. Nomura projects that in 2030 roughly a third of all domestic freight simply won't be shipped because of an expected shortage of truck drivers and tighter regulation, threatening to jack up prices for delivered goods nationwide and torpedo the prime minister's vow to rein in inflation.
AI and robotics might patch some holes, but only so far. At 446 robots per manufacturing employee, Japanese industry isn't as automatised as South Korea, which the International Federation of Robotics ranks as the world leader at 1,220 robots per worker, but it is still far above the global average of 132. The machine fix has limits, especially in blue-collar work, where the fantasy of seamless automation keeps running into the stubborn fact of human labor.
The State Tightens, Then Calls It Policy
Japan Inc. has already voiced public support for speeding up acceptance of qualified foreign workers. In December, the country's largest business lobby, Keidanren, called for policy on foreign nationals to shift from "acceptance" to "strategic attraction." That push partly reflects more competition for foreign workers from other ageing economies like South Korea and Taiwan.
Prefectural governments also want change. Last July, the National Governors' Association of Japan requested that Tokyo officially define foreign nationals as "residents and members of local communities" and take responsibility for developing and financing a national framework for recruitment, settlement and social integration, including language education. The request names the burden plainly: if the center wants labor, the center should pay for the infrastructure that makes labor possible.
The government has moved the other way. Takaichi's government stopped accepting overseas workers for food services in March, then in April doubled the residency requirement for foreign nationals seeking citizenship to a decade, and in May hiked the maximum fee for those seeking permanent residency by 2,900% to 300,000 yen despite successful applications having dropped roughly 40% from their peak in 2007. The administration also lumps in policy on foreign workers and residents with fundamentally unrelated hot-button issues like overtourism and foreign real estate purchases.
A study by the University of Tokyo and Osaka University found that when respondents were surveyed using a format that mitigates social desirability bias, support for restrictions fell from about 60% to less than a third. Polls can be managed. The numbers underneath them are harder to bully.
The article says this approach ultimately plays to the more aggressively xenophobic agenda of Sanseito, whose relentless criticism of Takaichi this year underscores how fringe groups operate to tilt public discourse in their favor regardless of the ruling party's policymaking. The less risky path for the prime minister may be to listen instead to governors and local businesses calling for a functional and well-funded immigration policy, arguing that handled well, this can enable faster growth for all in Japan rather than immiseration in isolation. Hudson Lockett wrote the piece. Jon Sindreu edited it, and Aditya Srivastav handled production.