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Faced with a shrinking workforce and tight restrictions on immigration, Japanese employers, such as small companies, farms and fisheries, are plugging labour shortages by relying on interns from across Asia, reports the South China Morning Post.
The programme is intended to help developing countries upgrade their workers' technical expertise, but critics say it is abused by some employers who see it as a source of cheap labour.
The number of employers caught committing violations, such as failing to pay wages, numbered 197 last year, down more than half from 452 in 2008, according to Japanese officials. Lawyers and labour activists say the true number is many times higher and interns fear being sent home if they speak up.
Eight current and former interns described being cheated of wages, forced to work overtime, having contracts withheld or being charged exorbitant rents for cramped, poorly insulated housing.
The internship system has been criticised by the UN and the US State Department, which in its annual "Trafficking in Persons Report" said Japan was failing to stop cases of forced labour.
"In reality, many are working like slaves," said Shoichi Ibusuki, a lawyer who has represented several interns in court cases.
Unions and other activists have called for the internship programme, established in 1993, to be abolished and replaced with a formal system for employment of foreign workers. They argue that a formal system would better meet the demand for low-skilled labourers as young Japanese flock to the cities and shun work that is dirty, dangerous or difficult.
Ippei Torii, Vice President of the ZWU All United Workers Union, commented: "We need to stop the deception. If we need to bring in foreign workers, then we should call them workers and treat them so."