Japan Faces Demographic Crisis | Turns to Foreign Workers to Strengthen Its Economy

Japan Faces Demographic Crisis | Turns to Foreign Workers to Strengthen Its Economy | DD INDIA

Japan is increasingly relying on foreign workers to bolster its economy and fiscal health. With one of the fastest aging populations in the world and a shrinking domestic labor force, the country views young overseas talent as vital to sustaining growth. A Nikay survey of leading economists found that twothirds believe expanding the foreign resident population will strengthen Japan’s fiscal position through higher tax revenues and social security contributions. More than three quarters also expect it to lift living standards by improving access to goods and services, stabilizing prices and enhancing workplace productivity. Japan’s foreign resident population reached 3.7 million at the end of last year, up 11% from 2023. They now make up just 3% of the total population, far below the OECD average of 11%, highlighting the potential for further growth. Nearly 56% are in their 20s and 30s, prime working ages, making them significant net contributors. Economists say this demographic helps close labor gaps, drives productivity, and delivers more in taxes and social insurance premiums than they draw in benefits. Japan’s key immigration reforms include abolishing the decades old technical intern training program in 2024 and replacing it with the training work program. The migrant workers can extend their stays and open clearer pathways to permanent residency for skilled professionals. While many western economies face political push back and economic caution over immigration, Japan is charting a different path treating foreign workers as a strategic asset. In the US, UK, and much of Europe, concerns over job competition, public spending, and integration have led to tighter controls. Japan, by contrast, is leveraging targeted immigration to replenish its workforce, sustain industrial output, and secure fiscal stability. Economists emphasize that lasting success will depend on policies that integrate foreign residents effectively turning demographic headwinds into long-term economic growth. Dipanu Kashab’s report for the economic brief DD India. Japan is increasingly relying on foreign workers to bolster its economy and fiscal health. With one of the fastest aging populations in the world and a shrinking domestic labor force, the country views young overseas talent as vital to sustaining growth. A Nikay survey of leading economists found that twothirds believe expanding the foreign resident population will strengthen Japan’s fiscal position through higher tax revenues and social security contributions. More than three quarters also expect it to lift living standards by improving access to goods and services, stabilizing prices, and enhancing workplace productivity. Japan’s foreign resident population reached 3.7 million at the end of last year, up 11% from 2023. They now make up just 3% of the total population, far below the OECD average of 11%, highlighting the potential for further growth. Nearly 56% are in their 20s and 30s, prime working ages, making them significant net contributors. Economists say this demographic helps close labor gaps, drives productivity, and delivers more in taxes and social insurance premiums than they draw in benefits. Japan’s key immigration reforms include abolishing the decades old technical intern training program in 2024 and replacing it with the training work program. The migrant workers can extend their stays and open clearer pathways to permanent residency for skilled professionals. While many western economies face political push back and economic caution over immigration, Japan is charting a different path treating foreign workers as a strategic asset. In the US, UK, and much of Europe, concerns over job competition, public spending, and integration have led to tighter controls. Japan, by contrast, is leveraging targeted immigration to replenish its workforce, sustain industrial output, and secure fiscal stability. Economists emphasize that lasting success will depend on policies that integrate foreign residents effectively turning demographic headwinds into long-term economic growth. The tanchu kashab’s report for the economic brief DD India

Japan is facing a demographic challenge that threatens its economic future, an aging population and a shrinking workforce. Amid the stress, the country is increasingly looking abroad, welcoming young foreign workers to fill critical labor shortages and strengthen its fiscal position. Diptanshu Kashyap brings us this report on how Japan is using immigration to power its economy.

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