Japan's Modern-day Slavery Program Gets New Lipstick

I first ran this story in Terrie's Take, which you can get every Sunday night by subscribing at www.japaninc.com.

If you're an employer of people, whether as a company owner or a manager, you'll know full well how difficult it is to find good staff recently. Yes, it's always been difficult to find experienced mid-career hires in Japan, because of the risk aversion of the general population. Particularly anyone over 30, once they have a reasonable job they want to keep it for life. And if you are a multinational, there is the added challenge of finding bilinguals.

It is no secret that Japan is in the middle of a severe manpower shortage. Although the government was warned decades ago about the aging workforce, half-hearted measures to turn the birthrate around and denial that immigration was a solution have meant that we are now in the middle of the worst worker shortfall in post-War history. For the first time there are more job offers than job seekers across EVERY prefecture of the country - which the Abe government trumpets as proof that Abenomics is working. However, while he toots his own horn everyone else knows the situation is really because of the mass departure of baby boomers from the work force over the last 10 years, plus the fact that young couples have no confidence about their futures (and thus are not having kids).

Indeed, the situation is dire. The national labor pool is forecast to shrink from about 62m workers today (down from the peak of 86.99m in 1997) to just 30m by 2050. In health care alone there is a shortage of 500,000 workers. In manufacturing, the job openings ratio is 2.74 jobs for every applicant, about double the national average of 1.33. Farming, construction, retail... every sector is feeling the pinch, and of course since the operators of these businesses are also the main supporters of the LDP, they are letting the Abe government know in no uncertain terms that they are not happy.

The government's bandaid solution, as we could guess all along, is to bring in more unskilled/low-skilled foreigners on what looks to be a Japanese version of the infamous "gastarbeiter" program run in Germany during the 1960s and 70s. This was a harsh program enacted by both East and West Germanies (before unification) that invited foreigners to come work in their respective factories for up to three years, after which they were supposed to return home. The East German side had the strictest controls and the authorities there tried to limit contact between these workers and the regular population - reportedly even making it a deportable offense to have sexual relations with a German citizen!

West Germany was a bit more tolerant and many of the workers from places like Turkey wound up marrying locals, while the Vietnamese, who often existed in a grey zone where they were technically illegal, were also allowed to stay and put down roots. Several decades later, this led to migrant community kids being brought up as Germans and indeed the country found that they weren't so bad. In fact, in certain districts where the Vietnamese families settled, although they only made up 2% of the population, they accounted for 17% of the university student body.

Much as America discovered, newly migrated families often work harder and can make outsized contributions to society.

The first steps to Japan's own gastarbeiter program are already in place, starting with the equally infamous Technical Intern Training Program which was started in 1993 to "teach skills to young people from developing countries in the hope the knowledge and techniques would be passed on and made use of". Yeah, right... As we have pointed out in previous issues of the Take, what this program really does is to solicit low-income farmers and factory workers from China, Vietnam, Nepal, and Myanmar to come to Japan to work for a pittance. Now to be fair, after some embarrassing exposes in the press, the government has cracked down on some of the worst offending employers - the ones withholding passports and salaries, seeking sexual favors and unpaid overtime, etc.

But the problems persist.

Just recently the Asahi Shimbun uncovered more evidence that the training program continues to be a government-sponsored human rights cesspit. The TV station, no friend of the LDP and Abe, took delight in revealing that one of the leading "supervising organizations" in the training program, Friend Nippon, was in fact simply dispatching trainees to factories with almost no oversight. One case involved a group of 33 trainees sent to Mitsubishi Motors for welding training, where instead they were simply put to work on the production line doing menial jobs. Previously, there was a similar case over at Nissan Motors.

This dispatching gig is big bucks for Friend Nippon (FN). Apparently they have already sent out over 5,000 people, whom they make a JPY20,000~JPY30,000 "supervisory fee" per month per person - a tidy sum of more than JPY100m per month. Unfortunately, it's not just FN. there are apparently another 2,000 similar bloodsucking groups out there, looking for their cut of the action. It's really disgusting.

In another case, also uncovered by the Asahi, trainees from Vietnam were found to have been dispatched by a Morioka company to do soil decontamination work in Fukushima. They were apparently working in one of the mostly heavily contaminated areas, where we guess it's difficult to get Japanese workers to go to. After that effort was publicized the Justice Ministry has pledged to investigate all 1,002 construction companies currently receiving foreign trainees, to ensure compliance. Not that we expect them to come up with anything, since everyone already knows this program is just one step up from a modern-day slavery system.

So it's surprising that the government has the chutzpah to double down on the Technical Intern Training Program with an announcement that workers who've been through the program, who can speak some Japanese, and who have had a favorable rating from their employers and their handling organization, will be allowed to apply for a new 5-year low-skilled work visa to continue on here. Applicants meeting the language and some other unspecified conditions will also be allowed to bring in their families.

The new visa is also theoretically available to applicants still in their home countries, but one wonders how they will be able to meet the language and other requirements unless they were actually in-country to get practical experience first. They're likely to be poor, with little access to tertiary education. So in our opinion, the main objective of the new rules is to bolster the existing system, i.e., to funnel people into a virtual slave program - the 3-year internships - then give them a few more basic freedoms for an extra five years, to keep them incentivized. In a way, this is similar to how you get amateur gamblers hooked.

The beneficiaries of the new visa program are those corporate sectors most desperate for workers - primarily those meeting the 3-K definition: Kitanai (Dirty), Kiken (Dangerous), Kitsui (Physically Tough) - all jobs that refined young Japanese who are now finding it so easy to get undemanding office jobs, want to avoid like the plague. The government expects that they will bring in about 500,000 unskilled/low-skilled laborers on the new program by 2025. Throw in the family members and you have at least 1m new immigrants over the next seven years.

And of course this is not the only channel into Japan's workforce. There are already more than 260,000 (as of 2017) more privileged foreigners (mostly Chinese) studying in Japan, and in some ways these people are far more desirable to the country as they are already learning Japanese and of course gaining local skills. Most of these students are quickly snapped up by Japanese employers as they graduate, and by virtue of their 4-year local college degrees, they are on a fast track for permanent residency. No temporary visas for them.

The government has said it wants to increase the foreign student population to 300,000 by 2020. It should meet this target handily. Perhaps the biggest problem with this expected big influx of unskilled/low-skilled people is going to be crimes of desperation. As we have already seen over the last 25 years, these new interns and laborers are an easy target for scam-prone factory owners and perverts - who are kind of like the proverbial abused kid getting to kick the dog (in this case, the immigrants are the dog). Like those before them, some of the migrants will not receive their salary for months or years, will endure brutally hot/cold factory conditions, get injured, or will be sexually coerced, and as you can imagine, this will cause intense resentment and anger. In a very small subset of those migrants, this will inevitably lead to emotional outbursts and violent crimes - as has already happened in the past. Consider the 2013 murder of of a company president Police and female employee by a 30-year allegedly abused Chinese trainee at a fish farm in Hiroshima Prefecture. That case certainly gave the xenophobes around the country something to harp on about.

Lower down the scale, the mere fact that you are underprivileged and seeing your Japanese colleagues having a nice life while you have nothing, is bound to make even the most reasonable and mild-mannered person want something better. For this reason, the authorities are already having a problem in the Technical Intern Training Program with workers running away - much as slaves did in the 17th and 18th centuries in the USA. They even call them "runaways" in the English press here...

Anyway, in 2017, approximately 6,000 interns disappeared, mostly to find better-paying jobs, or to escape sexual or physical harassment. There were 251,721 foreign trainees in Japan as of the end of June 2017, of which 104,802 were Vietnamese and 79,959 were Chinese. Needless to say, being the bulk of the worker population, the bulk of the runaways were from Vietnam.

Time will tell if the Japanese intend to turn the new unskilled/low-skilled work visa program into a copy of Germany's use-and-throw-away gastarbeiter system. No one seems to be saying if after the five years the workers will have a route to stay on as legal immigrants. For example, what will happen if they intermarry? This is highly likely to happen, since most of the trainees are required by the intern program to be here alone. Our guess is that the Abe government is counting on companies and voters getting used to having hard-working foreigners around, which will soften the opposition to immigration sufficiently that the workers will be allowed to stay. We think that's why the rules beyond the end of five years are a bit fuzzy. It's intentional, so as to not alarm the country's xenophobic voting population that a groundshift in immigration is taking place.