#Japan #Tokyo #Economic Analysis #Japan Productivity #OECD Labor Productivity

Japan's Labor Productivity Analysis 2025

The Japan Productivity Center, a public interest incorporated foundation led by Kazutake Maeda, has published the report titled "International Comparison of Labor Productivity 2025" on December 22. This analysis is based on annual assessments utilizing data from the OECD and other sources.

This year’s report provides insights on Japan's labor productivity standing on a global scale in 2024, reviewing both hourly productivity and productivity per worker. It also compares productivity trends with pre-COVID levels, emphasizing challenges such as Japan's declining population and the rising demand for labor across sectors. In light of this, leveraging digital technologies like generative AI has become crucial for enhancing productivity. With inflation trends indicating a need for sustainable wage growth, the significance of improving productivity has only gained more urgency.

According to the OECD data, in 2024, Japan's hourly labor productivity is calculated at $60.1 (¥5,720), ranking 28th out of 38 OECD member countries. This figure represents a slight decline of 0.6% compared to 2023. Furthermore, the productivity per worker is estimated at $98,344 (¥9,350,000), placing Japan 29th in the OECD.

Understanding Japan’s Hourly Labor Productivity

Japan's hourly labor productivity for 2024 stands at $60.1 and has slipped to the 28th position among the OECD nations. Historically, Japan ranked 21st in 2018, but this figure drastically decreased to 28th by 2020. After showing signs of recovery, it has reverted back to a similar low in 2024. Adjusted for price fluctuations, the actual increase in labor productivity for 2024 is recorded at -0.6%, marking Japan 33rd in the OECD rankings.

Productivity Compared Internationally
The trend of hourly labor productivity among the major advanced economies has varied, with Japan finding itself amongst the lowest ranks. Nations like the USA and Germany consistently outperform Japan, indicating a significant gap that needs to be bridged for Japan's economy.

Productivity Per Worker

Japan's per worker labor productivity for 2024 has been calculated at $98,344, which remains unchanged from 2023, placing Japan 29th among OECD countries. This figure is similar to countries like New Zealand and Slovakia. Japan’s productivity levels are particularly concerning when looking at the major G7 economies, where Japan stands out as having the lowest productivity figures.

Manufacturing Sector Insights

When focusing on the manufacturing industry, Japan's labor productivity is estimated at $80,411 for 2024, ranking 20th among 35 major OECD member countries in this sector. This reflects a level comparable to Italy and Spain. Notably, even as nominal productivity in yen continues to rise, a declining yen has resulted in an 18% drop in dollar terms since reaching a peak of $97,971 in 2018.

Conclusion

The report seeks to provide essential data points for policymakers and strategists aiming to enhance Japan's labor productivity in the increasingly competitive global marketplace. The Japan Productivity Center will continue its role in monitoring Japan’s international standing in labor productivity, essential for effective policy formulation and action planning.

For additional insights, the full report can be accessed on the Japan Productivity Center's website.