No one should be surprised that Japan, with its declining and aging population, is facing a severe labor shortage. A report by the Teikoku Databank states that across all industries, 52.6% of Japanese companies say they don’t have the workers they need. 260 bankruptcies in 2023 were caused by a lack of employees; compare that to 146 cases in 2022, and 118 cases in 2021. And with 163 new labor shortage-related business closures reported just between April and September of 2024, those numbers don’t appear to be going down soon.
For international developers who dream of relocating to Japan, this may sound like a golden opportunity. Misconceptions on this labor shortage are, however, unfortunately common. You may have heard that Japan doesn’t want immigrants, that only low-paid service industries are running short of workers, or that speaking Japanese is a requirement to get a decent job. Conversely, some believe that, with a labor shortage this severe, even a new graduate can land a job in Tokyo.
This article aims to address those concerns via the latest statistics, and to share some qualified good news.
Is Japan’s labor shortage a good thing?
First, it’s important to address Japan’s long-term prospects. This workforce decline may sound like bad news for Japan’s economy, and a doomed economy is hardly appealing to immigrants. Yet that’s not necessarily the case.
Japan’s labor practices for decades have been geared around lifetime employees who work long hours, often for stagnant wages, in exchange for company loyalty and security. This model worked well from the 1950s to the 1970s, when investing in and retaining employees helped Japan catch up technologically. Having a large, stable employee pool meant that Japanese companies were able to promote high-value employees from inside. In later decades, however, those same labor practices, and the preference of Japanese businesses to cut costs and salaries while retaining their employees, has resulted in a stagnant economy and persistent mild deflation.
Now, Japanese companies find themselves needing to attract experienced workers rather than selecting them.
In actuality, the absolute number of people who are employed is going up, and the ratio of openings to applicants is improving. Companies still perceive a labor shortage, however, and for a promising reason: Japan’s economy is recovering after Covid.
There’s another excellent reason for the labor shortage, which is the overtime limit enacted in April of 2024. Companies now need to hire more people rather than overworking the ones they have, which is of course great news for both employees currently in Japan, and those considering immigrating here.
Since the Japanese workforce overall continues to shrink, though—the birth rate fell to a record low of 1.20 in 2023—even more changes will be required.
Japan needs more immigrants
Japan increasingly relies on immigrant labor to bridge the gap. Reuters reports that the number of foreign workers more than quadrupled in the last fifteen years; now the foreign worker population in Japan is at an all-time high, with over 2 million present in the country as of October 2023. Nonetheless, experts project that Japan will still be short by one million foreign workers in 2040, if Japan wants to achieve its targeted annual growth rate of 1.24%.
Those numbers might be hard to achieve, but Sayaka Sasaki, a talent sourcing specialist at Tech Japan Inc., is feeling optimistic on Japan’s ability to draw international talent.
People in several countries are looking for the security of Japan rather than economic wealth.
She believes immigrants from other developed countries are increasingly attracted to Japan for “its high standards of service, sanitation, and security.”
Japan needs tech workers, specifically
As suggested by the statistics above, every industry in Japan needs more workers. Tech, however, ranks as one of the most affected sectors. Of Japanese companies, 52.6% have trouble finding and retaining staff—but 77% of Japanese IT companies reported that issue. What’s more, the problem is worsening, since the percentage was 73.1% in 2022, and only 65.7% in 2021.
The problem may be even more widespread than those numbers suggest. A 2021 report by the government found that a higher percentage of IT workers in Japan are employed by IT-related companies, as compared to western countries. This implies that there are a number of non-tech companies in Japan who would probably benefit from having IT workers, but who either can’t find good candidates, or can’t attract those candidates away from bigger tech companies.
In addition, that same report found that the majority of IT workers are employed and live in Tokyo; again, there are likely a high number of companies in other prefectures who would benefit from having IT employees on staff, but who are unable to compete with the pull of Japan’s capital.
Of course, there is another way to account for this statistical disparity. As TokyoDev editor Scott Rothrock explained, “Most Japanese SMBs [small and medium-sized businesses] resist technology; many are happy to use Excel and paper filing.”
They may not be able to continue on that path much longer, however, as Japan prepares for a wave of digital transformation or, as it’s commonly known here, “DX.”
Japan requires technological innovation, right now
This tech labor shortage has come at the moment when Japan needs those workers most, as Japanese companies emphasize digital transformation as a solution to pressing social issues.
Digital transformation in Japan
According to Japan’s Ministry of Economy, Trade, and Industry, digital transformation is defined as “a process where companies prepare to adapt to rapid changes in their industries by using data and technology to transform their products, services, and business models based on customer/society needs, as well as changing their operations, organization, processes, and internal cultures to be more competitive.” This can encompass everything from incorporating AI or storing information on the cloud, to accepting payments via LINE.
“I believe there are several factors that contribute to the current rush to DX in Japanese society,” Sasaki said. She laid out three primary reasons why technological innovations, and the skilled professionals who drive them, are needed in Japan now more than ever.
“Issue one,” she said, “Japan is an aging society. You are probably aware that the Japanese still use fax machines. Our technology is embarrassingly behind that of most developed countries. For example, the [Covid] vaccine rations were managed in Excel.”
The second problem, according to Sasaki, is the growing divide between urban centers and rural areas. “The working-age population is concentrated in the urban centers, while the elderly are concentrated in the rural areas. This disparity is a major obstacle to the promotion of cashlessness and digitalization.”
Ignorance leads to various gains and losses, not only in business, but also in taxes, social welfare, online shopping, hometown tax payments, and more. The supply of information is not keeping up, which means DX is lagging behind.
The real heart of the issue, however, is the “shortage of human resources,” Sasaki said. “As the working population of Japanese society declines, the workforce will have no choice but to rely on foreigners, technology, robots, and AI. It is not only in terms of labor. Demand is tightening in all areas, including welfare, medical care, disasters, and national security.”
“Perhaps,” Sasaki speculated, “the pandemic has made the Japanese government realize how far behind it has been in its efforts.” She added, “Our Japanese strengths are hard work and unity in times of disaster, but our greatest weakness is our inflexibility to change.”
AI solutions
A number of Japanese companies agree with Sasaki’s evaluation that new technology—and particularly AI—may be the only way to compensate for the declining population.
Taking farming, for example. The BBC reports that farming is one of the most rapidly-aging industries in Japan; the average Japanese farmer is 68.4 years old. Both farmers and the companies that supply them are turning to AI as a means to keep up with and even increase production despite the rapidly-dwindling number of active farmers.
One example is Nihon Nohyaku, a company that manufactures agricultural chemicals, but has also developed a smartphone app called Nichino AI. If the farmer discovers that the crop is failing, he can take a picture of the ailing plants, run it through the app, and receive a diagnosis and a suggestion of which pesticides to use. The accuracy rate is reported to be between 70-80%, so it’s not as good as an experienced farmer might be, but it enables more inexperienced or overworked farm personnel to manage the health of the plants.
A number of TokyoDev clients are also developing AI solutions for pressing industrial and social problems. NABLA Mobiity is optimizing flight operations for the airline industry using data analysis and AI/ML. Tensor Energy is using AI to manage renewable assets and accelerate the transition to a zero-carbon economy. Both MODE and Tektome are applying it to the construction industry, and companies such as Exawizards, Recursive, and Corpy are all using AI to address social challenges like aging societies and environmental preservation.
What this means for international developers is that AI/LLM skills are in very high demand. What’s more, AI could represent an especially easy path to Japan, according to Paul McMahon, CEO of TokyoDev.
From talking to some of our clients, there’s the perception that the AI field is more advanced outside of Japan, and so that’s one of the reasons they seek international talent.
What, exactly, are Japanese companies hiring for?
Given the overall labor shortage, the particular lack of skilled tech workers, and Japan’s simultaneous turn toward digital transformation and AI, it’s clear that talented international developers are welcome in Japan. But not every developer has the exact skill set Japanese companies are looking for, or the “soft skills” and language abilities that will enable them to succeed in a Japanese company.
Following is a breakdown of what Japanese companies, recruiters, and economic analysts have described as the most-needed tech positions and skills in Japan today.
Senior leaders
When Japanese tech companies discuss the developer shortage, they aren’t just talking about getting warm bodies into chairs. They’re focused on hiring high-quality talent.
This suggests that Japan is far more interested in attracting senior engineers and other experienced workers than fresh graduates.
Soft skills
In addition to managerial experience, Japanese companies consistently report that they’re looking for engineers with communication skills. In fact, one recent report suggested that employers place more value on applicants’ ability to communicate well than their development skills.
Sasaki stressed this in our interview. “As a career software engineer, I believe that what is lacking in Japan are . . . engineers with communication skills.”
When it comes to good engineers in Japan, 90% of them are . . . not good at communicating with clients and other members of the team.
She added that the other soft skills companies and recruiters are looking for are “leadership, people management, and Scrum.”
Abilities in demand
Having referenced a variety of industry and recruitment sources, here’s a brief list of the most in-demand languages and skillsets in Japan.
Backend
“I would say backend is always the role that’s the most common,” Clement Chidiac, Senior Technical Recruiter at Mercari, said when asked what companies were looking for.
The biggest volume of English-speaking roles will be on the backend side.
Indeed, backend experience is the number one requirement of job postings listed on TokyoDev. While it’s not the most desired skill of Japanese companies in general, as Chidiac points out, it is one of the roles that is most likely to not require Japanese. Companies are therefore usually more open to hiring international developers for backend positions.
Python
Python is consistently ranked as one of the most in-demand languages in Japan, and the one also suffering the greatest skill shortage. For example, a survey by the temp agency アクサス株式会社 found that there’s an 8% gap between the companies that want Python engineers, and engineers who know Python, which is a larger gap than for most other languages.
Morgan McKinley’s article “Skill Shortage Impacts Technology Growth in Japan” also ranked Python as #1 in the “Development and Testing” skills in demand, #3 in “Cyber Security,” and #4 in “Analytics.” It was listed more often than any other experience or language in the guide.
Sasaki confirmed that Python skills are sought-after in Japan. Also, during TokyoDev’s 2023 survey of developers in Japan, 41% of respondents indicated they regularly use Python as part of their job. In addition, Python is ranked within the top ten most popular job requirements on TokyoDev’s job board.
AI/Machine learning
Unsurprisingly, given Japan’s embrace of AI as a potential solution to population decline, AI and machine learning experience is particularly desirable. Japanese companies tend to consider other countries more advanced in AI, so they’re especially keen to avail themselves of international developers’ experience.
AI is listed twice in Morgan McKinley’s compilation of skills in demand—more than any other skill except for Python—and machine learning is highly ranked in TokyoDev’s list of most popular job requirements.
Chidiac did caution that the landscape is changing. “For LLM and machine learning, there are more roles than a year ago. It’s still not a big, big volume, but there are a few more roles.
“The need for machine learning has evolved a little because a year ago, or even before, there was a lot of [demand for] the machine learning model development part. Now it is a bit more end-to-end, like engineering on top of machine learning requirements.”
Others
Aside from those three skills, there is less consensus between sources. Based on TokyoDev’s job board, however, remaining top job requirements include:
Sasaki mentioned AWS, and Chidiac discussed a UI/UX design skill shortage in Japan. “The UX talent in Japan, local talent, tends to be focused on UI only, so these profiles tend not to fit with modern tech companies,” he said. “Also, because most companies build products for Japan users, there is often a bilingual requirement, which makes the search for talent even harder.”
Finally, Morgan McKinley’s lengthy table of in-demand jobs and skills in Japan is well worth taking a close look at.
Do you need to speak Japanese?
The answer to this common question is a clear, definite “Maybe.”
On the one hand, TokyoDev operates an entire page of job roles in Japan that require no Japanese language ability, proving that you do not necessarily need to speak Japanese to find an engineering job. There’s no real consensus on the topic, however, as other recruiters and companies stress the need for Japanese ability to build an ongoing career.
Sasaki was apologetic on the subject, saying it’s a common question from international developers. “I always say to them, ‘Unfortunately, Japan lags behind in globalization. It is obvious you are very talented, but you need to learn Japanese. If you can acquire N2 level Japanese skills, you will be at the starting point to develop your career. There are careers out there without learning Japanese, but your options will still be limited.’”
Chidiac, by contrast, sees the potential for career advancement in Japan without speaking Japanese—but not necessarily very far.
I’ve seen a lot of foreigners being promoted to manager, etc. There’s sometimes a natural ceiling when it comes down to getting to leadership roles without very high-level Japanese. How do you deal with the head of the business who might not master English? How do you deal with the CEO or the back office?
“But coming to Japan, there’s the element of a long-term commitment, right?” he added. “So you might start looking for a job now and find your job in a year. You might start studying Japanese now and be fluent in five or 10 years, to be able to use that to work.” It takes that sort of long-term commitment, he stressed, to be successful in Japan.
“This is perhaps part of the labor issue in the first place,” McMahon pointed out.
Almost all software engineers who speak Japanese are already in Japan. Despite having a developed economy, it can’t easily incorporate immigrants into its workforce.
“This extends to outsourcing to other countries too. An extra translation layer is often needed here.”
But if you don’t speak Japanese, McMahon said, that “doesn’t eliminate the possibility entirely—if you are technically skilled enough. If your tech skills are just passable, it gives you another route too—learn Japanese!”
See our article about interpreting Japanese language requirements on job postings for more on the subject.
Are multinational development teams the solution?
Some Japanese companies are taking the bull by the horns, and creating teams or entire workplaces that are designed to be welcoming to international workers.
- Cybozu, a well-established Japanese tech firm, has recently created its own international engineering team, specifically to tap into more global sources of talent.
- MoneyForward is aggressively pursuing its policy of “Englishnization” and aims to transition to a completely English working environment by the end of 2024.
- Givery recently touted its success in creating a multinational development team, and described how its workplace diversity actually attracted more Japanese engineers to join the company.
If these companies are indicative of the general trend, then we can expect to see an uptick in English-speaking, multinational development teams in Japan. Naturally this benefits developers from other countries, but it’s also a necessary adaptation by Japanese companies to remain competitive in global markets.
Chidiac is concerned, though, that creating a separate, English-speaking team can cause problems down the road. “I’ve seen some companies that managed to grow quite well, [but] you end up with a company that’s also split between the business side and the engineering side, with two different cultures within the same company.
“And then sometimes that leads to difficult conversations that come down to, ‘Hey, the business team is in the office. The engineering team doesn’t want to be in the office because the culture is different.’ How do you bridge this?”
McMahon explained that if Japanese companies can overcome these difficulties, they will have one definite advantage when it comes to recruiting international talent: the ease of Japan’s visa processes.
Japan makes it quite easy for companies to sponsor visas, compared to a place like the US. The fees are low, it’s often possible to do it without getting a specialist involved, and there isn’t a cap on the number of immigrants from a specific country like there is in the US.
That being said, it’s still an investment on the part of the company to recruit from overseas. “Because bringing someone to Japan,” said Chidiac, “requires a lot of admin—the visa and all that—and there’s a risk factor in terms of, ‘Do we want to hire someone that could leave us within six months to a year?’”
To overcome this hesitation, Chidiac recommends that candidates state upfront the reason they want to come to Japan.
The people who pass interviews at the first step, in my experience, usually have a bit of a story behind why they want to come to Japan. ‘I’ve started learning [Japanese] on my own,’ ‘I’ve visited Japan multiple times,’ and so on.
Conclusion
The worker shortage is a serious threat to Japan’s ongoing well-being. Given Japan’s aging population and falling birth rate, immigrant workers are both a natural and much-needed solution to keep the country’s economy afloat. In particular, tech companies in Japan report struggling to find, attract, and retain talent.
To recap what sort of tech workers Japan needs now:
- Talented senior developers
- Those with management, leadership, and communication skills
- Backend developers
- Developers who know Python
- AI and Machine Learning specialists
- People who know or are willing to learn Japanese
If any of these sound like you, then check out jobs in Japan TokyoDev’s job board.
If you want to know more about developer salaries in Japan, visas for software engineers in Japan, or how to bring your pets or family with you, check out our articles.
If you want to discuss your options with developers who’ve already made the leap, join the TokyoDev Discord.