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Japan Labor Productivity Ranks 30th among OECD Nations; Observers Blame Failure to Invest in Human Resources

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The landscape of Tokyo

Japan’s labor productivity in 2022 ranked 30th among 38 member nations of the Organization for Economic Cooperation and Development, according to the Japan Productivity Center.

Labor productivity measures the output of goods and services a worker produces in a certain amount of time. Higher labor productivity will lead to economic growth and prosperity.

Japanese workers produced $52.3 dollars per hour in 2022, giving Japan its lowest ranking since comparable data became first available in 1970. Japan’s labor productivity improved 0.8% in 2022 from the previous year, but its ranking went down by two spots.

Japan ranked around 20th for many years, but its status has now dropped for four consecutive years. It also ranked the lowest among Group of Seven countries.

Ireland topped the ranking at $154.1, followed by Norway at $149.9. Japan’s figure is about one-third of these countries.

Among G7 countries, the United States ranked ninth at $89.8, while Germany ranked 11th at $87.2. These numbers are far above Japan’s figure, which was even below the OECD average of $65.2.

In the 1980s, Ireland’s labor productivity was about the same as that of Japan. But the European country’s economy grew rapidly as a result of its drawing in IT firms, such as Google, with lower corporate tax rates.

Observers pointed out that Japan’s labor productivity remains low mainly due to Japanese companies’ failure to invest in human resources through such means as wage hikes.

“It’ll also be necessary to promote investment in intangible assets, including the digital field, in order to boost added values,” said Prof. Miho Takizawa of Gakushuin University, who supervised the Japan Productivity Center’s research.

The Yomiuri Shimbun