An Immigration Stimulus for Japan

Allowing in more foreign workers would boost growth, especially in quake-ravaged areas.

Recent economic data showed that Japan was slipping into recession even before the devastating earthquake and tsunami of March 11. In the aftermath of that natural disaster, putting the country back on an economic-growth track is doubly important as the government and businesses try to finance reconstruction. Given the urgency of the challenge, any and all pro-growth policy options should be on the table. That includes a controversial but important measure: immigration reform.

Population is a central problem confronting Japan. A falling birth rate and an aging population mean that the country has far too few young, productive workers. This will become even more noticeable as the current working generation begins to retire. Unless radical policies are implemented, it is simply a matter of time before manufacturing, consumption, tax receipts, fiscal health, the pension and welfare system, and the very ability of people to make a living will all collapse under the inexorable dual pressures of rapid aging and rapid declines in the young working population.

The only solution is to import more workers. I estimate that Japan needs to welcome some 10 million immigrants over the next 50 years to avoid the negative consequences of population decline. That would bring immigrant numbers to about 10% of the population, the level in the U.K., France and Germany.

Such numbers would spur growth because new markets and demand would arise for clothing, food, education, labor, finance, tourism and information. Robust immigration policies would encourage foreign investors to reassess long-term economic prospects, starting another virtuous cycle of interaction with the outside world.

Immigration will be critical to reinvigorating Japan’s most important industries. Take farming: The farming population of Japan declined by 750,000 between 2005 and 2010, bringing it to merely 2.6 million, according to the Ministry of Agriculture, Forestry and Fisheries. The average age of a farmer is 65.8 years.

This makes it a certainty that in 10 years, the farming population will decline by roughly half. The fishing industry faces the same fate. The population of fishermen and the volume of their catches are headed in the same direction: down, rapidly.

This demographic trend was already afflicting areas such as the rice-growing areas in Miyagi Prefecture that are now reeling from the March 11 disaster. Unless radical reform is implemented, the decline will only accelerate as older farmers balk at rebuilding and younger workers continue to flee. It will simply not be possible to rebuild local industries using only Japanese employees that have only a few more years in the workforce left.

Nor is the list of regions in need of immigration confined to those affected by the disaster. Aichi Prefecture, the heart of Japanese industry and home to iconic companies such as Toyota, is a case in point. The population that supported the economy in these areas in the past has declined. For instance, in Aichi prefecture not only did the total population decline between 2000 and 2009, but the percentage of working-age persons (age 15-64) dropped to 65.5% from 69.8%. Similar rapid trends have affected Niigata Prefecture, a rice-growing center, and the Sanriku Oki area, one of the finest fishing grounds in the world.

The problem extends deeper than mere numbers of workers. One consequence of a shrinking population is that visionaries and risk-takers—entrepreneurs in business, politics, education, journalism and the arts—become scarcer and scarcer. That compounds the phenomenon that a society that was highly homogeneous to begin with has educated its people with standardized content in a culture that discourages too much free thinking. Lack of fresh faces makes the country seem increasingly sterile.

Because Japan has traditionally been such a homogeneous place, many have feared the prospect of greater immigration. Yet a pro-immigration policy doesn’t have to undermine Japanese values or culture. If policy makers have the will to encourage greater immigration, they can find ways to do it well.

The centerpiece of any immigration policy would be to ensure the country attracts highly skilled workers and provides them with a clear path to integrate into Japanese society. To start, Japan needs a total overhaul of its system for foreign students and trainees. Currently those students have few or no prospects for staying permanently. Only 30% of foreign students graduating from Japanese universities stay in Japan. That number must be closer to 70%.

Not only must the government do more to attract students in a wider range of fields, including vocational areas such as agriculture, but policy makers must make it easier for those workers to stay permanently. A country with a declining population does not need guest workers. This would involve simplifying the procedure for gaining permanent residency and even citizenship. At a minimum, any foreign worker in steady employment should be able to apply for permanent status.

In some respects, boosting immigration can seem like a daunting task. The government needs to reform the pension system to cover workers who immigrate in mid-career; landlords must be more willing to accept non-Japanese tenants; citizenship laws need to offer citizenship from birth to the children of immigrants. Policy makers also will need to work to change the culture within companies. For instance, foreign workers often are discriminated against in terms of salary and promotion opportunities. Government should press the private sector to end this sort of practice.

These reforms would be significant, but none would require sacrificing the best features of Japanese life. For instance, government should actively encourage immigrants to master the language—and everyone should remember that children born to immigrants likely will grow up fluent if we ensure they’re allowed to integrate into society. And despite caricatures of frightening or violent foreigners in the popular imagination, immigration won’t compromise public safety as long as Japan is attracting highly skilled, employed immigrants and allowing them and their families opportunities for social and economic advancement.

Japan must recognize that globalization is here to stay, and should stake its very survival on accepting people elsewhere in the world as its brethren, and transforming itself into a much more multicultural, diverse society. It will be a large task, but Japan is past the point where easy solutions will do.

Mr. Sakanaka is executive director of the Humanitarian Immigrant Support Center in Tokyo. He previously served as the Chief of Entry and Residence at the Nagoya and Tokyo Immigration Bureaus.