Japan's economy needs foreign workers, not the nationalist approach pushed by its new leader

Japan's Prime Minister Sanae Takaichi delivers a speech at the House of Representatives plenary session in Tokyo on October 24, 2025. [AFP] Sanae Takaichi has made history by becoming Japan's first female prime minister. However, this was hardly a win for feminist or progressive politics. Takaichi is a right-wing ultraconservative whose policy positions derive from traditionalist perspectives on the role of women, Japanese history and society more broadly. She has the same anti-immigrant positions as conservatives and right-wing populists the world over, defending "national identity and traditional values", while emphasising the importance of strong economic growth. Far from solving Japan's economic problems, however, policies that restrict immigration tend to cause labour shortages and inflation. Japan is the canary in the coalmine for many developed countries suffering a demographic crisis due to falling birth rates. Japan's population has declined for 16 consecutive years. Unless Takaichi adopts a more pragmatic approach on immigration, her tenure could be one of economic stasis and relative decline. How did Takaichi become prime minister? Takaichi was elected leader of the ruling Liberal Democratic Party earlier this month. Her rise to prime minister was delayed, however, when the LDP's junior partner, the Komeito party, withdrew from the governing coalition over the LDP's handling of a political funding scandal. The LDP has minorities in both the upper and lower houses of Japan's Diet, or parliament, and requires coalition partners to govern. After extensive negotiations that will require compromises from all sides, the right-wing Japan Innovation Party, known as Ishin, agreed to support Takaichi and her LDP-led government. However, the new coalition is still two seats short of a majority in the lower house and will require additional parliamentary support. This means Takaichi's minority government will be more precarious and constrained than previous governments. Japan's demographic crisis Japan's population peaked at around 128 million in 2008 and has steadily declined ever since. It's around 124 million today. Last year, the fertility rate (the average number of children a woman has in her lifetime) fell to a record low of 1.15. Under current projections, Japan's population is expected to fall to 87 million by 2070 and 63 million by 2100, when only half the population will be of working age. The issue is therefore not simply one of a declining population, but also an ageing population, with rising pension and medical costs. Many professions in Japan, such as teachers, doctors and caregivers, are already facing acute labour shortages. Immigration as a political lightning rod While previous governments have acknowledged the declining population is a significant problem, they have done little to address the issue. Various initiatives have brought foreign residents or workers into the country, but there has been a reluctance under LDP governments to introduce programs with the scale and commitment - in terms of integrating immigrants into Japanese society - to make a significant difference. This means these programs have had only modest success. Japan's number of foreign-born residents reached a record high of 3.6 million this year, representing around 3% of the population. But this is far lower than many other developed economies. This increased foreign population has resulted in a record number of "foreign" babies being born in Japan, with Chinese, Filipino and Brazilian mothers topping the list. This has somewhat offset the declining figures for newborns from Japanese parents. Japan's tourism industry is also booming, with almost 37 million visitors coming last year. Taken together, this increasing number of foreigners in Japan has resulted in the rise of anti-immigrant parties and policies, including the far-right Sanseito party. This, in turn, prompted the LDP to move further to the right to avoid losing votes to Sanseito and other populist parties. This partly explains why Takaichi's nationalist rhetoric has resonated with the ageing conservative LDP base. Takaichi advocates for foreign workers in specified fields where the country has labour shortages, albeit under strict criteria (such as Japanese language ability, training and oversight). And she opposes the mass settlement of immigrants, or the large-scale granting of political rights to foreign residents. While her policies have so far been short on detail, she has framed foreigners as a danger to national cohesion that needs to be strictly controlled. Pro-natalist policies pushed instead Across the world, older populations tend to be more susceptible to anti-immigrant scare campaigns from right-wing conservative media and politicians. Japan is no exception. Politicians such as Takaichi, therefore, see electoral benefits in colouring immigration and foreigners as a threat to social harmony or cultural heritage. Unfortunately, as a result, ageing countries like Japan that are most in need of immigration are often the most resistant to it. Instead, many right-wing conservatives in these countries promote pro-natalist policies - encouraging women from the dominant racial or ethnic group to have more babies - as a solution that boosts populations and maintains cultural and racial homogeneity. Hungary is one such example. The right-wing nationalist government of Viktor Orban has provided generous financial benefits to parents at a cost of around 5% of Hungary's GDP. Though Hungary's birth rate was above the European average in 2023, it has fallen since then. Conservatives are pushing Japan to take a similar pro-natalist approach rather than rely on increased immigration. With Takaichi as prime minister, Japan is unlikely to see an improvement in women's independence and status in society, a significant rise in birth rates, or increased immigration. Japan's demographic crisis is therefore set to continue, and probably worsen, in the foreseeable future.

Japan's economy needs foreign workers, not the nationalist approach pushed by its new leader

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