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How Japan compares

Japan’s skills snapshot

Japan’s future growth prospects will depend heavily on how well it manages and develops the skills of its workforce. Finding ways to optimise Japan’s human resources, particularly older workers, young people and women, will be key to addressing this challenge.

Key findings

Developing the relevant skills

  • How well does Japan’s education system perform? In the 2009 PISA tests of 15-year-olds, Japan is among the top performing OECD countries in reading (rank 8), mathematics (rank 6) and science (rank 5).1
  • Does Japan invest enough in education and training? Japan spent 5.2% of its annual income on education in 2009, compared to the OECD average of 6.2%.2
  • How equal is access to opportunities for further training in Japan? A growing share of Japan’s workers is employed in non-regular jobs and these workers receive less training than workers in regular jobs.3 This may prevent them from obtaining better paid jobs.
  • Should more be done to prevent skills shortages? The unemployment rate rose between 2007 and 2011,4 but some 80% of Japan’s employers still reported recruitment difficulties in 2011, compared to only 61% in 2007.5,6 This suggests that more should be done in Japan both through the education system and by employers themselves in providing training to improve the supply of skills required in the labour market.

Supplying skills

  • Is there scope to improve skill utilisation in Japan through strengthening labour force participation? In 2011, 84% of the people aged between 25 and 54 were in the labour force, compared to an OECD average of 81%.7 However, the participation rate for prime-age women remains relatively low (at 72% in 2011, this rate was the 6th lowest in the OECD area).8   
  • To what extent are Japan’s older workers supplying their skills to the labour market? In 2011, 68.2% of people aged 55 to 64 were in the labour force, compared to an OECD average of 57.5%.9  But Japan will need to maintain or encourage greater participation of older people in the labour force to cope with much more pronounced population ageing compared to most other OECD countries.10 In addition, many older workers in Japan are required to leave their career job at the age of 60 and so may suffer a loss in valuable firm-specific human capital. Of workers aged 55-59 in 2005, only 32% were still working for the same employer in 2010 in Japan compared with 60% in Sweden.11

Using skills

  • How smooth is the transition from school to work for Japan’s youth? The employment rate of Japan’s youth in 2011 was 39%, on par with the OECD average.12 The unemployment rate of Japan’s youth was 8.2% in 2011, a relatively low rate compared with the OECD average of 16.2%.13 Nevertheless, there is still scope to improve the integration of Japan’s youth into the labour market, as in the 4th quarter of 2011, 7.5% of youth aged 15 to 24 were not in employment or in education and training.14 Moreover, about one-third of working youth are employed in non-regular jobs that offer low pay and limited career prospects.15
  • Are the qualifications of Japan’s workers well matched with the requirements of their jobs? In 2005, 34% of Japan’s workers were over-qualified for their jobs (against the OECD average of 25%), and 16% were under-qualified (against the OECD average of 22%).16 Over-qualified (under-qualified) workers are those who have a higher (lower) qualification than the most common qualification of all other workers in the same occupation. 

Key recommendations from the OECD Skills Strategy

A country can develop the relevant skills by encouraging and enabling people to learn throughout life; fostering international mobility of skilled people to fill skills gaps; and promoting cross-border skills policies.

A country can activate the supply of skills by encouraging people to offer their skills to the labour market and retaining skilled people in the labour market.

A country can put skills to effective use by creating a better match between people’s skills and the requirements of their job and increasing the demand for high-level skills.

For more information, see the:

OECD Policy Map on Skills | OECD Skills Strategy | Skills Strategy: Overview

OECD Skills Strategy and its relevance for Japan

Watch this video on strong performers in Japan

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