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Shaking Up Japan’s Workforce to Reinvigorate

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Yoko Ishikura is a Professor Emeritus at Hitotsubashi University.

 Japanese office workers. Photo credit: iStock 02-27-13 © kobbydagan

As Japan searches for ways to cope with a shrinking and aging workforce — along with the need for a more innovative workforce to help pull it out of decades of stagnation — it is becoming increasingly clear that business as usual is no longer an option for several reasons.

  • Japan has the world's highest share of "elderly" people (those 65+) — about 23 percent of the total population — a figure that is expected to rise to 31 percent by 2030.
  • The working age population (15-64) is shrinking fast (expected to drop to 58 percent in 2030 from 63 percent now), with fertility low and longevity quite high.
  • Women are as well educated as men yet they earn, on average, 27 percent less than their male counterparts (still well above the OECD average of 17 percent).
  • Although women represent 42.3 percent of all workers, which is in line with other developed countries, the ratio of women in managerial positions is low, even among other Asian countries (see figure).

Far too few women managers in Japan

Share of women managers vs. workers (%)

Share of women managers vs. workers (%) in Japan
Sources: "Labour Force Survey (Basic Tabulation)" by the Ministry of Internal Affairs and Communications (2012) and "Databook of International Labour Statistics 2012" by Japan Institute for Labour Policy and Training.

Notes:1. 2012 data are used for Japan, 2008 data for Australia and 2010 data for other countries.2. In Japan's "Labour Force Survey", 'Administrative and Managerial Workers' include company officers, company management staff, and management government officials. Definition of 'Administrative and Managerial workers' varies across countries.3. Japan's "Labour Force Survey" uses the population assumed on the basis of the fixed population according to 2010 census as the base of calculation.

Share of women board members (%)

Share of women board members (%) in Japan

Source: Corporate Women Directors International website (

Japan's best hope lies in simultaneously tackling three challenges: (i) harnessing the talents of older workers; (ii) boosting the participation of women; and (iii) rethinking how its education system and companies approach work and learning. Yet although these ideas are much debated and weighed, little progress occurs. Few companies have adopted plans to reskill older workers, and hardly any educational institutions have begun new initiatives for women or the elderly — keep in mind that what's needed are high-productivity workers trained to keep up with fast-paced change. In effect, while the notion of lifetime jobs still prevails, that of lifetime learning does not.

What is needed to propel real change? From my vantage point as a longtime professor and specialist in competitiveness, innovation, and global business strategy and talent (see bio) — I'd argue that Japan needs a mindset change, spurred on by those not only willing to question the status quo and the "unwritten" rules but also to unlearn old ways and push for new creative ways.

Rethinking the Company—Skills—Education Nexus

The good news is that some of the major stakeholders have at least started to tinker with the status quo, so it's worth taking stock of some of these initiatives, which is what we recently did (supported by Mercer Japan). The results are explored in "Reinvigorating Japan's Economy with More Women and Older Workers," part of a new World Economic Forum book, Education and Skills 2.0: New Targets and Innovative Approaches. Let me mention a few here:

(1) The government should promote clear goal setting for the relevant stakeholders. For gender issues, the Abe administration has set a goal of attaining 30 percent of the leadership positions by women by 2020 as one of the key pillars underlying Japan's growth strategy. For older workers, the mandatory retirement age was recently raised from 60 to 65 — meaning that companies are obliged to keep employees if they want to continue working after they turn 60. And a 2008 government survey shows that more than 90 percent of older workers think that they want to work until more than 65 years old. For lifelong learning, the government's goal is to double the number of those enrolled at universities and specialized schools in five years.

(2) Companies could articulate the growth vision and stretch goal to attract and retain the "right group of people." At Daikin Industries — ranked 100 in Forbes' World's Most Innovative Companies 2013 — a new approach to better develop and retain talent on a global basis, regardless of age or experience, is based on: (i) a shift from a seniority-based system to a merit-based one; (ii) opportunities for individuals willing to take on challenges; (iii) a compensation system to reward employees for both achieving results and challenging themselves; and (iv) a "no blame" policy for failure. Similarly, IBM Japan encourages its workforce to acquire the new capabilities needed to implement its business strategy. Granted, tensions might arise at times between keeping on older established men and making room for promoting younger women, but rethinking the rules around hiring and promotions would benefit both groups.

(3) Companies could seek ways to facilitate diverse career paths and work styles. One way, which would attract both women and older workers, is through job rotations across different fields and flexibility in work style. Another way is to establish an open entry system instead of a single career path and corporate-led assignment system within a narrow field. Orix has done just that by creating an open entry system and free agent system — trying to make explicit both talent and business requirements.

(4) Educational institutions could offer opportunities to bridge education/skills development and employment — for all groups of people, not just youth. One way to do this is by providing company employees, such as middle-level managers, with the wherewithal to train others. For example, the University of Tokyo has initiated a veteran instructor training school to provide experienced manufacturing employees with the tools to teach others.

Changing Mindsets

The efforts under way to tinker with the framework are a start but what is needed to really make a difference are "rule breakers" — in management-speak, those who question the common beliefs and "unwritten rules" of the game to truly change the game and create new business concepts. For example, we need to challenge traditional rules such as a fixed system of promotion, an evaluation system emphasizing "face time" rather than output per time spent, and a belief that seniors aren't able to reskill themselves. We also need to challenge the sequential model of education, skill development, and employment.

These rule breakers — true trailblazers — can be women who opt for the entrepreneurial route. They include Tomoko Namba, founder of DeNA (a major social-networking videogame platform); Fujiyo Ishiguro, President and Chief Executive Officer of Netyear Group (a marketing company focused on Internet services); Yuriko Kato, President and founder of M2 Labo (an agricultural think tank); and Haruno Yoshida, President of BT Japan (a multinational focused on telecommunication services). But these rule breakers can also be older workers who can start a new life by combining their rich experiences with new skills in IT and not become "baggage" requiring extra charges. Together, these rule breakers can make the life of all workers, including the mainstream men, a more balanced and richer one.

This post was first published on the Jobs Knowledge Platform.


Yoko Ishikura

Hitotsubashi University

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