“No Chance to Save Money”: Weak Yen Reduces Japan’s Appeal to Young Vietnamese

Japan has more than 2 million foreign workers, as of October 2023. Of these, Vietnam is the most represented nationality at 520,000, but the pace of new arrivals from the country is starting to slow. To find out why, in June 2024, I went to Hanoi, the Vietnamese capital.

The most common visa status among foreign workers in Japan is “technical intern trainee”; the trainee program was established to transfer skills and knowledge to developing countries. Comparing the numbers of newly arrived trainees before and after the COVID-19 pandemic, in 2019 there were 99,170 from Vietnam, but this dropped to 83,403 in 2022. By contrast, the number of new Indonesian trainees rose from 15,746 in 2019 to 30,348 in 2022.

When I visited six organizations in Hanoi that send trainees to Japan, all of the managers agreed that the number of vacancies in Japan has decreased by about 30%. Why is this?

“If We Sent People Over, We Made Money”

The aftermath of the 2011 Great East Japan Earthquake prompted a sharp rise in Vietnamese workers in Japan. China had previously been the main supply of labor to Japan, but the country’s economic development made working in Japan less attractive, and the disaster led to the departure of Chinese nationals. Major anti-Japan demonstrations in China accelerated this trend, and Vietnam became a new source for Japan’s foreign labor needs.

At the end of 2012, there were 52,000 Vietnamese residents in Japan, but this rose to 412,000 at the end of 2019, just before the pandemic. This was mainly due to the increase in trainees. In 2016, Vietnam overtook China to become the main supplier of workers in this category. There were 219,000 Vietnamese trainees in Japan as of the end of 2019, representing 53% of overall trainee numbers.

Prospective trainees perform morning radio calisthenics at a training center managed by a sending organization in Hanoi on June 17, 2024. (© Sawada Akihiro)

Sending trainees to Japan became big business, and the Vietnamese firms involved in securing participants provided lavish entertainment and kickbacks to the supervising organizations that mediated for Japanese firms. As well as shouldering the costs for these Japanese officials’ transport to Vietnam and local accommodation, they offered guided tourism services and trips to nightclubs, while interviews with prospective trainees fell by the wayside. There were cases where companies paid managers of the supervising organizations $1,000 in kickbacks for every trainee accepted, so as to learn of as many job openings as possible.

An executive at one sending organization that dispatched up to 1,500 trainees to Japan each year reveals: “We took around 7,000 or 8,000 dollars from each trainee for processing fees. Even after the costs of recruiting, training, entertainment, and kickbacks, we made a profit of 1,500 dollars per trainee.”

The executive goes on to paint a bleak picture of the situation at the time. “If we sent people over, we made money. We didn’t tell the trainees anything detailed about what the jobs would involve, and just had them practice self-introductions before the interviews. We didn’t put much weight on training, and some of our recruits were poorly motivated young people. The companies taking on trainees told us that the quality of the workers had dropped, and even before the pandemic there was a movement to shift away from recruiting in Vietnam.”

Weak Yen Decreases Japan’s Appeal

Other sending organizations, however, worked hard to stamp out kickbacks and entertainment. One of these was the firm Lacoli, based in Hanoi. One of its executives, Miyamoto Yūki, says that these created severe burdens on trainees. “There was a social problem of Vietnamese trainees going to Japan with major debts and disappearing or getting involved with crime, so Japanese companies came to shy away from them.”

Even as Japanese companies have become more hesitant to take on Vietnamese trainees, though, Vietnamese people have come to find Japan a less appealing place to work. This is due to the weak yen. Until February 2022, ¥1 was worth more than 200 dong, but by June this year it had dropped below 160. Many trainees send around ¥100,000 home each month, but the decreasing value of this sum in their home country is a major issue.

The executive from the first sending organization says that inflation in Japan is one cause for decreased interest in the country. “Rising prices in Japan mean increased costs, and people are saying across Vietnam that you can no longer make money there. There used to be an unspoken rule that there would be three times as many applicants as positions available, but now it’s hard to get twice as many.”

According to this executive, due in part to Vietnam’s economic growth, the minimum required to attract applicants now is ¥120,000 per month after tax and rent are deducted, or ¥150,000 including overtime pay. Japan’s reduced popularity, meanwhile, means the fees taken from applicants have dropped by $1,000 or $2,000.

Major Debts

Even so, figures from Vietnam’s Department of Overseas Labor show that Japan was the most popular destination for Vietnamese workers in 2023, with 80,000 making their way to the country. Taiwan was the second most popular destination, attracting 59,000; Japan and Taiwan accounted for 90% of the total outflow of Vietnamese labor. Although it is not as popular as it was, Japan is still a realistic option for Vietnamese workers seeking a posting overseas.

What keeps Japan in the running are its relatively reliable level of recruiting demand and the lack of tough entrance requirements, such as language proficiency. It is also easy to raise money to go to Japan. Once a trainee has a confirmed place, and has received a visa from Japan’s Immigration Services Agency, it is possible to borrow money from Vietnam’s State Bank.

A dormitory at a training center houses trainees before they go to Japan. Photo taken in Hanoi on June 17, 2024. (© Sawada Akihiro)

A 2022 survey by the Immigration Services Agency found that 55% of trainees had amassed debts before coming to Japan. By nationality, Vietnamese trainees owed most, with an average of ¥674,480 (more than $5,000 at the average exchange rate for that year). Meanwhile, a survey by Japan External Trade Organization found that the average monthly wage in Vietnam’s manufacturing industry was $273 in 2023, giving a sense of the scale of these debts.

There have been a series of cases where trainees have vanished from the jobs in Japan they were dispatched to, in search of higher wages, and major debts have been identified as one of the causes. To reduce the burden on trainees, the Japan International Cooperation Agency has been working with the Vietnamese government and the International Labor Organization to build a recruitment network endorsed by Vietnamese and Japanese companies. The aim is to have companies shoulder half the cost of travel to Japan. From 2027, the training program will become a training and employment (ikusei shūrō) program, with Japanese companies paying part of trainees’ fees to sending organizations. While this is to be welcomed, I do not think it will be enough to bring an increase in young people wanting to work in Japan.

Korean Switch?

In Hanoi, I also visited Thanh Mai Education, an organization specializing in study overseas. When I asked where is a popular place to study, the manager Vuong Tri Luc told me, “The amount of money students can raise impacts their place of study more than their personal wishes.” Unlike trainees, students cannot borrow from banks. They must finance themselves, even if they borrow from friends or family members.

The center has five classes, each for a different destination, with a total of 150 enrolled students. The largest class is for students headed to South Korea. According to Vuong, “Japan was most popular before the pandemic, but now South Korea is.” One reason is the fascination with the country among young people raised with K-pop and other aspects of Korean culture. Another is that the Korean writing system Hangul is easy to study, with just 24 basic letters, compared with the complex combination of three scripts in Japanese. The biggest reason, however, is the opportunity to save up money.

Trainees study Japanese at a training center managed by a sending organization in Hanoi on June 17, 2024. (© Sawada Akihiro)

Although they are students, they are aiming to work. As in Japan, there are restrictions on how much work overseas students, for example, can do in South Korea, but they are not as strict. Vuong says, “They’re not controlled as tightly in South Korea as in Japan. A lot of overseas students work on the weekends too, and they can make from 35 million to 40 million dong [¥210,000 to ¥240,000] per month.” While it costs 200 million dong to study in South Korea compared with 100 million (¥600,000) in Japan, students can soon make up the difference. Even if they have to take on major debts, young Vietnamese target the country where they can make money.

South Korea’s total fertility rate has plunged to 0.72, and the declining number of births has spurred it to bring in foreign workers from Southeast Asia and other regions. The entry quota for foreign workers was expanded from 60,000 to 120,000 in 2023 and then 165,000 in 2024. This is around the same as the 180,000 new trainees Japan accepted in 2023.

Foreign workers in South Korea received an average monthly wage of ¥285,000 in 2023, mainly in manufacturing jobs, which was much more than the average of ¥217,000 that trainees earned in Japan. If South Korea becomes a realistic destination among Vietnamese people for work overseas, then they will switch away from Japan as students have done. A system for reducing the burden of getting here is essential, but above all, higher wages are a key issue to address to ensure that Japan is a country of choice for foreign workers.

(Originally published in Japanese on October 15, 2024. Banner photo: Vietnamese trainees learning Japanese at a sending organization training center in Hanoi on June 17, 2024. © Sawada Akihiro.)