Japan’s Long-Term Growth Strategy Faces Workforce Challenge

Japan's proposed 370 trillion yen (around $2.3 trillion) investment plan aims to strengthen economic growth and increase wages over the coming years. The government's draft roadmap targets raising annual economic growth to 1% while supporting the country's long-term development.

A major obstacle to achieving those goals is Japan's shrinking workforce. Official projections indicate that the employed population will decline by around 7% by 2040 as the country continues to age. Unless productivity improves significantly, Japan could face a shortage of millions of workers.

Business groups and regional governments have urged policymakers to attract more skilled foreign workers to help address labour shortages. However, recent government measures have focused on tighter immigration rules, including stricter residency requirements and higher permanent residency fees.

Labour shortages are already affecting several industries, including elder care, manufacturing, agriculture and freight transport. Analysts say these sectors may struggle to maintain current output if workforce gaps continue to widen.

While investments in artificial intelligence and robotics could improve productivity, experts believe automation alone is unlikely to fully replace the workers needed across many industries, particularly in labour-intensive roles.

Industry organisations and local governments have called for a more structured immigration policy that supports recruitment, integration and language education. They argue that a stable workforce will be essential if Japan hopes to achieve its long-term economic ambitions.