Japan’s labor productivity in 2022 has landed the country in the 30th spot among the 38 member nations of the Organization for Economic Cooperation and Development, according to the Japan Productivity Center. The output of goods and services produced in a certain amount of time by a worker, also known as labor productivity, is a crucial factor in determining economic growth and prosperity.
Japanese workers’ production amounted to $52.3 per hour in 2022, marking Japan’s lowest ranking since comparable data became available in 1970. Even though Japan’s labor productivity saw a 0.8% improvement from the previous year, its ranking dropped by two spots. This decline in ranking marks four consecutive years of Japan’s status dropping, with the country also ranking the lowest among Group of Seven countries.
Ireland took the top spot in the ranking with $154.1, followed by Norway at $149.9. Japan’s productivity falls significantly short, totaling only about one-third of the figures achieved by these leading countries. The United States ranked ninth at $89.8, and Germany ranked 11th at $87.2, far surpassing Japan’s productivity level, which even fell below the OECD average of $65.2.
In the 1980s, Ireland’s labor productivity was on par with that of Japan. However, the European country’s economy experienced rapid growth due to the influx of IT firms attracted by lower corporate tax rates. This growth has left Japan’s labor productivity struggling to keep up.
Observers have pointed to Japanese companies’ failure to invest in human resources, such as through wage hikes, as the primary reason behind Japan’s persistently low labor productivity. Prof. Miho Takizawa of Gakushuin University, who supervised the Japan Productivity Center’s research, emphasized the necessity for promoting investment in intangible assets, particularly in the digital field, in order to enhance added values.
Although Japan’s labor productivity saw a slight increase in 2022, the country’s ranking has continued to decline over the past four years, highlighting the need for strategic investments in human resources and intangible assets. As Japan lags behind other leading nations in terms of labor productivity, taking necessary steps to address these issues will be crucial for the country’s economic future.
