Foreign workers will ease Japan’s labour shortage

Significance

Near-stagnation in wages is difficult to reconcile with reports of a very tight labour market in which firms struggle to hire. The answer lies partly in much higher levels of foreign workers than recognised by official statistics.

Impacts

• Government surveys consistently demonstrate that real wages are falling after accounting for industry and demographic characteristics.
• Female workforce participation rates for ages 45-54 and 55-64 are at the highest ever, evidence of a strong response to labour demand.
• Part-time workers continue to suffer a 40% wage penalty compared to regulars, even accounting for age, industry, gender and firm size.