What I Learned This Week

Can Japan boost stagnant productivity growth in its service sector? And, what are the implications?

From 2012 to late-2018, Japan’s working working-age population (15 to 64 years of age) shrunk by 4.7 million. However, its total workforce increased by 4.4 million during the same period, after accounting for three major sources of labor-force growth: the elderly, women and foreigners. Nevertheless, the share of the working-age population that is employed is now at its highest level since the 1960s, with the ratio of job offers-per-applicant near its all-time high of 1.6, registered in 1963. And, according to the latest projections by Japan’s health ministry, Japan’s workforce will fall from 65.3 million in 2017 to 52.5 million in 2040, a decline of 22%. Demographic headwinds will be a pers…

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