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          19 July 2019 - 13:00

          Japan, the challenges of an advanced economy

          The country is facing the demographic aging and the lack of workforce

          Japan is an especially topical case study of interaction between cultural and economic norms. The Land of the Rising Sun is in fact an advanced economy that is responding to the rapid ageing of the population and the reduced workforce with dramatic changes in social norms and business culture. 

          Since the post-World War 2 era, the swift process of modernisation of Japan’s economic system has guided the evolution of socio-cultural structures and trends in this East Asian country. Phenomena such as the so-called "Gurobaruka" (transliteration in the hiragana alphabet of the word “globalisation"), which led to the opening of Japanese society to Western consumer trends and ideas, have become actual slogans used by large Japanese conglomerates (or “keiretsu”) and by the country’s political leaders, to address changes in its cultural fabric that are aligned with the needs of economic development.

          After the Japanese bubble economy burst, between the 1980s and 1990s, the term “globalisation” was replaced by that of “internationalisation" (“Kokusaika"), which is now embedded in the Japanese mindset starting in the early years of schooling, as an essential key to the success of future professional careers. The concepts of “globalisation" and “internationalisation" have taken on two very specific meanings in Japan: the first denotes the ability to accept a global perspective, rather than becoming closed in a domestic framework. Internationalisation, on the other hand, is related to the field of action, and indicates the ability to be competitive on the international stage. The consensus, among many analysts and experts on Japanese affairs, is that the process of internationalisation of the corporate world and Japanese society has been evident, until now, mostly in relation to its most superficial manifestations. The gradual decline of Japanese giants such as Sony, Panasonic and Nintendo against competitors from South Korea and then China, in the years of deflationary stagnation, have reinforced this vision also within Japanese governments, which responded firstly by making changes in Japanese universities. For example, Prime Minister Shinzo Abe, during his first term in 2014, launched an initiative aimed at including 10 Japanese universities in the ranking of the 100 best universities in the world.

          This set of political initiatives has produced weak results. Japan ranked last among 11 Asian countries, and 51st out of a total of 63 countries, in the 2017 IMD World Talent Ranking, in its ability to attract highly qualified foreign workers. These difficulties are principally due to two types of problems: the language barrier with Japanese, and the rigidity of Japanese business practices and culture, which, however, is changing as a result of the contribution of multinationals and businesses linked to the new economy, such as the e-commerce giant Rakuten Inc. Companies like the latter have taken extraordinary measures to “internationalise" themselves and to facilitate the same process in the Japanese education system, obtaining far-reaching changes. Computer programming will become a compulsory subject in the curricula of the country’s primary schools starting from April 2020. Beginning in 2022, programming will become an integral part of compulsory computer science courses at all secondary schools. The Japanese government estimated in 2016 that the following year the national economy would have a shortfall of 290,000 IT professionals, reaching 590,000 by 2030, assuming moderate growth in the national IT industry. These estimates have prompted the government council on industrial competitiveness to promote the compulsory inclusion of programming in primary school curricula, an initiative immediately accepted and implemented by the competent governmental ministries.

          As emphasised by the 2018 Robert Walters Salary Survey, which develops a comprehensive overview of professional and wage trends in the country, large Japanese companies are the main drivers of change with regards to areas such as internal use of English, openness to female professionals - in a country where female employment is lower than the average for Western countries - and the integration of non-Japanese candidates with unconventional identity and gender profiles. The Japanese business world, grappling with a dramatic shortage of personnel due to the progressive ageing of the population - especially in the sectors that are highly labour intensive - is also the main engine behind perhaps the most drastic and important socio-cultural change in post-war Japan: the extensive immigration reform adopted by the country last April. The reform, championed by Prime Minister Shinzo Abe in spite of the initial reluctance in public opinion, introduces new types of sectoral residence permits for foreign workers, and proposes to issue 340,000 over the next five years.

          At the same time, the reform introduces a series of new legal protections and integration channels for productive foreign citizens, and measures aimed at countering the illicit exploitation of the healthcare system and procedures linked to granting political asylum. Language tests and sector-related skills linked to the granting of visas can be handled in Japan or in seven Asian countries: Cambodia, China, Malaysia, Mongolia, Myanmar, Nepal, Philippines, Thailand and Vietnam. The latest socio-economic revolution announced by the Japanese government, to meet the needs of companies, concerns the welfare sector. The government will promote employment up to the age of 70 and the introduction of support measures for former employees to find a new job after retirement, start new businesses, or work as freelancers.