Japan’s New Immigration Rules Threaten Foreign Worker Retention Amid Labor Shortages

Japan is tightening its immigration policies just as the country faces a growing labor shortage, leaving nearly 2.6 million foreign workers in a difficult position—essential to the economy yet increasingly discouraged from staying long-term.

The care sector, which employs about 90,000 foreign workers, illustrates the contradiction. Many of these workers, mostly from Southeast Asian countries like Indonesia and Vietnam, have been able to secure permanent residency after five years of employment as certified care workers. They receive generous scholarships, full-time contracts, and streamlined certification processes. “Facilities are so happy to have them,” said Reiko Ogawa, a professor at Chiba University studying migrant care workers. “Without them, a number of facilities would have already gone under.”

Recent policy changes threaten this path to permanent residency. Proposals revealed in July would block foreign care workers from obtaining permanent residency, prompting some to reconsider long-term plans. Workers’ representatives told Foreign Policy that some are now sending earnings home instead of investing in Japan, such as buying property.

Prime Minister Sanae Takaichi’s government is also raising permanent residency visa fees by 20 times starting this October. Additionally, applicants would need to earn more than the average Japanese household income—currently 5.8 million yen (about $36,000). This requirement effectively excludes many foreign workers in sectors like care, hospitality, agriculture, fishing, tourism, and manufacturing, where average salaries often fall below 5 million yen.

These changes reflect a conservative shift in Japan’s immigration policy under Takaichi’s leadership. The Liberal Democratic Party (LDP) is responding to rising anti-immigrant sentiment, including pressure from the ultra-nationalist Sanseito party, which gained influence in the 2025 parliamentary elections.

Japan’s labor crisis is well-documented. Under previous LDP governments, policies like the Technical Intern Training Program, specified skilled worker status, and the highly skilled professional visa were introduced to address shortages in industries and rural areas. In 2017, Japan introduced a points-based system for permanent residency, considering factors like income, education, language ability, and career achievements.

These efforts have had an impact. Between 2012 and 2025, Japan’s foreign workforce nearly doubled despite a pause in hiring during the COVID-19 pandemic. “We are seeing steady growth in our recruitment and placement of foreign staff, well above the Japanese staff,” said Kei Chiyoda, a manager at Staff Services, a major Japanese recruitment firm.

Kenichi Shishido, of the NGO JP Mirai, which supports foreign workers, noted the highest demand for foreign labor comes from automobile manufacturing in Aichi Prefecture, IT and logistics in Tokyo, and hospitality in Hokkaido and Okinawa. The largest increases in foreign workers have been from Indonesia, Nepal, and Myanmar, though Vietnam’s participation has declined due to economic improvements back home.

Yet recent restrictions are eroding these gains. Japan halted the specified skilled worker program for restaurant jobs in April. Changes to the business manager visa, which raised the minimum capital requirement from 5 million yen to 30 million yen, have pushed about a quarter of foreign-owned businesses to consider closure, sale, or merger.

Public opinion is also shifting. A 2025 poll by Yomiuri Shimbun and Waseda University found 59% of Japanese, including 71% of those aged 18-39, disagreed with the idea that Japan should actively accept foreign workers—a reversal from majority support just one year earlier.

The labor shortage is uneven across the country. Between 2019 and 2024, only Tokyo saw population growth, while rural areas like Akita lost nearly 8% of their residents. Rural regions have tried to attract foreign workers through language education, regional recruitment platforms, and scholarships. Some, like Kochi Prefecture, have developed comprehensive strategies to integrate foreign families into communities.

But progress is slow. “There’s a much higher hurdle for recruiting foreign workers in rural areas,” Chiyoda said. “It’s faster and smoother to hire in areas where foreigners already live and are integrated, like Tokyo and Aichi.”

In rural Japan, the decline is evident. Schools are merging, businesses are closing without successors, and communities are struggling to maintain essential services like medical care and transportation. “Concerns voiced in regional areas are suggesting the situation is becoming critical,” Shishido said. “It’s no longer a simple matter of a labor shortage but a challenge to maintain essential functions.”

The consequences extend beyond rural communities. Japan’s food self-sufficiency rate has fallen to 37%, one of the lowest among developed nations. Villages also hold cultural and natural resources at risk as traditional industries and crafts face decline.

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