TOKYO - Mr Tomoki Yoshihara starts his shift at a meat-processing plant in rural Australia at 5am, and earns three times more butchering lambs for almost 50 hours a week than he did as a member of Japan’s military. 

He is among a record number of young Japanese granted working holiday visas in Australia last financial year, lured by higher wages that are made even more attractive by the weakening yen.

“From a salary perspective, it’s so much better here,” said the 25-year-old, who earns around A$5,000 (S$4,000) a month after tax and lives in Goulburn, south of Sydney.

“If you want to save money, Australia is the place to be.”

With similar visa programmes in Britain, Canada and New Zealand recovering post-pandemic, the outflow of talent risks exacerbating Japan’s acute labour shortage.

It is also a sign that many younger Japanese are not buying into the nation’s economic optimism as it exits from decades of deflation.

Meiji Yasuda Research Institute’s economist Yuya Kikkawa said: “Youth are questioning Japan’s economic outlook. Living conditions are far tougher than the headline inflation figure suggests.”

The Bank of Japan finally scrapped the world’s last negative interest rate in March amid signs a virtuous circle of wage gains is feeding demand-led inflation.

But even after Japanese labour unions won their biggest wage hike in more than 30 years in March, there remains a notable gap in real wages with other advanced economies.

In 2022, average annual wages in Japan were US$41,509 (S$56,500), compared with US$59,408 in  Australia and US$77,463 in the US, according to the latest data from the Organisation for Economic Cooperation and Development.

A long-running trade-off that put job security ahead of higher pay made more sense when prices were barely moving.

Now with inflation at its strongest in decades, the Japanese are starting to realise that years of static wages leave many of them budgeting each month before their next pay cheque.

“Japan’s wages hadn’t risen at all for 20 years while other countries were increasing theirs,” said Mr Atsushi Takeda, chief economist at Itochu Research Institute.

“With the yen getting weaker, the gap has become even bigger.”

Some 14,398 Japanese were granted working holiday visas in Australia between financial years 2022 and 2023, the highest number in Australian government data going back to 2001.

It allows those aged 18 to 30, or 35 for some countries, to have a 12-month holiday and work in roles ranging from farming to hospitality, nursing, construction or office work to fund their trip.

There is also an option to extend for as long as three years.

On top of the attractive wages, Australia has been a popular destination for the Japanese due to its perceived safety, its similar time zone as Japan and recently relaxed rules that allow visa holders to work for more than six months for employers in certain industries.

Australia “always had a generous visa system but recent changes in lengthening the employment period made it even easier for Japanese to move there”, said Mr Kotaro Sanada, a spokesman for the Japan Association for Working Holiday Makers. 

Aside from Australia, Canada issued 7,996 such visas in 2023 until October, while Britain issued 898 in 2023, according to host-country data.

New Zealand approved 2,404 visas between financial years 2022 and 2023.

Mr Sanada anticipates the numbers will rise further as rules are relaxed. He expects Britain to become the next popular destination after the annual visa quota for the Japanese was raised to 6,000 from 1,500.

“More people are flying abroad with hopes of getting jobs,” said Ms Harumi Taguchi, principal economist at S&P Global Market Intelligence. “If this trend continues, hiring younger workers in Japan could get even more difficult.”

Ms Lili Takahashi, who flew to Australia in April shortly after graduating from college, said she aims to spend two years on a working holiday and may apply for permanent residency and marry her girlfriend there.

Australia, unlike Japan, allows same-sex marriages.

In the meantime, the higher wages in Australia – magnified by the yen at its weakest against the Australian dollar in almost a decade – will allow for a better work-life balance.

“Japanese wages may be enough to survive,” said Ms Takahashi, 22.

“But it’s sad to think I wouldn’t have much money left for hobbies and hanging out with friends” if she stayed in Japan, she added. 

The rise in popularity of working holiday visas is part of a broader trend of the Japanese choosing to live abroad.

In 2023, the number of Japanese who were permanent residents overseas was the highest since the survey started in 1989, according to the Ministry of Foreign Affairs of Japan. 

That could worsen chronic labour shortages in Japan’s ageing and greying society, where companies compete for increasingly scarce human resources. 

More than two-thirds of small and medium-sized businesses say they face labour shortfalls, one survey found, and the number of bankruptcies attributed to manpower constraints reached a record high in 2023, according to a report by Teikoku Databank.

In 2023, the government allowed a record number of foreign workers into the country to alleviate the demographic struggles.

Itochu’s Mr Takeda said the outflow of Japanese workers depends on the economic outlook.

“If the conditions for faster growth do take hold in Japan, maybe young people will see a reason to return,” he said. BLOOMBERG