The JCER study compares wages earned by factory workers in China, Vietnam, the Philippines, Indonesia and Thailand with the money a foreign national would receive through Japan’s government-sponsored technical training programme.
By 2032, factory wages in all except the Philippines are projected to be more than half of the trainee pay in Japan. Once local wages hit the 50% threshold, workers may be more reluctant to relocate to Japan. A sharp drop in the yen is already driving some foreign workers away as other Asian economies fight to attract labour.
The study examines typical factory pay in Beijing, Shanghai, Hanoi, Ho Chi Minh City, Manila, Jakarta and Bangkok, using data from the Japan External Trade Organization and JCER forecasts. Yen conversions are based on the average exchange rate between April and September this year.
Japan’s technical trainee wages are based on data from the Ministry of Health, Labor and Welfare. For pay in 2021 and onward, the JCER study assumes that the average minimum wage increase of 1.6% per year, observed over the past decade, will continue into the 2030s.
Vietnamese are the largest nationality of foreign residents in Japan after Chinese, and they make up the biggest share of technical trainees, Justice Ministry data shows. The number of Vietnamese trainees grew twelvefold over the past 10 years to roughly 160,000.
Factory workers in Vietnam earned the equivalent of roughly ¥30,000 (US$215) a month in 2021 – less than 20% of the ¥164,000 a technical trainee could earn in Japan, the JCER study finds. Living expenses in Japan and repaying travel costs can eat up about half of the trainee’s monthly pay, but the rest can be put into savings or wired home.
Factory employees in Indonesia and Thailand earned 26% and 29%, respectively, of the Japanese wage last year. Chinese factory pay came closest to the Japanese trainee level, at 59%.
The number of Chinese technical trainees in Japan peaked in 2012 and has fallen since then, partly because of the Chinese government’s support for domestic jobs. Trainees from Vietnam, Indonesia and other Southeast Asian countries have emerged as the main participants in the training programme. But wages there, too, have been climbing fast, fueled in part by inflation.
Wages in Japan have remained stagnant for years. Japan’s wage gap with the other Asian countries in the study is steadily narrowing.
Chinese factory wages are on track to top the pay for technical trainees in Japan in 2026. In China, people 60 and older are expected to make up over 20% of the population by 2025, and over 30% by 2035. The severe shortage of labour on the horizon suggests fewer Chinese workers will come to Japan.
If the advantage of moving to Japan is assumed to diminish when local pay reaches 67% of Japanese wages, then none of the four Southeast Asian countries in the survey would be expected to cross the threshold before 2035.
But in a grimmer scenario, where Japan loses its shine if local pay reaches 50% of Japanese wages, then Indonesia, Thailand and Vietnam will hit the threshold in 2030, 2031 and 2032, respectively.
Vietnamese made up 58% of the 276,000 technical trainees in Japan last year. Many work in service sector jobs that require strong language skills, such as care workers and convenience store and restaurant staff. But advocates for Vietnamese workers in Japan say conditions for them need to improve. There have been reports of these Vietnamese trainees being abused and going unpaid.
On average, 54.7% of foreign interns borrow money back home to pay for the trip to Japan, the Immigration Bureau of Japan reports. The percentage is even higher among certain groups, like 83.5% for Cambodians and 80% for Vietnamese. Once wages back home reach 50% of Japanese pay, they would have little incentive to endure the costs of travelling to and living in Japan.
A weak Japanese currency, which sold off as far as ¥150 to the dollar recently, only diminishes the appeal of working in Japan.
“Many have seen their pay fall 15% to 20%” in terms of the Vietnamese dong, said a representative at a job placement agency in Hanoi. “We don’t see much interest in openings for technical trainees or skilled workers in Japan.”
Southeast Asians have many job options beyond Japan, with governments worldwide from South Korea and Taiwan to the Middle East eager for more labour.
South Korea’s Employment Permit System, launched in 2004, lets workers switch jobs within the same industry up to three times with a legitimate reason, and ensures equal pay with their South Korean counterparts for equal work.
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