Japan Overhauls Foreign Employment Policy, Replaces Trainee Program by 2027

Sweeping Reforms to Address Labor Shortages and Worker Protections

The Japanese government has announced a significant overhaul of its foreign employment policy, slated to commence in fiscal year 2027. The reforms aim to tackle the nation's chronic labor shortages, driven by an aging population, while simultaneously enhancing protections for foreign workers and tightening measures against visa overstays. The core of this transformation involves replacing the long-standing and often-criticized Technical Intern Training Program (TITP) with a new framework called 'Employment for Skill Development (ESD)'.

The decision to reform the system follows instructions from Prime Minister Sanae Takaichi, amidst growing public concern regarding the influx of foreign nationals and widespread criticism of the TITP. The TITP, established in 1993, was originally intended to transfer skills to developing countries but has frequently been accused of being a source of cheap labor, leading to issues such as low wages, long working hours, restricted job mobility, and human rights violations. Government data revealed that nearly 10,000 trainees went missing from their workplaces in 2023 alone, highlighting the program's shortcomings.

Introducing the Employment for Skill Development (ESD) System

The new Employment for Skill Development (ESD) program is designed to offer a more transparent and skill-based framework, making Japan a more attractive destination for foreign talent. Set to launch in April 2027, the ESD system will function as a three-year structured skill pathway. Under this program, foreign nationals will initially enter as trainees and then be encouraged to transition to the Specified Skilled Worker (SSW) Type 1 status.

Key features of the ESD program include:

• Job Mobility: Unlike the TITP, workers will be permitted to change employers within the same industry after one or two years, provided they pass relevant skills tests and meet other conditions.
• Language Proficiency: Workers will need to demonstrate basic Japanese language proficiency, such as the JLPT N4 level, before arriving. Employers or supervising groups will be required to provide at least 100 hours of mandatory Japanese language training, with costs covered by the employers.
• Career Progression: The system aims to provide clear pathways for career growth, allowing workers to develop skills and eventually qualify for the SSW Type 1 visa, which permits up to five years of employment in Japan.

Specified Skilled Worker (SSW) Visa and Worker Caps

The reforms also integrate with the existing Specified Skilled Worker (SSW) visa system, which has two types. SSW Type 1 allows for a stay of up to five years, while SSW Type 2 offers unlimited visa renewals, the ability to bring family members, and a potential pathway to permanent residency. Workers who successfully transition from the ESD program to SSW Type 1 can then aim for SSW Type 2 status.

The government has outlined specific targets for foreign worker intake under the new system. The ESD program will be capped at approximately 426,000 foreign trainees for its first two years, covering fiscal years 2027 and 2028. Concurrently, Japan aims to accept around 805,000 individuals under the SSW program by March 2029, a slight reduction from the earlier target of 820,000 set in March 2024. The combined total of foreign workers under both the existing and new systems is projected to be approximately 1.23 million through fiscal year 2028.

Expanded Sectors and Future Outlook

The new ESD program will cover 17 sectors, including critical areas such as agriculture and construction. The SSW framework will also expand to include 19 industrial fields, with additions like logistics warehouses, linen supply, and resource recycling, and broadened job categories in manufacturing and transportation. This strategic expansion aims to channel foreign labor into industries facing the most severe shortages.

The Cabinet is expected to approve the final plan in January, following further deliberations. These reforms represent Japan's concerted effort to balance its urgent need for foreign labor with the imperative to ensure fair treatment and clear career pathways for those contributing to its economy.