User-unfriendly Japan risks being left behind in Asia’s scramble for international talent

When Jacky Ou moved to Nagoya, Japan, from his native China, he knew many things would be different: the language, the food, the unwritten rules of etiquette that govern Japanese life.

But he wasn’t prepared for all the paper.

“People are always sending so many documents,” he said, adding that he had to learn how to file properly in a hurry, so his small apartment wouldn’t overflow. In conversations with other foreigners, “this is usually one of the biggest points we complain about.”

“One of my neighbours doesn’t read Japanese at all, so every time she gets these documents, she knocks on my door and asks for help,” Mr. Ou said. “It’s a serious problem.”

Interpreting the documents is only the first step. Doing anything with a form usually requires faxing – an alien concept to most people born after 1990 – or delivering it in person, often in order to collect various stamps and even more documents. Mr. Ou said several friends – fellow graduate students at top universities, precisely the type of people most countries usually want to attract and keep around – have left Japan simply “because of how complicated it all is.”

As countries across Asia finally lift their pandemic restrictions (with the notable exception of China), a struggle for international talent is heating up. Singapore launched a new talent visa in August; Hong Kong followed a couple of months later, while Taiwan relaxed entry and residency rules for white-collar workers.

With the highest proportion of elderly citizens of any country in the world, Japan desperately needs immigrants to fill professions such as nursing – vital for an increasingly aged population – but also in white-collar roles. The Ministry of Economy, Trade and Industry has predicted that Japan’s IT sector will face a shortage of as many as 790,000 workers by 2030.

“It was extremely difficult for foreign talent to move into Japan during the pandemic, as restrictions made it difficult to obtain a visa,” said Jeremy Sampson, the managing director for Japan and Korea at recruitment consultancy Robert Walters.

Japan is already on course to miss targets for recruiting foreign employees across a variety of sectors, and the country now risks being left behind by its Asian neighbours. While some smaller cities began offering fast-track paths to permanent residency this year, many of the hurdles Japan faces in attracting foreign talent are structural and difficult to solve in the short term.

“I think Japan is very cognizant that it needs to compete in the market for highly skilled migrants,” said Stephen Nagy, a senior associate professor at Tokyo’s International Christian University. “The challenge is how do you create attractive conditions? The yen is devalued, taxes are high, and the cost is higher than in, say, Hong Kong for things like international schools.”

Japan’s personal income tax rate is 45 per cent, three times that of Hong Kong and double Singapore’s, according to accountancy giant PwC. And unlike the latter two, Japan also taxes capital gains. The weak yen has also made leaving the country to travel home or around Asia far more expensive for foreign residents.

Quality of life is extremely high in Japan. The food and public transport are excellent, there is scant pollution and practically no crime. For foreigners willing and able to learn the language, life here can be very rewarding, and there is no shortage of people who will wax lyrical about Tokyo’s charms or those of other parts of the country.

Mr. Sampson noted that, despite the devalued yen, “Japan still remains the third-largest economy in the world.”

“There is still a huge opportunity for companies to attract foreign talent,” he said. “But I believe the government needs to see the opportunity here too.”

Compared with the regional financial centres with which it must compete, though, Japan can be a lot less user-friendly, something that may be a significant problem when it comes to attracting foreign talent for relatively short-term contracts.

Both Singapore and Hong Kong count English as an official language; even South Korea and Taiwan use it widely for business. A survey commissioned by Japan’s Education Ministry late last year found that 75 per cent of some 18,000 job offers for foreign specialists required the highest level of proficiency in Japanese.

Then there’s the paperwork. The faxes. The need to get documents signed and stamped, then signed and stamped again.

“I think it’s improved a lot over the past three to four years, but Japan still has a long way to go on this front,” said Prof. Nagy, who has lived in Japan for most of the past two decades. “These things become quite a burden in terms of staying here over the long term.”

For those foreigners who do come to Japan, integrating professionally can often be a shock. Overwork and presenteeism remain major problems, and many female employees report issues with harassment and discrimination.

The culture can be stifling even for Japanese entrepreneurs, driving some to move overseas – further exacerbating talent shortages. Shingo Potier de la Morandière, an entrepreneur and founder of co-working space Impact Hub Tokyo, said Japan “has a very tough time ahead.”

“If you look at the cabinet or board of any company, they’re dinosaurs, all older men hanging on to the good times,” he said. “People talk about change, but nobody really wants to, so young talent will continue to leave and we’ll struggle to replace them.”

Mr. Potier de la Morandière, a former trader of French heritage, said he feared Japan “is going to follow a similar path to France: It will continue to make great food and be a lovely place to visit, but if you expect something new you’re going to need to be elsewhere.”