How Should Labor Productivity Be Improved?

The Daily Yomiuri (Toyko, Japan), March 10, 2018 | Go to article overview

How Should Labor Productivity Be Improved?


The administration of Prime Minister Shinzo Abe has been prioritizing "work style reform" as one of its signature policies, aiming to improve the nation's labor productivity. Experts recently spoke with The Yomiuri Shimbun about such issues as what labor productivity improvement policies are required for the Japanese economy, and labor productivity's limitation as an economic index.

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Workers' skills need boost to compete globally

Tsutomu Miyagawa / Prof. at Gakushuin University

Labor productivity indicates how much value can be added per unit of labor input, and is a yardstick of economic development. The additional value can increase through technological innovation in particular. Toyota Motor Corp.'s Prius hybrid car, for example, is the fruit of research and development.

Japan once boasted of its manufacturing industry's high productivity. But with China and South Korea closing in from behind, Japan's business model of pursuing efficiency has lost its luster. Also, new, highly productive facilities have been transferred overseas since the 1990s, making them no longer able to contribute to domestic productivity.

In the service industry, the IT revolution in the latter half of the 1990s brought along such firms as Google and improved productivity. During this period, Japan lagged behind due to its excess capacity.

Introducing equipment can raise labor productivity, but doing so recklessly may lead to excess capacity. Since the bursting of the economic bubble in Japan, overcapacity has put stress on corporate management, blocking pay increases.

Currently, the discussion is primarily about rectifying long hours of work, but that is not enough if we are to improve productivity. The expertise of individuals needs to be built up. Germany is ahead of Japan in labor productivity because it has many skilled workers. We should create a system that helps foster workers who can compete globally.

---Tsutomu Miyagawa

Graduated from the University of Tokyo Faculty of Economics in 1978, and joined the Japan Development Bank (now the Development Bank of Japan). Having been a fellow at Harvard University and an assistant professor at Hitotsubashi University, he is now a professor at Gakushuin University. His fields of expertise are macroeconomics and the Japanese economy.

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Change approach to draw out innovations

Yasushi Shimizu / Management consultant

Labor productivity in Japan is said to be low by international standards, but the talent of the Japanese is far from being low.

In the Survey of Adult Skills by the Organization for Economic Cooperation and Development (OECD), conducted among men and women aged 16-65 and released in 2013, Japan displayed the highest average proficiency in literacy and numeracy.

In each company, improvement in productivity is the responsibility not of employees, but of top executives.

In the era when markets expanded against a backdrop of population growth, companies boosted sales by producing more goods and services in less time and at lower cost. …

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