Japan Labor Productivity: Updated Jan. 2, 2026.

Japan 2024 labor productivity 28th among 38 OECD members, lowest in G7

Article source: https://mainichi.jp/english/articles/20251227/p2g/00m/0in/020000c

Ideas

Labor productivity is very hard to measure as its hard to measure service-type companies and or technology-related companies as there is no real measure as they don't produce products like manufacturing companies.

With that said, one measure that might be reliable is the hours worked per employee in companies as Japanese companies, or many of them, still have long work hours which is not very common today among many advanced nations other than some technology companies in the US.

Just because an employee stays at his desk or cubicle for 8 to 10 hours doesn't mean they are actually doing any real productive work, which seems to be very common in Japan.

Ever since the 2008 global financial crisis more and more companies have been transitioning to using more non-regular employees as a way to reduce costs and maintain their profit margins for the good of their shareholders but not necessarily for the good of their employees who should be the main stake-holders in a company.

And yes, many import and wholesale companies purchasing power has been reduced due to the weak Japanese yen, which put pressure on many companies to increase prices on energy and raw material products used in Japan.

And yes, there is a supposed worker shortage in Japan which could be affecting the productivity of many companies who can't fill needed positions and especially for some skilled positions while some companies just can't pay the needed wages to attract the workers they need for their company.

The use of AI in manufacturing companies is not so easy in Japan, as they still rely on humans to do most of the work, and especially in the smaller and mid-size companies that might only make or produce one type or product.

For the larger name-brand companies, such as Toyota or Honda, they probably are already using AI in their manufacturing process, but again, many small and mid-size companies might not have the resources, money, to move into using AI and it takes time to train new people, get new equipment. 

And there is the human factor involved as some or many companies, especially small companies, don't want to or can't replace their employees who feel they are valuable stake-holders in their company.

And to be fair, due to differences in culture among countries its unfair to measure apples and oranges or one country against another country and the Japanese workplace is not the same as the workplace in the US or even Ireland or any other country.

And at the same time it's not fair to measure price changes as how does a price of a product really have to do with productivity as a weak currency doesn't really measure a work place or manufacturing place. 

All that prices can measure or not, is the availability of needed products for a company and the purchasing power needed to get the products needed to do the work required in a company.

For many years, Japanese companies didn't really increase wages that much but the past two years they have increased wages significantly as a way to help their employees and maybe improve spending in the economy. 

But to be fair the wage increases, while needed, haven't really been that much of a boost as the Japanese economy is still being affected by higher than wanted inflation which reduces the disposable income of Japanese households which means they are not spending at the level needed to help the economy.

The Bank of Japan, while very conservative like most central banks, has begun to increase the key rate the last year or two as a way to try and reduce inflation but it hasn't really helped much yet.

Japan's overall wages are much lower than wages and salaries in other advanced economies but that is not necessarily a negative as each country has its own work and business culture and wages in the US might be higher but that doesn't make US worker better off necessarily, as there are other variables beside wages that might be more important for a worker.

Again, to be fair, its hard to measure the labor productivity of service-type companies which make up around 75 percent of all companies in Japan.

And again its not really fair to measure apples and oranges meaning measuring one country's service-type companies and another country's service-type companies and most economies today are service related economies and not manufacturing companies like in early part of the 20th century.

Have a nice day!