The number of foreign residents in Japan may be at an all-time high, but the nation is struggling to court blue-collar workers from overseas, even after sending offers.

Of 10 workers from Indonesia guaranteed positions at Hiroshima shipbuilding and welding companies, five declined, instead accepting offers from South Korea.

“The hourly wage we suggested was 1,200 yen ($8) and the Korean side was 1,700 yen,” said an unnamed man who works at a job placement organization for foreign workers.

Given the wage gap, he knew his organization stood no chance of convincing them to stay.

“That said, things like this never happened in the past,” he said, sighing, now faced with filling the empty spots before the gigs start in August.

There’s no certainty the same thing won’t happen again.

“South Korea’s shipbuilding industry is aggressively corralling workers from other parts of Asia,” he said.

Over in Onomichi, Hiroshima Prefecture, a stream of migrant workers astride bicycles pedal homeward through the Innoshima island industrial park's front gate after wrapping up work at 5 p.m.

Of nearly 700 workers at the park, about 270 are from overseas. Indonesians account for close to 100—the majority of the minority, if you will.

Shipbuilding and metal processing entities are part of the 13 companies that make up the park, which also boasts Japan’s largest output of hull blocks.

Innoshima Tekko Ltd., a hull block and canning machine manufacturer, said its roughly 60 foreign employees are essential to its business.  

Indonesians are among its overseas hires and the company recently set up more places where Muslim employees could wash up before their prayers.  

Its plan is to attract and retain workers from predominantly Muslim Indonesia by better accommodating their needs.

Swatno, a 37-year-old employee from Indonesia, first came to Japan in 2008 and has worked for Innoshima Tekko for six years.

He currently leads a group of international workers tasked with welding, but initially joined the company as a “technical intern trainee.”

This program was set up by the Japanese government in 1995 to invite young workers from developing countries to build their job and technological skills. It was meant to be an international contribution where workers could then apply their new skills in their home countries.

Swatno returned to Indonesia after his internship, but later moved back to Japan in May 2023 under the “specified skilled worker” visa. This relatively new category requires Japanese proficiency along with specialized knowledge or experience in fields such as nursing, machinery or food service.   

When asked if he had considered working in South Korea, Swatno denied having done so in fluent Japanese.

“I am not very young and it would be difficult to learn the Korean language for somebody my age,” he said.

However, he noted there has been an increasing number of Indonesian workers heading to South Korea.

“I hear that migrant workers’ pay in South Korea is higher because they are asked to put in overtime,” he said.

A FAMILIAR PROBLEM

The driving force behind South Korea’s recruiting blitz is heightened alarm over a population in freefall.

This has been a pressing social issue since the 2000s as the nation’s fertility rate is among the lowest in the world and has one of the fastest rates of decline.

In 2023 South Korea's birthrate fell to .72, making Japan’s record low of 1.2 enviable by comparison.

Faced with this existential threat, it is currently trying to hire legions of “unskilled” migrant workers, primarily from Southeast Asia, to fill a void in shipbuilding and other industries.

This year’s worker quota for the government’s Employment Permit System, established in 2004, is 165,000. This is almost on par with the number of technical trainees in Japan.

South Korea’s population is also roughly half of Japan’s 123 million and the quota has maintained an upward trend, previously jumping from 70,000 in 2022 to 120,000 in 2023.

Many industries in the country have long relied on overseas labor. Demand in shipbuilding is a result of the domestic workforce viewing those jobs as too difficult.

Construction, along with agriculture and livestock, are other trades where migrants do the heavy lifting, but demand is spreading to other areas.

The restaurant industry, for example, this year introduced a pilot program seeking kitchen assistants. Forestry positions will also open to migrants.

A 60-year-old man who has run a barbecue restaurant on the outskirts of Seoul for more than 20 years commends the program.

His restaurant has been short-staffed over the past several years and few have replied to his online job postings. Attempting to streamlining operations by using a touch panel to take orders was not enough to help.

“If Koreans are not willing to work for my establishment, I will have no choice but to hire foreigners to keep it open,” he said. “I would be grateful if they came to South Korea.”

LONG-TERM OPPORTUNITIES

Under the Employment Permit System, migrant workers can work in South Korea up to four years and 10 months on a temporary work visa that they can only renew once.

However, if they fulfill requirements such as gaining work experience and professional skills, they will become eligible to obtain a points-based skilled worker visa.

For those who choose that route, the visa paves the way for them to land long-term employment and permanent residency.

Last year, the South Korean government relaxed requirements for this visa and raised the category’s quota to 35,000, up from 2,000 in 2022.

The move followed strong requests from employers plagued by a chronic shortage of manpower.

In South Korea, around 70 percent of high school students go on to college and typically seek positions at major companies after graduating. This trend puts small and midsize businesses at a greater disadvantage.

Factories in rural regions are also grappling with how to recruit new employees.

HTM in Hwaseong city on the outskirts of Seoul is one example. The metal processing company currently employs 13 Vietnamese and Indonesian individuals.

Excluding a period when he returned to Vietnam, factory chief Pham Tien Hien joined HTM in 2009, a year after he arrived in South Korea. He is currently on the skilled worker visa and hopes to settle down in South Korea.

“I am going to apply for a permanent residence permit next year,” said the 39-year-old.

Min Pil-hong, CEO of the company, said small and midsize businesses will not be able to stay afloat without relying on international labor under the Employment Permit System.

“In South Korea, a pool of skilled labor is shrinking,” said Min, 48. “It is only expected to offer the right to permanent residency to skilled migrant workers.”

Raising its quota for migrant workers as potential permanent residents means Seoul will pivot its focus to immigration, a departure from its longtime policy of accepting foreign nationals as temporary labor.

The government sees this shift as inevitable.

“South Korea has already passed the stage where it could afford to choose between adopting or not adopting immigration,” said then-Justice Minister Han Dong-hoon in December 2023. “If we do not accept immigrants, we will not avert the course toward extinction.”

The gung-ho approach to recruiting has resulted in its current edge over Japan.

Sources with staffing agencies in Myanmar and Nepal that process applicants hoping to work in Japan and South Korea say the latter is an increasingly popular choice among young people.

MAJOR ADVANTAGES

South Korea offers better pay, according to Makoto Kato, an analyst well-versed in the subject of Asian migrant workers at Mitsubishi UFJ Research and Consulting Co.

In Japan, the average monthly salary is 217,000 yen for a technical intern trainee and 235,000 yen for a specified skilled worker.

In South Korea, however, the figure for even an "unskilled" worker is 285,000 yen.

The country's hourly minimum wage is 9,860 won (about 1,115 yen). At the current exchange rate this is more than Tokyo’s minimum wage—the highest of Japan’ s 47 prefectures.

The Korean language is also considered easier to learn, relative to Japanese. Hangul is the singular writing system compared to Japan’s hiragana, katakana and kanji characters.

The long-term stakes are high, and while the current competition between Japan and South Korea for foreign labor is already fierce, it is expected to intensify in the years ahead.

(This story was written by Makoto Oda and Kiyohide Inada, a correspondent based in Seoul.)