 Okay, we're back. We're live. And this is Steve Zercher. He joins us from the Far East. He joins us from Osaka. Am I right, Steve? We're going to talk about diversity in Japan, which is really an important topic. Welcome to your show, Steve. Thank you, Jay, for helping out. I appreciate it very much as I kind of get the feel of how to do all of this. Thank you. So Steve is a professor in a Japanese school there. He teaches business. He's also associated with the Schuyler School, teaches entrepreneurship. Very important to straddle those two countries and to see the differences and the similarities, as he does. But one thing is very catchy to talk about diversity in Japan, because everybody has treated Japan as like not very diverse. And you know, you read the Japanese, you're not Japanese. It's not like the U.S. where it's all a polyglot. So that's changing, Steve. I would like to hear from you about that. Yeah, exactly. So Japan is 98 percent Japanese. So that's the fact. That's the race, right? That's the race. Yeah, it's a homogeneous society. Japan is made up of people primarily that are born here, that learn Japanese, that identify as being Japanese. But what's been happening in the last few years, despite the tendency of Japanese society to think about Japan only in terms of Japaneseness or Japanese people, as you know, it's a worldwide issue, not just for Japan, but other countries as well. Japan is beginning to run out of people. The population is declining. The number of people leaving the workforce every year is about 500,000. They're retiring. And now there's a vacuum that's being created in terms of companies wishing to hire people to sustain their businesses both domestically and internationally. Can I just stop you there and ask what causes that? That's very troubling, because this is certainly an industrialized nation, one of the top economies in the world in terms of manufacturing. Excellent, excellent manufacturing. A leader, if you will, in manufacturing cars, electronics, and all kinds of other things. So for them to lose 500,000 people from the workforce every year, they're not that big. This is a blow to their future economy. Why is that happening? That's an excellent question. And lots of social researchers are looking at that. In my opinion, I think it's an outcome of the flat economy that Japan has experienced since the bubble bursting back in the early 1990s. The Japan economy has essentially been flat. It's a five trillion dollar economy. It's remained at that level for a long, long period of time. So new jobs are not being created. What's happening in Japan, and this again is happening in the U.S. and other countries as well, is a secondary kind of the B class level jobs are proliferating. They're becoming much more common. So college graduates, instead of joining a company and being a full employee, they end up working on a contract basis, or like within the university, they work on an adjunct basis. You know in American universities adjuncts are 70, 80 percent of the teachers now at the school. That's beginning to happen here in Japan. And those people in that secondary work class are getting paid much, much less. And so it creates a lack of confidence on the part of the men that are working in those, you know, those kind of temporary jobs or those not full positions. And they don't feel confident enough to be able to start families. And of course, the women look at them and say, you know, I can't live a comfortable life with you making only $30,000 a year. So I think that's one of the major factors, but probably not the only factor. The Japanese birth rate is at 1.28. So that means every couple, the average number of children that's being born is 1.28. Now obviously, if you don't have two kids, you're not even replacing yourself. So as a result, the overall population is going down. I just saw some statistics. This is just shocking. In 2050, so 30 years from now, 40% of the Japanese people will be over the age of 65. 40% of the country will be 65 and older. And Korea also is going to be very close behind that. So to answer your question, I think one of the major factors is the economic impact of a flat economy and the second class job sphere. It's about 40% of workers right now fall into that category. Where do they go though? I mean, it sounds like there's a reduction simply in the number of young people. But are people leaving Japan? Are they actually heading off to other places, other possibilities in other countries and continents? No, Japanese people actually love being in Japan. There's a trouble within the university environment. We try and encourage students to go abroad and many of them don't want to do it because life here is very comfortable. This is a quality country. The quality of life is very, very high. I think the numbers of Japanese people living outside of Japan are around 2 million. So out of 125, that's not a huge number. And that's remained pretty much set or stable over the last few years. Now, if you were planning on a large-scale basis, you would say as Singapore sometimes says, gee, what else? There are other countries too. Australia sometimes says, we want immigrants. We want to incentivize immigrants. We want to bring them in and offer them deals of one kind or another, housing, what have you, good jobs, because we need people in the workforce. And in this case, it sounds like that policy is absolutely indicated. Is anybody advancing that policy? Yeah, actually, that's one of the things I wanted to talk about in our conversation today that is being implemented. So Japanese people believe Japan primarily is for Japanese people. And there's been a reluctance on the part of the government to explicitly promote immigration, you know, migrant immigration or worker immigration. But Abe, he's been in power now for many, many years because of industry telling him, hey, look, we cannot find enough Japanese people to work in certain segments of the economy. We need to bring in people from the outside. So he has set up something which is called backdoor immigration. So three-year work contracts, five-year work contracts, specifically targeted to industries where there's a critical shortage, like nursing, like construction, like agriculture, like hotel services. Those particular segments now have people coming in to Japan and the numbers have dramatically increased. He's not promoting this explicitly, but it is happening. People are aware of it. And right now, from what I can pick up from the Japanese press and talking to my friends and so forth, it's being tolerated. But the numbers are still relatively low. As I mentioned, the number of foreigners overall in Japan is only about 2%. The raw numbers are about 1.5 million. But that's up dramatically from just four or five years ago. So in this case, is there a stress on training? In other words, so you say, well, we need people in the hotel industry. Let's find some people who are skilled in hotels or whatever the industry may be. Is there a stress on country? For example, Karen Walters back in what, 1921 or so, set up some categories of countries that were to be incentivized. So if you're from country A, we want you. If you're from country B, maybe not so much. If you have family here, we want you. If you don't have family here, maybe not so much. So are there categories being established, the favorite one group or training or another? I don't know how conscious this is and whether it's based on this perception of certain nationalities or certain types of people fitting in more comfortably in the Japanese culture and Japanese society. But most of the immigration, this kind of backdoor immigrants are from Southeast Asia. So Vietnamese, Burmese, Nepalese, Chinese, of course, as well. Those are the primary groups that have filled these numbers of immigrants coming in. So for example, if you go to 7-Eleven, you know, 7-Eleven is an icon institution here in Japan. You can't go more than three blocks in an urban area without running into a 7-Eleven. If you go to Tokyo, no Japanese people working there. None. They're all this group of people. And do you know Japanese people, they go into 7-Eleven and they see that. So they're facing it on a daily basis like, oh my gosh, there's nobody here. Also there's a little bit around the edges of older people. You know, they're beginning to get more flexible than having middle-aged women. If you go into McDonald's, you'll find women who are 40 and 50. So that's another labor group that was previously considered not worthy of working anywhere. But now because of these dire circumstances, they're bringing women in as well. So one thing I wanted to use as an illustration of this tension that exists in Japan regarding diversity and the fact that the number of immigrants, although on a bigger scale or still smaller, beginning to increase and the society is noticing that, is sports. Right now, most Americans don't care because it's rugby. I can't find any information sources on Yahoo America about rugby at the World Cup going on. But in Japan, it's being hosted here and it has become a phenomenon. And the reason why is that Japan has a team that is doing extremely well. So just a week and a half ago, they beat Ireland. Ireland was number two in the world. It was a huge shock. So right now they're undefeated in their grouping. And they may be going on to play New Zealand who's number one in the world. So there'll be this dramatic match potentially between Japan and New Zealand. And Japan has not been involved in rugby for all that long, am I right? I believe it goes back, I'm not 100% sure, maybe the last 10 to 20 years. But in the previous tournaments, other than the one in 2015, they lost every single match. They're like Namibia. Namibia has lost every single match they've played in the World Cup. And Japan used to be in that category as well. So one of the things they've done because of the unique rules that apply to eligibility for rugby teams, this is an English sport, they created it. So they made the rules very flexible in allowing immigrants to be able to play on the national team. So England wanted to remain dominant. So they would allow British citizens from other areas that were strong in rugby to come to England. And if they lived there for three years, they were eligible to play on the national team. So they were kind of trying to stack their own team. But now Japan, under the 31 players on the team, 15, almost half, 1-5 have not been born in Japan or are not fully Japanese. So there's different categories. There's pure immigrants, people, you look at them and you go, you know, they're not a part of the team or they're not Japanese. Or people that are hafu. And hafu is a Japanese term meaning Japanese mother, foreign father, vice versa. So there's a term for that. So nearly 50% of the team is not Japanese by the traditional definition of what Japanese is. So some people feel they're not a Japanese team, but they're doing extremely well. And they're being embraced by the country right now. And the people who are running the team, I met a couple of them, are very proud that they have this diverse group that's representing Japan. And they think it's important for them to teach Japan as a whole by showing them how diversity and bringing in these other people has made this team much, much better, which is clearly obvious. Japan, if it was just 100% Japanese people, they would still be losing every single match. In my opinion, maybe others will disagree with me, but certainly there's a difference in outcome. So everybody loves them now because they're winning. Yeah, let me give you the best example of this. If we could throw up the first picture of Naomi Osaka. So this woman, you, J, you recognize her. She's internationally famous. This is Naomi Osaka. She's currently ranked number two and probably is going to be number number one in the world for women's tennis. So she did had a shock win last year in the US Open against Serena Williams. And she is what's called a half was I was describing earlier. Her mother is Japanese and her father, I believe, is from Haiti. And she's basically grown up in America. But Japan has embraced her as being Japanese, even though she cannot really speak Japanese all that well. So the fact that she's become internationally famous and she's half Japanese, Japan has as a whole has embraced her whole heartedly. She's doing advertisements here and so forth. So what's the other half, Steve? Is she African American or Haitian Haitian Haitian? Yeah, her father is Haitian. So his father took her to Florida when she was very young, maybe like five or six years old, if I remember correctly, and put her into tennis schools. And she went through the American tennis system and she doesn't live in Japan right now. But Japan has embraced her because she's half right. So she's mother is Japanese and the fact that she's now internationally successful. So if we go also to the next picture, which is the rugby team. So look at these guys, you know, some you can clearly identify as Japanese, but others like the guys on the right hand side there are not. This is the team that is doing so well right now. And then for the whole for the best part is being embraced by Japan, even though half of them are not Japanese. You can go to the next picture. We can see this guy who's from South Africa wearing the Japanese uniform. He's one of the stars on the team. He's a huge guy there. But, you know, you would look at him and you would not think that this guy is Japanese, but he is playing on the team. Yeah. If we go to the next slide, we can get to the point about the number of immigrants that are coming in. So here you can see the growth, Jay. And again, this is in response to the lack of Japanese workers. Right. So foreign workers in Japan, you can see how it's quadrupled over the last 10 years or so since 2007. And that number is going to increase over the coming years. You know, eventually it'll be $3 million, $4 million, and maybe $5 million. But where we are, a couple of things about that. I mean, these foreign workers, are they getting the jobs at McDonald's or they're getting the jobs in the factories as middle management? Are they getting the good jobs? And the second question which folds into the first is what kind of immigration status are they getting? Can they stay there for their lifetime and they have visas that are permanent resident visas? Can they get to be Japanese citizens or is it limited with a glass ceiling of some kind? So to answer your first question, they're mostly moving into entry-level positions, want jobs that basically Japanese people do not want to do. Like in America, the people who are working in the farms, they're picking lettuce in California, you see them. Americans won't do that. So mostly they're working in service industry jobs where Japanese people are not really interested in working or agriculture or construction. So mostly entry-level positions, they're viewed as a labor base for the lower end of the Japanese economy, which has a tremendous shortage right now. The second question you ask is what status they're on when they're here? It's a work visa. So it's a three-year contract or in some cases a five-year contract which can be extended but also cannot be extended. So I think Japan's using the Swiss model a bit, will bring the people in but will have them on a limited basis and if the economy turns bad, then we'll be able to send them back home. So that's how it works. I don't see these people moving up to higher levels. They're not being brought in on a track to become a citizen or to become a permanent resident like I am. They're coming in to fulfill immediate labor needs that cannot be fulfilled by Japanese people right now. And sort of transient. So the American dream story doesn't really happen. The American dream story, by that I mean you come in, you go to school, you compete in the marketplace, your kids go to school. Before you know it, you're part of a diverse population, which is what we have right now, even if there are those who deny that. But in fact, the U.S. is very diverse and so is Europe becoming. But I would expect that Japan would not allow that because they still harbor the notion that you've got to be Japanese to be Japanese. Yeah, I think fundamentally that's how they see things. But that runs up against the economic reality of lack of labor and Japan becoming a second tier country. Right now, Japan's the number three economy in the world is considered to be one of the leaders economically. But unless Japan can solve this labor issue, because no one thinks that the demographic landslide, the aging of the Japanese society and the reduction in the number of Japanese people, that's not going to be solved unless you bring in people from the outside. Now there is one path that's beginning to be encouraged that addresses what you're talking about the American dream. And that is for mostly Chinese who come to Japan as students and go through a four-year program and get a degree from a Japanese university. Up until recently, when they graduated, they had no opportunities to work in Japan. They basically had to go back to China. But now because companies recognize that this is a bilingual talent pool, these are interesting individuals. If you leave your home country and study in Japan, it demonstrates a certain strength of character or personality. So now employers are beginning to look at those foreigners and thinking about bringing them in and having them work in the company. That's something that's just changed in the last few years. So that might be a path to the Japanese dream, the American dream, so to speak. But the workers who come in on these short-term contracts, that's not a possibility for them. And Japan doesn't want to offer that opportunity to them. Well, who knows? But it seems like, for example, if I'm one of those short-term workers and after hours I go to school and I do well in school, and after hours I learn how to speak Japanese and I do well speaking Japanese. And for all at least appearances, I'm a good Japanese citizen. Isn't there a way that I can leverage that into a better immigration status? I guess we're too early in this process to really know that. My sense is that that probably is not an option. But one thing to do is to get married. That's a possibility. So Japanese women, I mean, I'm an example of that. There's, I think, probably the foreign professors at Kansai Gaide, probably 60% of us have married Japanese women. So that's not an official way of getting around this visa impediment that Japan puts in front of temporary workers that are coming in. But I don't know how Japan's going to respond to that if a significant percentage of the people that are here do accomplish language skills and do feel comfortable in the country and are employable beyond the three-year contract or whatever has been given to them. The company maybe wants to keep them and they get married and then technically become dependent like I am of a Japanese citizen. That might be a way for them to continue to live in Japan. How about your favorite subject, Steve? Entrepreneur, entrepreneurial activity, right? Suppose I'm one of these contract laborers and I decide, hey, I want to open my own McDonald's. I want to make a restaurant here. I want to make a business and I want to have partnerships that will give me financial depth and so forth. Is that going to help me? Japan's, as we've talked about in previous discussions, Japan's ranking when it comes to entrepreneurship is horrible for cultural reasons and others. Japan, even though the government encourages entrepreneurship, it's just not happening. So the government as a result is saying, okay, if you're a foreigner and you want to come to this country and you want to start a business, there is a special visa that you can apply for, but there's certain qualifications. You have to have a business background. You probably have to have a minimum amount of money in order for you to get the visa because without money, how are you going to start a business? So there may be some qualifications that are applied to that particular visa that would exclude people who are coming to Japan on a work visa. Typically, those are people who are coming from economically depressed countries or more challenging financial circumstances. So Japan's recognizing that, but that's a different track. Actually, I just, on that point, Jay, I was just invited to be a mentor for something, a startup bootcamp in Osaka, and it's exclusively inviting foreign companies to come to this contest, this business pitch program, with the expectation that maybe they'll settle here in Japan. So private interests and government interests are aligning to try and bring import businesses through the Japanese area. I mean, these are existing businesses, and that from that, they can set up and begin to employ Japanese people here. So there is an effort in this area, but the two are considered to be separate tracks, I think. You know, one of the things that I'm sure that appeals to you in discussing this subject is the notion that Japan could become diverse. In other words, if the government and public policy, those who formulate public policy, realize that it's good to have diversity. It's good to bring people in. It offers a certain amount of vitality to the social structure and to the business community and so forth, to the economy in general. Then somebody will say, oh, we want to do this more. And then before you know it, Japan will change. So my question to you is, I know there's resistance to that, but do you think there's a real possibility? And if that happens, how will things on the street be different? How will things in the economy and the business community be different? If you all of a sudden say 10 years from now, you have a much more polyglot population. Yeah. I think at this point, what we've been talking about with the sports efforts and the increasing immigration, but still on aggregate, 2%, it's mostly symbolic. It's interesting to talk about, but it's not having a profound effect on Japan. But because of these economic issues, the challenges that Japan faces, and again, the demographic issue is not going to go away, potentially Japan will become maybe 10% foreigners over the next 20 years or so. So at what point, where's the tipping point? Is it a 10%? Is it a 15%? The Japan begins to reflect back on itself and say, gosh, Japan is not just typically Japanese ethnic. That's not the definition. Japan is a country like Hawaii is or like other diverse countries recognizes that we have people here that are non-Japanese by ethnicity, but yet they're a fundamental, important contributing member of the society and it's making Japan better. So where that point is, I don't know. And then we could go the other direction too, Jay. I hate to be the pessimist here, but you know in Europe and also in our own country in America, under the current administration, there's an anti-immigration hatred that's out there and Trump and other countries, England with Brexit, America with Trump, they have hit a certain tipping point and instead of embracing immigration or embracing diversity, at least a segment of the population, they're actually actively fighting against it and blaming immigrants for social problems that they have no real connection with whatsoever. So I'm hopeful that your question would, Japan would respond positively to this, which is kind of there's some indications now in the fact that Japan has embraced this diverse rugby team. Again, they're winning. If they were losing, probably Japan would be condemning them and say, get rid of the foreigners, right? Yeah, exactly. You need to win. That's a very important part of it. But Japan could also turn the other way. I would say probably 30%, 35% of the population here in Japan is anti-immigrant. The best example of that right now is the tension between Japan and Korea. If you're a Korean, Japanese people, they're people who've been living in Japan for generations now that were brought over during the World War II forced labor. They're still not considered Japanese, even though by any definition, they are Japanese. They don't speak Korean anymore. They're third or fourth generation, but they have to carry a permanent resident card, an alien registration card, a green card, just like I do. I've only been here for 20 years. There's a big question in my mind here is whether Trump or some of the more right-wing leaders in this country in Europe accept it or not. It just seems to me that a country with a diversity is a stronger country, a stronger economy. There's a greater vitality about it. This is so with all life on the planet. The old story about the microbial colony, every microbial colony will die unless new microbes are introduced to it. It's the same thing with countries. The question I put to you here at the last of our show is let's assume that the Japanese, maybe if not this generation, the next generation realize that they've got to change the bell curve, that they've got to increase the population, they've got to increase the workforce because they're in a deadly competition with other countries in Asia, not just China. They've got to revitalize themselves. The way to do that is the way Singapore operates, bringing immigrants, give them a good deal, manage them so that they don't become a problem, and generally let them feed into your economy. If that happens, do you think that Japan will be able to maintain its economic vitality? Yeah, I think that is a necessary requirement for Japan to maintain its economic influence and vitality. If they don't get this right, if Japan turns inward and begins to become anti-immigrant, right now it's kind of neutral, and then we have these symbolic sports events that people are embracing, but if it just remains neutral, that probably won't be good enough. The Japan's influence in the worldwide economy will go down. Maybe their third now will go down to fifth, and seventh, and eighth. If they turn negative, then I think that is bad news for the country. It's clear that that's what they need to do, but it's interesting how it runs up against Japanese perceptions of who they are and the homogeneity of the society, and whether or not they're open to this change. Change in Japan is always kind of problematic. It's an interesting thing to think about. I'd like to say I'm hopeful that Japan can turn the corner and that over the next 10 to 20 years, it does embrace diversity and recognizes the contributions of others that are non-Japanese to achieve greater levels of success, like with the rugby team. I mean, it's clear that diversity has helped them become much, much more successful. If they embrace that example, that'll be good, but if they don't, and they say Japan's for Japan only, and go back home to where you come from, unless you fit a very narrow category, then the economy I think will suffer as a result, so we'll have to see. Right now, Japan is not suffering from what is going on in Europe or the United States, and maybe that's a tribute to the Abe administration. I'm not a big fan of Abe, but at least on this, he's been able to achieve immigration and there hasn't been a strong negative pushback by the right-wing elements of the Japanese politics or by the general population overall, at least so far. Global issue. And Japan actually, in the years to come, if it does this right, could be an exemplar of how you do diversity. It could be the most diverse country in Asia, and thus reap the benefits of that, which would be world-class. That's right. Well, Steve, thank you so much for this discussion. This is a great way of looking at it, and I look forward to two weeks hence when we'll do it again, so don't leave town. You're not going to leave town. No, no, no. I'll be here in Japan. Absolutely. It's a pleasure. A teacher in Japan and a teacher at the Schuyler College right here in Hawaii. Thank you so much for joining us on Looking at the Far East. Thank you. Aloha.