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Business October 28, 2025

Japan’s economy needs foreign workers, not the nationalist approach pushed by its new leader

Japan’s economy needs foreign workers, not the nationalist approach pushed by its new leader

Sanae Takaichi has made history by becoming Japan’s first female prime minister. However, this was hardly a win forfeministor progressive politics.

Takaichi is a right-wingultraconservativewhose policy positions derive from traditionalist perspectives on the role of women, Japanese history, and society more broadly.

She has the same anti-immigrant positions as conservatives and right-wing populists the world over, defending “national identity and traditional values,” while emphasizing the importance ofstrong economic growth.

Far from solving Japan’s economic problems, however, policies that restrict immigration tend to cause laborshortages and inflation.

Japan is the canary in the coalmine for many developed countries suffering ademographic crisisdue to falling birth rates. Japan’s population hasdeclinedfor 16 consecutive years.

Unless Takaichi adopts a more pragmatic approach on immigration, her tenure could be one of economic stasis and relative decline.

HOW DID TAKAICHI BECOME PM?
Takaichi was elected leader of the ruling Liberal Democratic Party (LDP) earlier this month. Her rise to prime minister was delayed, however, when the LDP’s junior partner, the Komeito party, withdrew from the governing coalition over the LDP’s handling of apolitical funding scandal.

The LDP has minorities in both the upper and lower houses of Japan’s Diet, or parliament, and requires coalition partners to govern.

After extensive negotiations that would requirecompromisesfrom all sides, the right-wing Japan Innovation Party, known asIshin,agreedtosupportTakaichi and her LDP-led government.

However, the new coalition is still two seats short of a majority in the lower house and will require additional parliamentary support. This means Takaichi’s minority government will be more precarious and constrained than previous governments.

JAPAN’S DEMOGRAPHIC CRISIS
Japan’s population peaked at around128 millionin 2008 and has steadily declined ever since. It’s around 124 million today.

Last year, the fertility rate (the average number of children a woman has in her lifetime) fell to a record low of1.15.

Under current projections, Japan’s population is expected to fall to87 millionby 2070 and63 millionby 2100, when only half the population will be of working age.

The issue is therefore not simply one of a declining population, but also an ageing population, with rising pension and medical costs. Many professions in Japan, such as teachers, doctors, and caregivers, are already facing acute labor shortages.

IMMIGRATION AS APOLITICAL LIGHTNING ROD
While previous governments acknowledged the declining population is a significant problem, they had done little to address the issue. Variousinitiativeshave brought foreign residents or workers into the country, but there has been a reluctance under LDP governments to introduce programs with the scale and commitment — in terms of integrating immigrants into Japanese society — to make a significant difference.

This means these programs have had only modest success. Japan’s number of foreign-born residents reached a record high of 3.6 million this year, representing around3%of the population. But this is far lower than many other developed economies.

This increased foreign population has resulted in a record number of “foreign” babies being born in Japan, with Chinese, Filipino, and Brazilian mothers topping the list. This has somewhat offset the declining figures for newborns from Japanese parents.

Japan’s tourism industry is also booming, with almost37 millionvisitors coming last year.

Taken together, this increasing number of foreigners in Japan has resulted in the rise of anti-immigrant parties and policies, including the far-rightSanseitoparty. This, in turn, prompted the LDP tomove further to the rightto avoid losing votes to Sanseito and other populist parties.

This partly explains why Takaichi’s nationalist rhetoric has resonated with the ageing conservative LDP base.

Takaichiadvocatesfor foreign workers in specified fields where the country has labor shortages, albeit under strict criteria (such as Japanese language ability, training, and oversight). And she opposes the mass settlement of immigrants, or the large-scale granting of political rights to foreign residents.

While her policies have so far been short on detail, she has framed foreigners as a danger to national cohesion that needs to be strictly controlled.

PRO-NATALIST POLICIES PUSHED INSTEAD
Across the world, older populations tend to be moresusceptibleto anti-immigrant scare campaigns from right-wing conservative media and politicians.

Japan is no exception. Politicians such as Takaichi, therefore, see electoral benefits in coloring immigration and foreigners as a threat to social harmony or cultural heritage.

Unfortunately, as a result, ageing countries like Japan that are most in need of immigration are often the most resistant to it.

Instead, many right-wing conservatives in these countries promote pro-natalist policies — encouraging women from the dominant racial or ethnic group to have more babies — as a solution that boosts populations and maintainscultural and racialhomogeneity.

Hungary is one such example. The right-wing nationalist government of Viktor Orban hasprovidedgenerous financial benefits to parents at a cost of around5% of Hungary’s GDP. Though Hungary’s birth rate wasabove the European averagein 2023, it hasfallen since then.

Conservatives arepushingJapan to take a similar pro-natalist approach rather than rely on increased immigration.

With Takaichi as prime minister, Japan is unlikely to see an improvement in women’s independence and status in society, a significant rise in birth rates, or increased immigration. Japan’s demographic crisis is therefore set to continue, and probably worsen, in the foreseeable future.

THE CONVERSATION VIA REUTERS CONNECT

Adam Simpsonis a visiting scholar at the Center for Southeast Asian Studies, Kyoto University. He is a senior lecturer, International Studies, at the University of South Australia.

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