Japan's New Law Not Enough to Reap Benefits of Immigration

With a recent ruling by the U.S. Supreme Court concerning U.S. immigration, and a new law taking effect in Japan this month, the topic of immigration has been receiving a lot of attention in the U.S. and Japan. While the topic is a hot button political issue in both countries, the U.S. and Japan have pursued vastly different approaches – with great benefits for U.S. businesses.

Japan has become more accessible to foreigners over the last twenty years. But in comparison to the U.S., it is an entirely different planet. According to Japan's Ministry of Justice, about 2.1M foreigners were living legally in Japan in 2011. Another 100-200,000 are estimated to be in Japan illegally. Together, this accounts for only 1.8% of the population.

In contrast, there were nearly 40 million foreign-born people in the U.S. in 2010, or 12.5% of the overall population. This number includes legal residents, as well as an estimated 11 million illegal immigrants.

Why does this matter to the business sector? First and foremost, immigration is a key potential source of human capital. This would seem to be a great opportunity for Japanese business. With a low birth rate, Japan's population is expected to decline rapidly causing younger generations and corporations to bear an increasing economic burden.

Severe shortages of unskilled labor have already caused some manufacturers to import foreign workers, but the numbers remain small. Japan's manufacturing sector, which employs the largest number of foreign workers by far, had only 219,000 in 2009. And yet the government remains resistant to bringing in more workers.

In contrast, the U.S. economy already relies heavily on foreign workers. In 2009, the New York Times reported that foreign-born workers comprised 17% of the workers in all occupations in the U.S. – and even more for specific positions including: computer software developers (30%), doctors (29%), farm laborers (53%), and household service staff (52%).

Foreign-born workers also can bring a wealth of new ideas and initiative… if given a chance. Unfortunately, Japanese companies do not seem eager to tap into this resource. When a foreigner fills a key role in a Japanese organization, it makes news. Workforce diversity is all too often seen as a problem to be avoided.

U.S. organizations deploy foreign-born workers from top to bottom. Half of all Silicon Valley startups have a co-founder that is a second- or first-generation immigrant. U.S. companies are eager to find workers with the appropriate skills wherever they come from. In a small business that I co-founded, we employed people from India, China, Germany, Russia, Ukraine, Philippines, Canada, Norway, Mexico, and Korea. We couldn't have survived without them!

Sadly, many people in both the U.S. and Japan see immigration as a threat. In spite of these shared worries, a quick look shows that Japan is paying an increasingly big price by not better tapping into talent on a global basis. Japan's new immigration law may have opened the door a crack, but it has a very long way to go before it catches up to the U.S. in its approach to immigration.

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