Japanese wage in dollar terms has plunged 40% in 10 years
Construction site gap narrows to 50,000 yen between Japan and Vietnam
Foreign workers leave high-wage, English-speaking countries
Construction and nursing sites supported by foreigners ’emergency’
The sharp decline in the value of the yen, which has adverse effects on the overall Japanese economy, is fueling the already serious labor shortage. As wages in Japan in dollar terms have declined by 40% over the past decade, foreign workers who have supported construction and nursing homes are turning away from Japan.
The non-profit organization (NPO) MP Research Group in Chiyoda-ku, Japan, together with a local prestigious university, operates a construction engineer training course for Vietnamese who want to find a job in Japan. In 2019, more than five times the number of Vietnamese applied for the recruitment of 50 people. However, the Nihon Keizai Shimbun reported on the 9th that the number of applicants is expected to fall short of this fall semester.
Boundary of $7,000 per capita GDP
As the wage gap between Japan and Vietnam narrows, it is explained that Japan is no longer an attractive place for Vietnamese people to guarantee a high income. In the past two years, the yen has fallen more than 20% once morest the Vietnamese dong. While the wage of foreign construction engineers in Japan has stayed at 200,000 yen a month (regarding 1.96 million won) for the past several years, Vietnam’s wage level has risen by 10 to 20 percent.
The salary of construction workers with a certain skill level has risen to VND25 million (regarding 150,000 yen in yen). The MP Research Society explained that “Japan’s status is lowering due to the narrowing of the wage gap.”
As the yen depreciated sharply, Japan’s average wage in dollars for 2020-2021 fell by 40% compared to 2012. Considering the average wage in Japan’s non-manufacturing industry is 100, the wage level in Hanoi, Vietnam and Manila, Philippines is 20-30, still a large gap. On the other hand, the wage level of construction engineers and caregivers rose to around 50-70, and the gap with Japan has narrowed significantly.
APLATIP, an organization that dispatches Filipino workers overseas, said, “The recent low yen is causing an outflow of talent to Australia, where wages are higher than in Japan and where English is spoken.”
The talent information industry analyzes that in the case of emerging Asian countries, when the per capita gross domestic product (GDP) exceeds $7,000 (regarding 9.98 million won), the labor force flowing into Japan decreases, and when it exceeds $10,000, the country becomes a country that accepts foreign workers.
5 million more foreigners
China has followed this path. In 2021, the number of foreign workers working in Japan was 1.72 million, accounting for 2.5% of the total workforce. It has increased 2.5 times over the past 10 years. Vietnam topped the list for the first time in 2020 as the proportion of China, which had long held the top spot for foreign workers in Japan, has declined.
Vietnam, with a GDP per capita of regarding $4,000, is expected to reach $7,000 in five years. However, it is analyzed that there is a possibility that the time when Vietnamese people turn away from Japan may become faster as the value of the yen falls. As the wage level in Vietnam and other countries is rising, fewer and fewer countries wanting to find a job in Japan, the newspaper reported.
The fact that wages are low, but taxes are high is also a factor that reduces Japan’s popularity. The average wage of foreign workers in Japan is 75% of that of Japanese workers. On the other hand, the income tax rate applied to foreign workers is 10%, which is higher than in many emerging Asian countries such as Vietnam and the Philippines.
As the popularity of foreign workers waned, the site suffering from a manpower shortage took an emergency. In the case of construction sites, 20% of rebar workers are already foreigners. Shogo Iwata, president of the National Reinforcement Works Association, said, “If wages do not improve, construction sites will have no choice but to stop.”
The International Cooperation Agency (JICA) estimates that the Japanese government will need to accept 5 million more foreign workers by 2040 than it does today to achieve its growth goals.
Tokyo = Correspondent Young-hyo Jung hugh@hankyung.com
