(Bloomberg) – Tomoki Yoshihara starts his shift at 5 a.m. at a meat processing plant in rural Australia, works nearly 50 hours a week, and earns three times as much as he did as a member of the Japanese army slaughtering lambs. ing.
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He is one of a record number of young Japanese people who obtained working holiday visas in Australia last year, attracted by high wages made even more attractive by the weaker yen.
“From a salary standpoint, it’s much better here,” said the 25-year-old from Goulburn, south of Sydney, who earns about A$5,000 (about $3,300) a month after tax. “If you want to save money, Australia is the place to be.”
Similar visa programs have been restored in the UK, Canada and New Zealand after the pandemic, and the exodus risks exacerbating Japan’s severe labor shortage. This is also a sign that many young Japanese are not buying into Japan’s economic optimism as it seeks to break free from decades of deflation.
“Young people have doubts about Japan’s economic outlook,” said Yuya Yoshikawa, an economist at the Meiji Yasuda Research Institute. “Living conditions are much tougher than the headline inflation figures suggest.”
Last month, the Bank of Japan finally scrapped the world’s last negative interest rate, amid signs that a virtuous cycle of rising wages is fueling demand-driven inflation. But even after Japan’s unions won the biggest wage increase in more than 30 years last month, there remains a notable gap in real wages with other developed countries.
The average annual wage in Japan in 2022 was $41,509, compared to $59,408 in Australia and $77,463 in the United States, according to the latest data from the Organization for Economic Co-operation and Development.
When prices were moving little, the long-term trade-off of favoring job security over higher wages made more sense. With inflation currently at its highest level in decades, many Japanese find themselves stuck with a monthly budget between paychecks as their wages have been fixed for years. It’s starting.
Atsushi Takeda, chief economist at Itochu Research Institute, said, “While other countries are raising wages, Japan’s wages have not increased at all for 20 years.” “As the yen depreciated, the difference became even larger.”
Approximately 14,398 Japanese people obtained working holiday visas in Australia in 2022-23, the highest number since 2001, according to Australian government data. This will allow people aged 18 to 30 (or 35 in some countries) to hold a visa for those aged 12 or older. To fund your travels, you can work in a variety of roles, from farming to hospitality to caregiving, construction to office work, and earn monthly vacation time. There is also an option to extend for up to 3 years.
In addition to attractive wages, Australia is highly regarded for its safety, has a similar time zone to Japan, and has recently become a country that allows visa holders to work with employers in certain industries for more than six months. The country has become a popular travel destination for Japanese people, in part because rules allowing people to work there have been relaxed.
Australia has “already had a generous visa regime, but recent changes to longer employment periods have made it even easier for Japanese people to immigrate,” said Kotaro Sanada, a spokesperson for the Japan Working Holiday Association.
Besides Australia, Canada has issued 7,996 similar visas through October 2023, while the UK issued 898 last year, according to host country data. New Zealand approved 2,404 projects in 2022-23. Sanada expects that number to increase further as rules are relaxed. He predicts the UK will become the next popular destination after the annual visa quota for Japanese nationals was increased from 1,500 to 6,000.
“More and more people are leaving overseas in search of work,” said Harumi Taguchi, chief economist at S&P Global Market Intelligence. “If this trend continues, employment of young workers in Japan could become even more difficult.”
Lili Takahashi, who flew to Australia this month immediately after graduating from university, said she was aiming to spend two years on a working holiday and may apply for permanent residency and marry her boyfriend in Australia. Australia, unlike Japan, recognizes same-sex marriage.
Meanwhile, Australia’s rising wages and the yen’s 10-year low against the Australian dollar should allow for a better work-life balance.
Takahashi, 22, said, “Japanese wages may be enough to survive, but it’s sad to think that if I stayed in Japan, I wouldn’t have much money left for hobbies or hanging out with friends.” Told.
The rise in working holiday visas is part of a broader trend of Japanese people choosing to live abroad. According to the Ministry of Foreign Affairs, the number of Japanese people living permanently overseas last year was the highest since the survey began in 1989.
This could further exacerbate chronic labor shortages in Japan’s aging society, where companies are competing for increasingly scarce talent.
According to a report by Teikoku Databank, more than two-thirds of small and medium-sized enterprises say they are facing a labor shortage, and the number of bankruptcies due to labor shortages reached a record high last year. Last year, the government allowed a record number of foreign workers into the country to alleviate the population problem.
ITOCHU’s Takeda says the exodus of Japanese workers will depend on the economic outlook.
“If the conditions for rapid growth are established in Japan, perhaps young people will find a reason to return to Japan,” he says.
–With assistance from Akemi Terukina and Emily Cadman.
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