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Wednesday, April 26, 2017

A Better Mousetrap? Luring the Highly-Skilled Foreign Professional to France and Japan

The results of the first round of the 2017 French presidential elections are in and the top two, Macron and Le Pen, will face off in the second round on May 7.  Le Pen is widely known for her anti-immigration stance:  "Elle n’est pas une chance pour la France, c’est un drame pour la France." (It is not a opportunity for France, it's a tragedy.)  Macron has a more nuanced and (dare I say it?) a more intelligent  position.  He wants to attract immigrants of a certain type by making it easier for professionals, academic, entrepreneurs, artists and other talent to live and work in France.  A couple of months age he sent a message to Americans inviting those with skills who are unhappy with US policies to consider making France their new home.

Let's put that call for talent in context because it has become a very common approach to immigration. Migration is notoriously difficult to stop and, frankly, business, the scientific and academic communities and governments don't want to stop it; they want to shape and control it in line with their own interests.  Who they want depends on what they think they need.  Alberta, Canada, for example, recruits foreign workers for the oil and construction industries,  Japan recruits nurses and English teachers.  New Zealand is recruiting tech workers.

So Macron's call is for France to compete for a share of  the best talent in this international labor pool.  His strategy is to make it easier for them to get visas.  Is that enough?  Not necessarily.

In 2012 Japan introduced a point-based immigration program for foreign professionals:  academics, technical workers and managers.  Those who qualify have the red carpet literally rolled out for them: a 5 year visa or indefinite leave to stay; spouses also get work visas; parents can come along in some cases; and permission to work in just about any area, field or industry.

Looking at how they allocate the points gives you a good idea of who and what they want.  Academic degrees count for a lot:  a Bachelor's degree is worth 10 points, a Master's degree is 20 and a PhD is 30.  However, experience counts for as much or more:  7 years of business experience is worth as much as a Master's. In the Academic and Technical categories being young (up to 29) gets you more points than being "old" (35 to 39).  There are also bonus points for things like having a degree from a Japanese school or Japanese language proficiency.  The Japanese government wants to make the deal even sweeter by allowing the most skilled (those with more than 80 points) the right to permanent resident status after only one year in Japan.  Read the brochure for yourself.  It's a fascinating look into what Japan thinks will draw migrants to Japan, and how they calculate what profiles will be the best ones for Japan.  Then, if you are interested, go look at similar points-based programs in Canada and New Zealand.

Thus far, Japan's recruitment of the highly skilled has not been a resounding success.  The points system is just the latest attempt to attract and retain them.  This article in the Nikkei Asian Review says that Japan is far from meeting the goal of 10,000 skilled foreign workers by 2020.  So far Japan has only attracted about half that number and the departure rate is high.  The barriers, they say, are language and workplace culture.  I think that is an overly simplistic explanation.  Yes, those are factors but there are others.

Nana Oishi's 2012 article on skilled migration to Japan (full text available on-line here) is a deeper look into why loosening immigration restrictions for the highly skilled does not always suffice to attract them to a particular country.  This is how she sees skilled migration in the Japanese context and I add a similar perspective with regard to France.

Limited Demand:  Though the Nikkei Asian Review article above says that Japanese companies are open to hiring foreigners, there is a disconnect between what they say and what they do.  "The most recent survey showed that 46% of Japanese corporations have never hired highly skilled migrants and have no plans to hire them in the near future (HITO Research Institute, 2011)." (P. 1086)

Lack of Advancement Opportunities:  Oishi says that professionals are motivated more by an opportunity for professional development and gaining new skills than they are by high salaries.  She found that foreigners were kept back by unclear or difficult promotion paths. (No foreigners at the management level, for example.)  Why should a Japanese company (or any company) invest in a foreign worker if they perceive that that worker might move on?  She cites research (Tsukasaki 2008) that shows that foreign professionals do not necessarily acquire skills and experience in Japan that are valued elsewhere.

Inflexible Labor Market:  This one, I think, is also pertinent to France. A labor market that is "flexible" is one where it's not too hard to enter and once in, it is relatively easy for a migrant or citizen to find other work.  France is a country where this lack of flexibility hits migrants very hard. (See this 2014 MPI report on the integration of migrants into the French labor force.)   Oishi says that access to the primary Japan labor market (permanent, full-time jobs) usually occurs right after graduation from high school or university.  Japanese companies hire the graduates and then train them.  By age 35 or 40 it's much harder to find another good job in a good company.  Hence, the higher points for younger workers.  In France, same problem but I'd say the age discrimination starts around 50.

Education:  For skilled migrants with family, the education of their children is a top priority.  These are "international" people who want an international education for their offspring.  That means a multi-lingual education and a school system that teaches skills that are good anywhere.  Some countries (like France) have special programs in the public school system that are subsidized by the state.  Japan is working toward state-supported dual-language IB (International Baccalaureate) programs in Japanese schools.   And that is a good sign.  These things are very important to skilled migrants because the cost of self-financing education for their children is factored into the migration decision and impacts the retainment of foreign workers.  Oishi says:
  • "However, a Japanese education runs the risk of “trapping” children into a monocultural and monolingual environment that might make it difficult to excel in the global environment. To avoid such a “Japanese trap” in education, many highly skilled migrants plan to either leave Japan eventually or send their children back home where the quality of education is better." (p. 1091)
What would also help the migrants, of course is home country subsidies for this kind of education in the host country.  And that seems to be something that the French presidential candidates support.  However, this effort is at cross-purposes with the host country's effort to retain and integrate migrant children.

Pension and Tax Systems:  At the time Oishi's article was written foreigners had to work in Japan for 25 years before they could draw a Japanese pension.  She writes:
  • "Pension contributions are automatically deducted from an employee’s salary every month, and if he or she withdraws from the Employees Pension Insurance system after 10 years of contribution, he or she receives only the equivalent of 2 months of salary as a lump sum refund, a small fraction of the actual contributions." (p. 1092)
I don't know if this has changed or not and I appeal to those who know more about this to set the record straight.  I will point out that Japan does have (like France) pension agreements with other countries - 16 of them.  That is something but not nearly enough.

Japan's worldwide tax system is another problem which I wrote about here.  If you are a Japanese resident you must report and pay taxes on earned and un-earned income from anywhere in the world. There is also an inheritance tax which means that a French resident of Japan will owe Japanese taxes on what he or she inherits in France.  France has a similar worldwide taxation system.  Both do have tax treaties with other countries but what they offer and how they apply are a complication that migrants with other options do not necessarily want to deal with.  Is Macron aware that a US academic working in France will be filing tax and asset declarations in two countries with a possibility of double taxation?  Nothing attractive about that.

Gender/Racial Equality:  A lot of the professional migrants that Japan and France want to attract are women and visible minorities.  Neither country is known for work environments that are attractive to either. In Oishi's study, she notes:
  • "The lack of gender equality and work–life balance has discouraged highly skilled migrant women from working for Japanese corporations. It was extremely difficult to identify professional migrant women in Japan; the author was informed that not many professional migrant women would be interested in working for Japanese corporations, which are notorious for gender inequality."
France has made a lot of progress in this area and certainly is known for a good work/life balance but there are still issues.  A 2015 EU study concluded that in France, "Having children and/or being pregnant are still perceived by employers as an impediment to employment and to promotion." Certain kinds of racial and national origin discrimination have also been well documented in both countries.

If that perception is wrong or foreigners underestimate the progress that has been made than both countries have work to do.  Assuming that Oishi is correct and that salaries are much less important to the skilled than opportunity, the skilled migrants will need assurances that they will be allowed to pursue that opportunity without discrimination or unfair treatment.

Oishi has a lot more to say and I recommend that you read her article.  The point here, however, is that there a wide variety of factors that migrants (and especially skilled migrants) take into consideration before moving to another country to live and work.  The skilled (however that is locally defined) have some advantage here because they are sought after in this international labor competition.  They have more options and it's as much about them choosing a place as it is about a place choosing them.  Simply tweaking the immigration system and expecting the skilled to come to your country is wildly over-optimistic and a good example of the Better Mousetrap Fallacy.

They will not necessarily come with the skills in the numbers you would like if your country does not make an offer that may include easier access to visas, but also has positive answers to questions about education for children, families, pensions, taxes, flexible/inflexible labor markets, benefits, and integration.  If Abe and Macron are serious about skilled immigration than they have a lot of work ahead of them.


Mike Staubes said...

Great article and very thought provoking. Reference to Macron, why would any intelligent American with skills needed in France move to such an unimpressive, bigoted place? Macron reasoned in this article that if you are afraid of President Trump, relocate to your safe and loving motherland called France. They (skilled person) must be totally naive and you correctly listed many factors to consider but streamlining visas, language difficulties, taxes, etc., ain't gonna help France (or Japan or the US, etc.).

I totally agree with your thought "France is a country where this lack of flexibility hits migrants very hard." You must change TWO cultural environments (your culture and new country's culture). Ain't gonna happen America, France, Japan...

A second point is that I don't believe there is as much "globalization" in this world as imagined; not when it relates to luring skilled people.

I define "globilization" as an environment where there is a familiarity among processes, cultures, work/life issues to name several things. For example, naive, skilled American, check into your local prefecture or other organizations in France or Japan to change your drivers license, open a bank account, register at tax office, etc., etc., and you will smash into the brick wall of local culture, obstinence, racism, and the ubiquitousness of "we don't care how you did it the USA, France, Japan...".

Ciao Victoria. Many books to be written.

Inaka Nezumi said...

In Oishi's paper, she seems to put particular emphasis on labor market flexibility. I think this is something that cuts two ways. Yes, lifetime employment means that one really has only up to a certain age to secure a permanent position, and it becomes harder to move around after that age. On the other hand, abolishing permanent positions makes taking the risk of moving to a new country less appealing to someone who has other options. Especially for people who might feel potentially vulnerable to discrimination there due to nationality, gender, or what-have-you. It may also make staying less appealing to natives, for that matter, leading to brain drain. I would focus on making it possible to hire people who lost their previous jobs mid-career (due to previous employer going under, say), without creating instability for those who have jobs, by removing permanence. Unless, that is, one is seeking primarily seagulls (people who fly in, leave, uh, phosphate deposits all over the place for others to clean up, and then fly away).

So the main challenge I see is to help people integrate. Oishi discusses language issues, and I do think a lot more effort could be made to help foreign hires get up to speed at the high level of Japanese needed to write reports and interact professionally with suppliers and with the public – plus just to have well-rounded, satisfying lives.

Regarding state pensions, I had not realized that Japan has so few totalization agreements. That is certainly something that could be improved. I would note that the minimum qualification period will be going down from 25 years to 10 years this Fall, which is a good thing, especially for those who would be coming from countries without totalization agreements. Though I think the impetus for the rule change had more to do with reducing the uncovered domestic population than with trying to encourage immigration.

As for the worldwide taxation of long-term residents, I think that is pretty standard for most developed countries, is it not?

Victoria FERAUGE said...

Mike, The French job market is a tough nut to crack and that's true for young French as well as migrants. Unemployment is high. My French spouse looked into what it would take to start a business in France and he was swearing because it looked mission impossible. So if France wants to attract entrepreneurs, than they need a system that lets people do what they do best; create companies. Japan seems to do better in that respect. Lot of small businesses in Osaka.

Nezumi-san, Good question. I think it's common but not universal. Hendersen lists his top ten that have only territorial taxation. Note that two of them are Singapore and Hong Kong.

Inaka Nezumi said...

Reviewing my comment, I would retract my sentence about seagulls.

Andrew said...

Good piece. I would not under-estimate the importance of acceptance and inclusion. Seems to be pick up in interest in Canada as destination post-Trump, but will need to see if interest leads to action.

Victoria FERAUGE said...

Nezumi-san, I thought your comment about seagulls was spot on especially in the context of Japan. The Japanese immigration system has been oriented toward the TFW - temporary foreign worker. Hell, they even changed the JET program rules to discourage people from using it to come to Japan and stay. This has created a foreigner = short-timer mentality in the minds of the Japanese. To use your analogy the foreigner comes and "fertilizes" the terrain by doing something that the Japanese want foreigners to do and then they replace them with another batch of younger, cheaper, temporary foreigners. This revolving door means that the Japanese can keep the majority of permanent full-time jobs (and 62% of Japanese according to Sugimoto still have those permanent full-time jobs) while the foreigners primarily work in the secondary sector with more precarious employment, fewer benefits and so on. Except that this system is not attractive to the highly skilled migrant which Japan ostensibly wishes to attract. So they are making changes. That's my take on it anyway.

Andrew, Thank you. Yes, acceptance is extremely important and I didn't emphasize that enough. Concerning immigration to Canada, I'm wondering if more agreements to mutually recognize credentials might help. Quebec has some good ones with France. My sense is that there are fewer between the US and Canada. Is that correct?

Inaka Nezumi said...

Hi Victoria,

I simply thought my analogy a bit too mean-sounding. But I think your take on it is right. It is encouraging to see that the government recognizes that making permanent residence easier is an important first step to attracting highly-skilled immigrants.