Demographics and the Downturn

Stephen DeAngelis

February 5, 2009

In a post entitled Demographics and Robots, I discussed “the Japanese, who have maintained xenophobic immigration policies [and] have tried hard to replace an aging work force with robots so that they don’t have to rely on immigrant labor.” According to an article in the Washington Post, the Japanese are desperately trying to retain labor immigrants already in the country; but the loss of jobs means that many are returning home [“Japan Works Hard to Help Immigrants Find Jobs,” by Blaine Harden, 23 January 2009].

“The last thing that aging Japan can afford to lose is young people. Yet as the global economic crisis flattens demand for Japanese cars and electronic goods, thousands of youthful, foreign-born factory workers are getting fired, pulling their children out of school and flying back to where they came from. … That situation — the extreme exposure of immigrant families to job loss and their sudden abandonment of Japan — has alarmed the government in Tokyo and pushed it to create programs that would make it easier for jobless immigrants to remain here in a country that has traditionally been wary of foreigners, especially those without work.”

For anyone who has followed Japanese immigration policies, the government’s turnaround is a stunning development. The desire to retain immigrants (and their families) appears sincere even if funding for programs to help them remains sparse.

“Japanese-language courses, vocational training programs and job counseling are being put together, Ozeki said, so immigrants can find work throughout the Japanese economy. There is a shortage of workers here, especially in health care and other services for the elderly. So far, government funding for these emerging programs is limited — slightly more than $2 million, far less than will be needed to assist the tens of thousands of foreign workers who are losing jobs and thinking about giving up on Japan. But [one government official] said the prime minister will soon ask parliament for considerably more money — exactly how much is still being figured out — as part of a major economic stimulus package to be voted on early this year.”

Japan is one of the world’s most xenophobic nations. Most labor immigrants are Asian or of Japanese descent so that they can help maintain the appearance of being Japanese.

“The government’s effort to keep jobless foreigners from leaving the country is ‘revolutionary,’ according to Hidenori Sakanaka, former head of the Tokyo Immigration Bureau and now director of the Japan Immigration Policy Institute, a research group in Tokyo. ‘Japan has a long history of rejecting foreign residents who try to settle here,’ he said. ‘Normally, the response of the government would have been to encourage these jobless people to just go home. I wouldn’t say that Japan as a country has shifted its gears to being an immigrant country, but when we look back on the history of this country, we may see that this was a turning point.’ Sakanaka said the government’s decision will send a much-needed signal to prospective immigrants around the world that, if they choose to come to Japan to work, they will be treated with consideration, even in hard economic times. There is a growing sense among Japanese politicians and business leaders that large-scale immigration may be the only way to head off a demographic calamity that seems likely to cripple the world’s second-largest economy.”

Japan is not alone in facing a demographic crisis. Germany, which was just surpassed by China as the world’s third-largest economy, is facing a similar crisis [“Tearing itself down,” The Economist, 12 April 2008 print edition]. The problem is especially acute in what used to be East Germany where, according to the article, “The cities of the east no longer imagine they can avoid demographic decline. Instead they seek to manage its consequences, and a few are inventing ways to shrink gracefully.” Harden reports that Japan’s crisis surpasses even Germany’s.

“No country has ever had fewer children or more elderly as a percentage of its total population. The number of children has fallen for 27 consecutive years. A record 22 percent of the population is older than 65, compared with about 12 percent in the United States. If those trends continue, in 50 years, the population of 127 million will have shrunk by a third; in a century, by two-thirds. Japan will have two retirees for every three workers by 2060, a burden that could bankrupt pension and health-care systems. Demographers have been noisily fretting about those numbers for years, but only in the past year have they grabbed the attention of important parts of this country’s power structure. A group of 80 politicians in the ruling Liberal Democratic Party said last summer that Japan needs to welcome 10 million immigrants over the next 50 years. It said the goal of government policy should not be just to ‘get’ immigrants, but to ‘nurture’ them and their families with language and vocational training, and to encourage them to become naturalized citizens of Japan.”

I’m willing to bet that the Japanese will be very selective about who those 10 million immigrants will be. As an island nation, Japan doesn’t have the border challenges faced by the United States and can, therefore, enforce a more selective immigration policy. My suspicion is that they will first continue to encourage Japanese descendants to return to their roots and will then welcome other East Asian immigrants. There won’t be a lot of black, brown, or white faces in the mix. The fact that Japan is grappling with this challenge during an economic downturn is what makes it so remarkable.

“The country’s largest business federation, the traditionally conservative Nippon Keidanren, said in the fall that ‘we cannot wait any longer to aggressively welcome necessary personnel.’ It pointed to U.N. calculations that Japan will need 17 million foreigners by 2050 to maintain the population it had in 2005. Among highly developed countries, Japan has always ranked near the bottom in the percentage of foreign-born residents. Just 1.7 percent are foreign-born here, compared with about 12 percent in the United States. The Japanese public remains deeply suspicious of immigrants. In an interview last year, then-Prime Minister Yasuo Fukuda suggested that the prospect of large-scale immigration was politically toxic. ‘There are people who say that if we accept more immigrants, crime will increase,’ Fukuda said. ‘Any sudden increase in immigrants causing social chaos [and] social unrest is a result that we must avoid by all means.'”

Concern about crime is the primary reason one hears about why immigration has been discouraged; but cultural reasons lurk just below the surface. The Japanese public’s reluctance to welcome immigrants is the reason why the government had done little to encourage foreign workers to stay. Harden reports that Japan lags behind efforts of countries like Germany.

“The German government in recent years has offered up to 900 hours of subsidized language training to immigrants, along with other programs designed to integrate them into German society. Japan had moved much, much more slowly. It changed its highly restrictive immigration laws in 1990 to make it relatively easy for foreigners of Japanese descent to live here and work. The change generated the greatest response from Brazil, which has the world’s largest population of immigrant Japanese and their descendants. About 500,000 Brazilian workers and their families — who have Japanese forebears but often speak only Portuguese — have moved to Japan in the past two decades. They have lived, however, in relatively isolated communities, clustered near factories. Because the government hired few Portuguese-speaking teachers for nearby public schools, many Brazilians enrolled their children in private Portuguese-language schools. With the mass firings of Brazilian workers in recent months, many of those schools have closed.”

Japan’s demographic challenges are linked to the fact that it has a low birth-rate; but, ironically, it ranks first among “countries [that] are healthiest and happiest for children” according to an article in The Economist [“The best places to breed,” 13 December 2008 print edition]. The Child-Poverty Index 2000-2006 was prepared by “Save the Children UK, the British arm of an international charity, [which] set out to find a simple way of measuring child welfare. They took three basic indicators: the mortality rate among under-fives; the percentage of under-fives who are moderately or badly underweight; and the proportion of primary-school-age children who are not enrolled in school. They also compared three periods: the years 1990-94; 1995-99; and 2000-2006.” The United States ranks 23rd in the Index. In addition to encouraging immigration, the Japanese are likely to initiate a program to encourage the growth of families — similar to one created in Germany. In the blog cited at the beginning of this post, I mentioned economic incentives Germany offers its population to have children as well as its multi-million campaign to make the country more child friendly. Current Japanese efforts to turnaround its immigration policies underscore the expectation that the country is unlikely to convince couples to have more children. The point is that even though the current economic downtown has slowed the global commute, it hasn’t stopped it altogether. The fear of many economists is that the recession will encourage the rise of protectionism which could mortally wound the latest wave of globalization. Such a consequence would delay rather than speed economic recovery.