Japan and Labor Productivity: Updated April 26, 2026.

Japan aims to up labor productivity by 15% in 5 yrs to push growth

Ideas

The idea of encouraging reskilling and pushing digitalization is nothing new in Japan as its been a talked about strategy for a long time but due to costs or due to an ingrained work culture in Japan, that is resistant to change, it still hasn't taken off.

Its common to think Japan continues to fall behind other advanced economies but some  sectors in Japan are just as competitive and productive as some in the global economy but the problem seems to be many of the tradition old-school companies are still resistant to move forward.

Again, other Prime Ministers have outlined the same labor reforms needed to boost the economy but still not much has really taken off as it seems sometimes they are just slogans or strategies that really go now where.

But lets give the new Prime Minister some room to maneuver here to see if she can get things going on labor reforms and reforms in the Japanese economy.

Its a known fact that Japan has the lowest labor producing among the most advanced economies in the world, as the long supposed work hours, too many meetings, too many paper documents needed for un-needed things along with a top-down culture that stymies creativity and innovation in Japanese companies.

It's not the fault of non-regular employees causing the low productivity problem in Japan as they just want and need a job and would prefer to be full-time workers with decent pay and decent benefits. 

Its the companies fault trying to keep their profit margins at a level that pleases their shareholders, as these days, that's all that most companies care about and they really don't care about the workers in their companies, as they have, unfortunately, become to westernized in taking care of their shareholders instead of their employee

Not to criticize or be negative but this sounds like a political campaign speech and when all is said and done, not much is really going to happen and it will just be business as usual in Japanese companies and the market place.

Yes, but to be somewhat positive there will be some changes as some progressive companies will take upon themselves to make the needed changes to increase productivity and some might even work on improving the work culture that allows a better work/life balance for their employees, especially for working women with children.

Yes, the weak yen has something to do with the increase in prices but that's not the entire story as many companies, not all companies, are either resisting change or don't feel its needed to change to be globally competitive as they are only focused on the Japanese market and not the global market.

And then there is challenge of costs needed to upgrade, re-skill employees, and move more into digitization which costs money and takes a lot of time for some companies means taking away from their core mission or business.

The Japanese government and businesses have known for a long time there is/was going to be a labor and one of the main reasons of course is the low birth rate in Japan, due to the fact that either women don't want to go through what their mothers went through or the cost of raising children in Japan is just to costly.

And another reason is the situation where if a women works for a company gets married they automatically are expected to leave the company as Japan, in the past, has not been so kind to working women and children and the need to balance child  rearing and company life.

And then there is archaic and outdated idea that once you reach a certain age you are not able to be as productive as when you were younger and or companies have not been able to adjust the pay scale, which mean giving older workers a little less in salary and keeping them on due to all their knowledge and skills but Japan, as seen in the past, is still slow to change.

Japan is wasting their human resources related to women working for companies and older workers being thrown out due the fact that companies are not able to adjust even though there is a significant labor shortage and if both of these groups were used correctly the labor shortage might to go away but will be lessened significantly.

And then there is the age old problem of immigration as Japan for whatever reason, seems to think they are a homogeneous society and bringing in too many non-Japanese for work will pollute the culture when in fact Japan is mix of Chinese, Korean, and other ethnic groups and there is no pure ethnic group anymore.

Yes, the Japanese government is trying many ways to lesson the burden on working women but the problem companies have to cooperate and in many cases they are not cooperating and maintain their traditional way of doing things in Japanese companies.

And dual income families need help as the women seems to have much of he burden, still on raising the children, and while some companies are emphatic many companies still are not and expect women to be focused on their job and not about caring for their children.

As a result some or many women don't take jobs leading to management positions that might require too much time away from the family and taking care of their children. Its a problem in Japan that has yet to be resolved to the point that working women see companies on their side and want to move into management positions if the can.

Have a nice day!

Article source:  https://mainichi.jp/english/articles/20260422/p2g/00m/0na/035000c

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!

Japan's Labor Productivity: Updated Jan. 1, 2025.

 

Japan's labor productivity ranks 29th among 38 OECD members in 2023

Article Source:  https://mainichi.jp/english/articles/20241228/p2g/00m/0bu/016000c

Ideas:

One reason for the low productivity in Japan might be the long hours that workers at large Japanese companies work. If they maybe worked less hours their productivity might improve.

Output maybe doesn't need to improve as working less hours will lead to a higher output ratio. Most of the G7 countries work less hours but Japan works longer hours which could result in a skewed productivity response.

At the same time, if Japan had a better work-life balance that too might improve productivity of Japanese companies, as maybe Japanese workers wouldn't be so stressed out everyday from working long hours.

Many of the European countries, and especially the northern European counties have better working conditions, better working hours and better work-life situations compared to Japan, and they have higher productivity levels too.

Unfortunately not all large Japanese companies are moving into the 21st century as some companies seem to be stuck in their traditional Japanese ways and not modernizing that much. For example it wasn't until a few years ago that many Japanese companies were still using fax machines and not using email that much.

For example some or many Japanese universities for professor jobs still require candidates to mail their resume and other documents instead of sending them by email.

While customer service at Japanese service companies is some of the best in the world, Japan is still stuck with a lot of red tape and procedural nonsense, which slows down customer service and unfortunately there is a lot paperwork involved in many Japanese situations. 

For example when in Japan and buying some duty free items there is a lot of paperwork to fill out which makes the entire process less than desirable for tourists.

And its even worse for Japanese citizens as Japan seems to like paperwork for many menial situations.

Japanese companies are a little behind related to technology innovation, as again, they just recently just got rid of using their fax machines at many Japanese offices.

Reskilling sounds good and many Japanese companies are considering it but its expensive too, which might cause some companies to think twice about reskilling. 

While there is a labor shortage in Japan, and probably some companies are considering AI in the workplace not all companies can afford to do it, as it too might be expensive.

Japan is a society of person to person relationships including service workers at department stores or other places where human contact is needed and important. It will be hard to change Japanese societies minds about using AI technology in service dependent businesses. 

Have a nice day!