Japan productivity problem holds back economic growth

Subject

Japan's lagging productivity.

Significance

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.

Impacts

• 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.