Japan, Taiwan, Singapore see record foreign labour increases

In a recent analysis by The Economist, South Korea’s growing efforts to address its labour shortages through increased foreign workforce quotas are examined against the backdrop of a broader trend in Asia.

South Korea offers a prime example of how persistent complaints can lead to tangible outcomes. Economists have long warned about the looming shortfall in the country’s working-age population, but it was the relentless advocacy of the business lobby that finally spurred action. In response to their pressure, the E-9 visa quota for non-professional workers surged from 120,000 last year to 165,000 this year. Consequently, the total number of migrant workers in South Korea increased by 9 percent in 2023.

This development is a positive turn for South Korea, which faced stagnation in its foreign labor force between 2016 and 2022, even as labor shortages intensified. Historically, low visa quotas and stringent eligibility requirements hampered the influx of foreign workers, who also had limited pathways to permanent residency and family reunification.

Progress is now underway, albeit slowly. A new initiative announced in February allows parents of international students to undertake seasonal work in rural areas suffering from labor shortages. Additionally, the number of temporary E-9 visa holders transitioning to the renewable E-7-4 visa has increased, from 400 annually in the 2010s to a cap of 35,000 this year. 

This trend of increasing migrant labor is reflected across Asia. In 2023, Japan’s foreign workforce reached 2 million, a 12 percent increase from the previous year and nearly triple the number from a decade ago. Singapore and Taiwan have also seen significant growth in their foreign labor forces, with Taiwan allowing skilled migrants to gain residency and Singapore easing restrictions on visas for jobs critical to its economic priorities.

However, significant differences remain in the approach to immigration. While Japan and South Korea grapple with issues of national homogeneity, Singapore embraces its multi-ethnic identity, and Taiwan actively protects its multicultural heritage. Consequently, the share of foreign workers in the labor force varies considerably: 3 percent in South Korea and Japan, 7 percent in Taiwan, and 39 percent in Singapore. 

Is there reason to be optimistic about the recent progress? The challenge is significant. According to economist Michael Clemens, South Korea needs to increase the foreign share of its workforce to 15 percent over the next 40 years to stabilize long-term growth. Our rough calculations suggest that this would require an annual expansion of about 4 percent in the foreign workforce over four decades. While this target is ambitious, it's not entirely out of reach: the foreign workforce grew at an average annual rate of 3.3 percent over the past decade, driven by robust growth in the 2010s. 

Similarly, Japan’s situation highlights the scale of the challenge. A state think tank projects that Japan will need an additional 2.1 million foreign workers by 2030, necessitating an 11 percent annual increase, which matches the growth rate Japan achieved over the previous decade. However, these numbers may underplay the difficulty of maintaining high levels of immigration. As wealthy Asian countries compete for talent, attracting migrant workers could become more challenging.

Many of the countries sending workers, such as Indonesia and China, are experiencing their own aging populations. Additionally, rising anti-immigrant sentiment could pose obstacles, as evidenced by recent protests in Taiwan over a plan to increase the number of Indian workers.