For the first time in a generation, Japan has emerged as the economic powerhouse of Asia, posting the fastest growth rate in the G7 and sending the Nikei stock exchange to a 21-year high. The boom is welcome in a country where the economy has remained stagnant since the 1990s, but it will take more than a short-term surge to address underlying issues that threaten Japan’s prosperity.
Japan’s recent economic strength is tied to its export sector, as well as investment in infrastructure ahead of the 2020 Olympic Games in Tokyo. Even uncertainty from an upcoming election has not been enough to shake investor confidence.
One area that has not fared as well for Japan is its service sector. The Financial Times reported that Japanese services grew at their weakest level in nearly a year. The biggest cause? Low workforce productivity. The labor force in industries like finance, IT services and professional services is not keeping up with its counterparts in manufacturing, retail and logistics.
This is troubling because Japan depends on productivity growth to offset its demographic crisis. Due to falling birthrates and increased longevity of seniors, Japan has the world’s oldest population. Nearly 27% of the people there are age 65 and older, and as each worker retires, there are fewer to take their place.
Countries faced with a shrinking working age population to support a mushrooming cohort of elders can only maintain their living standards if people in the workforce produce more per capita than they used to. In other words, productivity has to continue to increase, particularly in areas that don’t depend on raw materials to create value – services and knowledge work.
For Japanese workers and employers, Business English can be the gateway to increased productivity. Science, technology, research and professional development all rely on English as the lingua franca for sharing knowledge across international borders. Japan’s trading partners, including Europe and China as well as English-speaking countries like the US, Canada, Australia and the UK, conduct business in English, not just at the highest levels, but also in peer-to-peer conversations that result in innovation, investment and the spread of best practices.
English language skill in Japan remains stubbornly low, especially relative to the education, skills and prosperity of the population in general. Despite government efforts to ramp up English language competency in preparation for the surge of international visitors expected for the Olympics, many believe the official programs will fall short. That leaves it to businesses to bridge the gap by investing in this key capability for their workforce.