The digital revolution is starting to bring significant impact on Japan’s labour force. To achieve higher labour productivity, both Japanese employers and employees need to work together to improve workers’ skills. With further economic growth urges workers to become more digitally literally, Japanese government calls on businesses to ramp up their investments in their employees’ growth.
Japan’s Cabinet Office is working on finalising the upcoming Annual Report on the Japanese Economy and Public Finance 2018 which is set to release this month, Nikkei Asia Review reports.
According to an estimate in the report draft, Japanese businesses spend an average of around 280,000 yen ($2,536) a year on each employee for in-house and outside training and seminars. The budget can be higher for listed companies, as the amount goes up to 360,000 yen. Then yen figures include direct spending on training and seminars, as well as wages equivalent to the hours employees spend at these sessions.
The draft also states that a 1 percent increase in talent development spending could raise labour productivity by 0.6 percent and thus talent’s improved skills could add to company’s value. Supporting employee’s self-development efforts will lift company’s productivity by another 0.68 percent.
The key factor that motivates the government’s calls for skills training is the rapid advancement of digital technologies along with skyrocketing demand for engineers who can provide them. These skills are highly sought-after because they are unlikely to be automated.
Experts say the job roles without adequate digital literacy are at risk of being affected by automation, such as artificial intelligence or robots. The Organization for Economic Cooperation and Development says the proportion of routine types of jobs, such as clerical work, basic paralegal work and reporting, in Japan is higher than in other economies.
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The Cabinet Office report warns that if jobs are lost to automation, Japan’s labor share of income would suffer. In other words, wages and other worker earnings would make up less of the national income.
Japan is currently facing talent shortage in information technology specialists, who account only for 1.8 percent the nation’s labour force. This compares to 5.2 percent in the U.K. and 3 percent in the U.S. In Japan, about 70 percent of these specialists are employed by tech companies. While overseas, the rate is in the range of only 30 to 50 percent.
The draft stresses the importance of the workforce being capable of supplementing new technologies instead of being replaced by technology. As businesses cannot ensure this on their own, employees have to be willing to make the most of opportunities and improve their skills as well.
Self-development will not only benefit the company, but the employee as well. The report suggests that employee who makes these efforts could earn an additional 99,000 yen in two years’ time, compared to an employee who makes no such efforts. The figure is predicted to reach 157,000 yen after three years. Additionally, self-development efforts also increase jobseeker’s chance of getting employed by 10 percent.
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