For a while, it seemed like Japan was becoming a less attractive destination for foreign workers, with the weakening yen and relatively low salaries. However, the reality tells a different story. Despite these economic concerns, Japan has successfully attracted foreign talent in recent years.

In fact, as of October 2023, the number of foreign workers in Japan reached an all-time high of 2.04 million — a 12% increase from the previous year, according to data from the Ministry of Health, Labour, and Welfare. Notably, this growth includes not just low-wage workers but also highly skilled professionals, who now make up 29% of the total foreign workforce. Among these, 18% work in engineering, humanities, and international services — roles typically associated with white-collar jobs. The largest groups of foreign workers in Japan come from China, Vietnam, Nepal, and South Korea.

What Draws Foreign Workers to Japan?

There are two key reasons for this influx of foreign talent.

1. Japan’s Soft Power Influence

Japan’s rich culture, driven by its global influence through anime, music, and entertainment, continues to attract people from around the world. For many, experiencing life in Japan is a dream nurtured over years of watching Japanese TV shows, reading manga, or listening to Japanese pop music.

For example, during a recent visit to a Japanese company in India, one employee expressed excitement about her love for Jujutsu Kaisen, a popular manga series. Many international students in Japan share similar stories — the desire to visit or work in Japan often begins with an appreciation for its culture.

2. Limited Opportunities at Home

Youth unemployment rates in several Asian countries remain high, creating challenges for young people entering the job market. According to the International Labour Organization (ILO), unemployment among 15 to 24-year-olds was 15.4% in India and China, 13.8% in Indonesia, and 13.9% across the Asia-Pacific region in 2023.

Even for those with advanced degrees, competition in local job markets can be overwhelming. In South Korea, for instance, students from top universities often struggle to find positions at large companies due to the high level of competition. One Korean student mentioned that while studying in the U.S. is appealing, the costs are prohibitive, and Korean degrees are not as well-regarded abroad.

In contrast, Japan’s youth unemployment rate during the same period was only 4%, thanks to the country’s tradition of hiring new graduates in large numbers. Japanese companies value potential and long-term growth, which contrasts with many Western companies that prioritize hiring employees with direct expertise. This approach provides stability but can also lead to challenges for foreign workers adjusting to Japan’s unique employment system.

Challenges for Foreign Workers in Japan

While more foreign professionals are choosing to work in Japan, some difficulties remain.

1. Language Barriers

Many companies require a high level of Japanese proficiency. According to a 2023 survey by a recruitment firm, Japanese companies prioritize communication and Japanese language skills when hiring foreign candidates. Even those who pass the advanced N1 level of the Japanese Language Proficiency Test (JLPT) may struggle with the nuances of business communication, such as using polite language or honorifics.

A Chinese employee working at a foreign consulting firm in Japan admitted, “Even with N1 certification, I still feel uncertain about using honorific expressions in business settings.”

2. Slow Career Progression

Japan’s corporate culture, which emphasizes gradual career advancement, can also be frustrating for ambitious foreign workers. An American professional working at a large Japanese electronics company shared his concerns: after three years in the role, he felt ready for promotion but noticed that his peers working in foreign firms abroad had already advanced to managerial positions. At his current company, it was implied that employees in their 20s typically don’t reach management levels, which dampened his motivation.

Many talented workers worry that staying in one role for too long may limit their professional growth. If they don’t see career advancement after a few years, they may seek better opportunities elsewhere.

Addressing the Issues: How Japan Can Retain Foreign Talent

To fully tap into the potential of foreign talent, Japan needs to address several structural challenges.

1. Improve Language and Cultural Integration

Companies should consider adopting bilingual work environments where both English and Japanese are used, and provide Japanese language training for foreign employees. Similarly, Japanese staff should receive cultural sensitivity training to foster better collaboration. Expanding Japanese language education in foreign universities, especially in Asia, could also help more candidates become proficient before moving to Japan.

2. Offer Clear Career Development Paths

Japanese companies can benefit from rethinking their rigid HR practices. Instead of assigning employees to roles based on company needs, they should empower workers to pursue their career goals. Some forward-thinking companies, like Sony, already allow employees to request transfers or explore different roles within the organization through open-recruitment systems. Such initiatives can boost employee satisfaction and retention.

Conclusion: Unlocking Japan’s Potential

Despite significant progress in attracting foreign talent, there are still barriers to overcome. Language requirements, slow career growth, and cultural differences make it challenging for some international workers to thrive in Japan. Surveys by the Japan Student Services Organization in 2022 revealed that while 58% of international students wished to work in Japan, only 44% succeeded in finding employment. Notably, employment rates were highest among vocational school graduates (60%) but dropped to 38% for bachelor’s degree holders and 29% for those with master’s degrees.

To create a more inclusive workforce, Japanese companies need to prioritize diversity, equity, and inclusion (DEI) initiatives. This isn’t just about attracting foreign talent but also about addressing broader structural issues within Japanese companies. By fostering a supportive work environment, Japan can continue to be a top destination for global talent, benefiting both workers and the nation’s economy.