A Fresh Take on Japan’s Labor Immigration Policy: OECD Report Offers Partial Defense of TITP

Society Global Exchange

A recent OECD report on labor migration policy in Japan challenges the stereotypes of Japan as a closed country and the Technical Intern Training Program as a hotbed of labor abuses.

Introduction

On June 30, 2024, the Organization for Economic Cooperation and Development released a report titled “Recruiting Immigrant Workers: Japan 2024” (hereinafter, “the OECD report”), which I co-authored. It is the twelfth in a series of publications on labor migration policies among the OECD’s member states.

Immigration has emerged as one of the most perplexing and divisive issues in developed countries around the world. It has attracted particular attention of late, having played a prominent role in the US presidential election this past November. The OECD series is one of a very small number of written resources providing a detailed review of countries’ often complex and abstruse labor immigration systems, along with a discussion of major issues and recommendations for reform. As such, it has become an important reference for immigration policy makers. The report on Japan was researched and compiled over three years, from 2021 to 2024.

The Japanese government avoids using the word imin (“immigrant” or “migrant”) in reference to its own policies on the admission of foreign workers. But in international circles—including the OECD—migrants are defined as people who relocate to different countries, and a migration (or immigration) policy is simply a government’s framework for managing and responding to such movement. According to these definitions, Japan does indeed have immigrants and an immigration policy. In the following discussion, I have followed international usage with respect to these terms.

Is Japan Closed to Foreigners?

According to the OECD report, Japan ranks near the bottom of the organization’s member states in the percentage of immigrants (foreign-born persons) in its population. Nonetheless, the report’s authors do not endorse the stereotype of Japan as a country closed to foreigners.

Japanese society has aged rapidly over the last few decades, resulting in a sharp decrease in the working-age population. The Japanese government has adopted a number of policies to address the market’s structural problems. The main emphasis has been on boosting productivity and encouraging more broad-based labor-force participation by Japanese citizens. Increasingly, however, a labor migration policy is gaining acceptance as a rational response to structural changes in the labor market. Moreover, that policy is actually making progress in specific sectors, especially those most heavily impacted by demographic changes.

The OECD report explains that labor migration to Japan is demand-driven (i.e., driven by Japanese employers), and a valid Japanese employment contract is a precondition for the admission of all skilled workers. On the other hand, Japan imposes none of the additional requirements often seen in other countries, such as the labor market test, which ensures that nationals of a country are given the opportunity to take up jobs before they are offered to migrant workers, or pay in excess of the minimum wage, nor does it have overall quotas or caps on the admission of labor migrants. In this sense, its policy is relatively open.

A New Take on the TITP

The OECD report devotes a considerable amount of space to the Technical Intern Training Program, which constitutes the sole legal channel for admission of unskilled workers into Japan. Viewed from an international perspective, the TITP has three notable aspects: (1) the centrality of training and testing; (2) the involvement of multiple actors, such as “supervising organizations”; and (3) the fact that fees collected from Japanese employers cover most of the program’s costs.

With regard to the first aspect, the report notes that very few temporary labor migration systems worldwide incorporate the elements of training and testing. In most cases, there is little expectation for skill formation, since participants are simply expected to complete a specific low-skilled job in a certain period of time and then return home. Accordingly, there is no place for training and testing.

Most training under the TITP is on-the-job education with a focus on “soft skills”—such as cleanliness and discipline—in the tradition of Japanese-style employment. The report discusses the need to make tests more relevant and specific to the work actually performed. In this sense, it adopts a perspective distinct from previous TITP critiques, which have tended to dismiss the Japanese focus on “skill formation” as pro forma.

The second notable aspect is the involvement of multiple actors—such as “supervising organizations”—in addition to the employers themselves. The report notes that in most OECD countries with temporary labor migration programs, public agencies are heavily involved in the process of screening and approving applications, but once the migrants arrive and receive the documentation needed to begin work, such agencies almost invariably distance themselves from the employer-employee relationship. But the TITP brings in supervising organizations, sending organizations (in the country of origin), and (since 2017) the Organization for Technical Intern Training, a legal entity under the jurisdiction of the Ministry of Justice and the Ministry of Health, Labor, and Welfare. In this way the system provides multiple layers of protection for workers. The OECD report praises this aspect of the program, even while acknowledging the risk that it could lead to a lack of clear accountability, and it calls for maintaining such an approach henceforth. On this point, the report diverges markedly from previous critiques, which have tended to blame such intermediary entities as supervising organizations for many of the program’s ills.

The third notable aspect cited is the fact that the various costs of training and supervision under the program are almost all covered by fees charged to the employers instead of taxpayer-funded government spending. The report also notes that these costs amount to somewhere between 11% and 15% of total personnel expenses incurred by the migrants. What this means is that the cost of employing a foreign worker under the TITP is 4% higher, on average, than the cost of hiring a Japanese citizen as a nonregular employee. These figures contradict the prevalent image of TITP workers as cheap, disposable labor.

High Fees, Restrictions on Mobility, Disappearances

The OECD report does not neglect to mention problems that others have pointed out in relation to the TITP. These include high fees charged to applicants by some overseas intermediaries, tough restrictions on workplace transfers, and the disappearance of workers from their assigned workplaces.

With regard to the charges imposed by overseas entities, the report acknowledges that unreasonable fees remain an issue. At the same time, it points out that the problem is by no means unique to the TITP. When less-skilled workers seek jobs overseas, there is always a risk that intermediaries will take advantage of the imbalance between supply and demand and the information asymmetry between job seekers and employers.

Another oft-cited problem with the program is the fact that movement between employers is prohibited in principle. On the one hand, the report argue that limiting mobility for a specified period of time is justifiable, given the investment employers must pay upfront and the need to provide consistent support and orientation for migrant workers in the early stages of employment. At the same time, it points out that allowing job changes under specified conditions, after a certain period of time, can promote better compliance among employers, as seen in other countries.

Among the TITP’s migrant workers, compliance with immigration laws and program regulations is high by international standards. The total rate of noncompliance is about 4%, including the approximately 2% of participants that escaping from their assigned workplace (and presumably overstay their visas). In South Korea, as of 2021, a full 18.9% of guest workers under the E-9 program had lost their legal status owing to noncompliance. In Israel, as of the second quarter of 2023, the corresponding figure was 17.5%. The United States does not publish its noncompliance rates but excludes from guest-worker eligibility nationalities with an overstay rate of 10% or higher.

With regard to reported abuses by employers under the TITP, the OECD report concludes that these issues were largely addressed by sweeping reforms implemented from 2017 on. Nonetheless, the US State Department’s Trafficking in Persons Report ranks Japan as a Tier 2 country, citing the risk of forced labor and other forms of exploitation under the TITP. The OECD report raises doubts about the validity of this assessment, calling it “dated and subjective.” In this sense, the OECD report also challenges the prevailing tenor of domestic discourse on the topic, which is based largely on the Trafficking in Persons Report (as was the UN recommendation that the program be terminated).

Foreign Trainees and Number Absconding from Workplace

Toward a Skills Mobility Partnership

Of course, the TITP is still confronting daunting challenges. Foremost among these is that of facilitating the transition from temporary migrants to long-term residents. The crucial elements here are (1) enhancing integration policies predicated on family reunification, and (2) ultimately transforming the TITP and the Specified Skilled Worker Program into a single “skills mobility partnership” program.

The first element is critical because the TITP has become a steppingstone to long-term residence. Under the new Specified Skilled Worker Program, graduates of the TITP will have the opportunity to secure a Specified Skilled Worker No. 1 status of residence and subsequently transition to an SSW-2 permit, under which they will be able to bring their families to Japan. As immigrant families proliferate, it will be important to have in place a range of integration policies to support their economic and social stability. These should include measures to improve labor-market access for spouses and appropriate educational services for their children.

With regard to the second element, skills mobility partnerships (SMPs) are inter-state agreements under which destination countries invest in the training and education of human resources in origin countries, thus contributing to development while securing needed labor. The SMP is a new policy model—fusing the aims of labor migration and international cooperation—that has been championed by international organizations like the World Bank and the OECD in recent years.

The recent OECD report on labor migration in Japan suggests that a labor migration program integrating the TTIP and the SSWP could function as a kind of SMP with participating countries. The biggest requirement for such a partnership is ensuring the portability of the acquired skills after foreign workers return home. The idea is to eventually develop a system in which certifications earned in one country—such as a passing score on Japan’s skill exams—are recognized internationally.

As mentioned earlier, the recent OECD report treats Japanese labor migration policy from a number of new angles, introducing a global perspective that has long been missing from domestic debate on the topic. We can say that only the OECD, which is constantly analyzing national labor migration policy from an international perspective can do this work. We hope the report will contribute to the improvement of migration policies in Japan as the nation tackles the problem of worsening labor shortages.

(Originally published in Japanese. Banner photo: A Specified Skilled Worker sushi trainee from the Philippines plies his trade under a program offered by Ginza Onodera, a company that operates high-end sushi restaurants. Photographed in Setagaya, Tokyo, in November 2022. © Jiji.)

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    foreign workers foreign labor OECD immigrants immigration policy TITP technical intern

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