Wave of retiring workers could force big changes

All over Japan, companies are bracing for a demographic wave that will wash away many of their most experienced employees. The Japanese call it their “2007 problem.” Beginning next year, members of what Japan considers its baby boom generation will start hitting 60 and dropping out of the workforce. Some might postpone retirement, but they can’t work forever. Plunging birth rates mean there won’t be nearly enough young people to replace them.

Japan is just beginning to wrestle with a more controversial solution to the labor shortage: opening the floodgates to immigration.

Foreign workers account for just 1% of Japan’s labor force, vs. about 15% in the USA. Japan relaxes visa requirements for engineers and other specialized workers. But it is reluctant to let less-skilled workers into the country, limiting them to two- or three-year “training” contracts if it admits them at all.

“Sooner or later, we will need more people,” says Hidenori Sakanaka, retired head of the national immigration bureau office in Tokyo. “This is the time to create a new immigration policy.”

Sakanaka, the former immigration official, says Japanese bureaucrats are in denial. After retiring from his government job, he set up the Japan Immigration Policy Institute to advocate more liberal policies. He made what he admits is a utopian proposal: Admit 20 million foreigners in the next 50 years, up from less than 2 million now.

“Look at the speed of the decline in population. It’s unbelievable. Thirty million people will disappear,” he says. “There are two ways to go: Shrunken Japan ? and learning to live with it; and Big Japan ? we accept foreigners.”