Japan's lagging productivity.
A more vigorous Japanese economy requires a higher-quality workforce, more effective investment and, especially, higher rates of productivity growth. Productivity is critical because Japan already has one of the best-educated workforces among the advanced economies and its capital stock is already high. However, productivity growth has stagnated.
- Rising scale of part-time employment hinders the growth of a workforce with the skills to enable higher productivity.
- Japan’s service sector, a growing share of the economy, is not investing in the information technology required to increase productivity.
- Until Japan's productivity problem is addressed, the country's economy is likely to remain mired in slow growth.