In Japan, where the population is aging quickly and the birthrate is low, an urgent issue is to solve the shortage of labor by allowing diverse work styles. 

However, discussions about what employment practices should look like and what skills will be in demand in the future are happening not only in Japan, but around the world in anticipation of changes in the structure of industry and employment.

A report released by the World Economic Forum in 2018 said a “robot revolution” is expected to create 133 million new jobs by 2022, while 75 million existing jobs could be displaced. 

The report from the forum ― known for its annual meeting held in Davos, Switzerland ― painted a positive picture of a future brought on by the Fourth Industrial Revolution where technologies such as the “internet of things” and AI develop. However, at the same time, it pointed out that it takes a labor force equipped with new skills to harness growth opportunities.

The report stressed the need for an education system that supports individuals in improving or relearning skills and social policies aimed at promoting lifelong learning.

Individuals in focus

Needless to say, the Japanese government already has comprehensive talent and employment policies aimed at helping develop creativity and the country’s strengths by capitalizing on information technology.

For instance, there is a policy to promote the learning of IT skills based on an employee’s knowledge and in each industry area or such skills required in a cross-sectoral manner. Another example is a measure to support education for equipping individuals with basic IT literacy in cooperation with universities and other institutions. Moreover, the government places an emphasis on policies to stimulate motivation and enthusiasm in workers that leads to helping improve productivity or create new types of value for the company.

The government also seeks to promote clarification of duties for employees and their improved treatment based on fair performance evaluation. It even accepts having a side business and freelancing as work style options, because it attaches importance to the power of individuals as the source of value creation.

Kouki Noumura, director of the Ministry of Economy, Trade and Industry’s Human Resources Policy Office, said the ministry’s policy on workforce and employment practices going forward is to encourage flexible work styles.

“In the coming era where there would be rapid progress stemmed from the Fourth Industrial Revolution and population aging, what organizations need is the ability to adapt to a changing environment,” Noumura said. “And for that, you need to create an environment where individuals can maximize their sense of value. We in the government are promoting flexible work styles so that each individual can find a work style that best suits them and can maximize their skills.”

The average life expectancy of Japanese people in 2017 hit a record high. The average for women was 87.26 years, second in the world after Hong Kong. Though it fell one place to third in the world, the average life expectancy of men was 81.09 years, surpassing 81 years for the first time.

The average life expectancy in a particular year is a benchmark representing how many more years an infant born in that year would live, assuming fatality rates would remain unchanged.

According to a Ministry of Health, Labor and Welfare estimate, the ratio of babies born in 2017 who would reach the age of 75 is 75.3 percent for men and 88.1 percent for women. Additionally, the ratio expected to reach the age of 90 is 25.8 percent for men and 50.2 percent for women; both record highs. It’s accurate to say that Japan is soon to enter an era of the 100-year life.

Although Japan is one of the countries in the world with long-lived people, some are not necessarily happy about their longevity. While old age is supposed to be pleasant, people are worried about future insecurities such as medical issues and nursing care.

Additionally, the discrepancy between healthy life expectancy, in which people can live independently, and the average life span did not shrink. There have also been concerns over health disparities caused by differences between living environments and social circumstances.

The ideal is to have equal average life spans and healthy life expectancies. If the latter moves closer to the former, it would not only contribute to the improvement of an individual’s happiness, including quality of life, it would also have a substantial effect on society itself. This is because the social participation of the elderly would help solve the social security system’s pension issue, fiscal problems of health insurance and the labor shortage.

Positive cycle for health

It is necessary to address how each individual can build a habit to maintain their health, enabling them to be part of society long term by staying healthy. Additionally, how society, driven by the private sector, can create a positive cycle of maintaining one’s health through social participation is also being examined. The focus of the nation’s policies is now moving toward these points.

Extending the country’s healthy life expectancy was proposed in the Japan Revitalization Strategy announced in 2013. Afterward, in the Future Investment Strategy 2017, it was chosen as one of the key fields to achieve economic growth by actively utilizing innovative technology. The 2018 edition of the investment strategy went on to add a new goal of having the annual increase of healthy life expectancies surpass that of life spans.

Some of the concrete measures listed in the strategy include an industry-academia-government collaboration to comprehensively work on early prevention of dementia to livelihood support. It also features a policy to reinvigorate the health care industry by prompting the creation of overall solutions from prevention and treatment to care.

Today, health care has shifted to prevention and care at pre-symptomatic states, in addition to treatment. Additionally, health care is expected to transform from uniform treatment to personalized care. Ideas and momentum from the private sector could be further utilized for measures to prompt individual self-help.

Public-private sector efforts

In response to these trends, or pre-emptively addressing them, efforts from the public and private sectors are growing.

In Japan, companies have been conventionally required to monitor employee health. However, the idea of health management has gradually helped introduce the notion that it contributes to the improvement of revenue and productivity, if employee health is reviewed from the management point of view and strategically addressed.

A string of insurance products have been developed featuring concepts of contributing to promoting health and improving life practices. Municipalities are increasingly implementing health promotion projects for residents by effectively spending their budget, along with the utilization of private money. Additionally, breakthrough innovations are increasingly taking shape, which could lead to streamlining medical and nursing care systems and better health.

Seeking to create a health care industry that would address a wide variety of public health needs, the Ministry of Economy, Trade and Industry has held the Japan Healthcare Business Contest, which encourages the sustainable growth of health care businesses. Through this contest, the ministry is supporting the growth of startups in this field.

A new tide is surging toward the health care area and Japan must find ways to expand that tide.

It is an urgent task to secure human resources both in quality and quantity for Japan to be capable of addressing the fourth industrial revolution, which includes integration of artificial intelligence, and demographic changes due to dwindling birthrates and an aging population.

The key solution is to increase productivity, but it’s difficult to accomplish this task only through cutting labor hours and labor-saving investment. Advancing productivity becomes possible when accompanied by motivations of individual workers, such as a sense of engagement and joy in working. Streamlining and motivation are sort of two sides of the same coin. We think that education and investment in human resources are the keys to piece together the two different elements.

Acquiring lasting skills

What’s essential now is to learn how to learn, not what needs to be learned.

Knowledge and skills in a particular field become obsolete at once in the current age of rapidly changing technology and society. In the era of the 100-year life, it’s vital for people to re-examine and develop substantial abilities and skills at any organization or corporation, in addition to skills only effective for a brief period.

What can be defined as the essential skills of a working adult is comparable to defining operating software as a human resource. Individuals have to regularly upgrade it, as they do for their smartphones.

Single track to multiple paths

Lynda Gratton, a professor at the London Business School, stressed the significance of changing the single-track of a three-stage life of “receiving education, followed by working and retirement subsequently” to that of a multitrack one in the international bestseller “The 100-Year Life” that she co-authored.

Apparently, learning won’t end with graduating from school, and learning and working will be increasingly incorporated, especially in the AI-integrated society to come. Rather than just dealing with assigned tasks, broadening one’s horizons by actively going out to various sites oneself and interacting with people who have different sets of values will enhance social sensitivity and expand one’s career path.

A report compiled by young METI officials in 2017 described a conventional career view in the past as “Showa sugoroku,” likening the path to the Showa Era (1926–1989) when Japan experienced high economic growth, and a Japanese board game (similar to The Game of Life) where the goal is to move one’s game piece from the start to the finish line by rolling dice.

In contrast, the career view in the coming years won’t be described by sugoroku, where retirement means reaching the finish line after steadily advancing on a designated route. I suppose the future landscape will be similar to that of smartphone game “Pokemon Go,” that prompts players to go out to various areas and capture powerful creatures, namely “rare cards,” wherever they choose to go.

People are then required to boost their core strengths and strategically learn abilities that help broaden their paths, not to simply be skill collectors.

We are aware that there is bewilderment in the private sector amid calls of various political slogans — including “engagement of all 100 million citizens,” work-style reform and the era of the 100-year life. It’s true that there are concerns in traditional Japanese companies that even if companies support employees in acquiring versatile skills or accumulating various experience, employees might eventually quit or such efforts won’t bear fruit in their main businesses.

However, please consider it carefully. For Japan, shortage of labor is not a temporary phenomenon; rather, it is something that has been created because of a long-standing structural change. Companies reluctant to invest on the human resources front will lose their competitive edge and certainly be forced to withdraw from the market. Crafting a good human resources strategy is a matter of making a management plan that creates innovation and survives global competition. Company leaders need to reaffirm the importance of this urgent agenda and work on resolving it.

Changing role of firms

In the era of the 100-year life, an individual’s occupational life is obviously longer than that of a company based on the statistics that corporate life lasts 30 years or so. The social role a company plays will be different in an era where people experience career changes.

As discussed at the METI’s Study Group for Enhancing Human Resource Capability, companies will be increasingly required to place more importance on the capacity building of their employees than simply securing their employment until retirement. If the mobility of human resources progresses further, it might be the case that the social role of companies will grow to become, at their best, able to provide employees with opportunities for growth.

Individual workers, on the other hand, would strictly sort companies from the perspective of assessing how much they can develop themselves and achieve growth through working at a particular firm. Consequentially, Japanese companies now face the test of how to build a new relationship with their employees, differing from the conventional relations between companies and employees.