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News Release

The Need for Highly Skilled Foreign Workers
- Increasing the Momentum of Japan's Growth Strateg -

November 21, 2006


The international competition to attract highly skilled human resources, and, especially, in recent years, to attract foreign students, has intensified. Between 1995 and 2004, the number of foreign nationals entering the 18 largest OECD economies increased by 660,000, from 2.67 million to 3.3 million. Over the same period, the number of students studying overseas worldwide rose by 1.35 million, from 1.3 million to 2.65 million. The base may differ, but the OECD countries receive nearly 90% of all students studying overseas.

The reasons for the major OECD countries having stepped up measures to attract foreign students can be summarized as follows:

— As compared with the difficulty of procuring researchers, technicians and other workers in the most highly skilled areas from overseas, it is relatively easy to attract foreign students who are highly skilled workers in the making.
— It has become necessary for developed countries to innovate in order to sustain economic growth, and to recruit large numbers of able workers. However, falling birthrates have made it difficult to obtain sufficient numbers of workers from their own populations.
— Although the economic growth achieved by developing countries in recent years has increased the need for higher education, it is difficult to establish adequate higher education systems in a short time frame, and the demand for overseas study is growing.

Japan, too, has actively sought to increase the number of foreign students it receives, starting with the "Plan to Accept 100,000 Foreign Students" of 1983, but has experienced a number of problems, the most important of which can be summarized as follows.

— Japan attracts far fewer foreign students than other developed countries. The proportion of foreign nationals among all students in higher education is 16.2% in the United Kingdom, 11.2% in Germany and 11.0% in France, but only 2.9% in Japan.
— The range of subjects in which foreign students major is biased towards social sciences. In particular, a large proportion major in the humanities, while very few major in the natural sciences.
— There has been a fall in the quality of foreign students received. The ratio of candidates gaining a degree to the number of foreign students entering postgraduate courses has fallen over the past decade, from 97% to the mid 70-80% range for master's students, and from just under 80% to around 50% for doctorate students.

Japan must innovate if it is to make a success of its growth strategy and maintain strong growth potential in the 21st century. To do so, it must have large numbers of able workers. If Japan is to attract and make use of highly skilled foreign workers, it must tackle a number of issues, the three most important of which can be summarized as follows. (i) France, the United Kingdom and Germany, which have all greatly increased the numbers of foreign students they receive, have all implemented active measures to attract foreign students and have specialist organizations which pursue direct and vigorous canvassing programs aimed at would-be foreign students and educators in the countries from which they come. Japan needs to be more vigorous in its efforts to attract foreign students. (ii) Increasing the international competitiveness of higher education establishments by creating and expanding internationally accepted degrees helps to attract greater numbers of foreign students. Against this backdrop, other countries make rigorous checks on the completion of courses. Japan's checks are relatively lax. The international competitiveness of Japan's higher education establishments must be increased as a matter of urgency. (iii) The reason that the United States is able to attract large numbers of highly skilled foreign workers is that it selects promising projects by means of competitive research funding, and offers opportunities regardless of background, age or past achievement. In Japan, however, funding still provides only just over 10% of the overall research budget. Japan needs to further expand the volume of competitive research funding it offers.

For more information on the content of this report, please contact: Hidehiko Fujii , the Japan Research Institute, Limited.

Tel: 03-3288-4615

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