Automation will have a substantial impact on Japan’s GDP growth.

According to Japan’s Health, Labor and Welfare Ministry, there will be just 60.82 million working-age people in Japan through 2025, compared with 65.3 million in 2017, and only 52.45 million in 2040. This reducing population of working people will have a pessimistic impact on the country’s economic growth. Making a shift towards automation can be a winning approach to Japan’s GDP growth. Considering the McKinsey Global Institute’s estimations, the country will need a 2.5-fold increase in productivity growth over the next decade in order to maintain its recent GDP growth rate.

Like other economies, Japan, the world’s third-largest economy, has also faced the effect of the COVID-19 pandemic. The impact can be measured by this data that the country’s exports fell by 11.70 percent in the current year till March, compared with a 10.10 percent decrease expected by economists in a Reuters poll. While the epidemic has prompted Japanese leaders to improve productivity to drive economic growth, it is expediting the transition to digital to reduce the spread of the virus while enabling more people and processes to move online.

Certainly, automation will take or remove very few job positions entirely in the coming years, and have a tangible impact on almost every job to some degree. It has the potential to bring transformation to a wider range of business applications and redefine the human workforce and their way of performance. In Japan, the shortage of labor supply and the limited influx of immigrant workforce can create a robust incentive for automation.

In the pre-pandemic world, the country was expected to automate 27 percent of its existing work tasks by 2030. However, this could replace 16.6 million jobs. Even with this much of automation-replaced workers, the country will face a shortage of 1.5 million workforces throughout 2030.

According to McKinsey, over half of work time in Japan is spent on repetitive activities, two-thirds of which can be automated. This means 56 percent of activities and occupations are highly susceptible to automation. So, there is a need to start focusing on training and reskilling people to fill 11-12 million new positions that Japan is likely to need by 2030.

Redefining the Future of Work

There is no strange that Japan is the leading nation in the production of robots and factory automation systems. Five out of the top 10 producers in the world are Japanese and have almost 30 percent of the market share globally. The country’s leadership in robotics was built on a long history of technological leadership in manufacturing, and the modern-day Japanese automation companies are benefiting from strong growth in demand for their products.

To prepare and drive a more automated future, business leaders in the country must stimulate their efforts at digitization. They must prioritize digital transformation at the top, retrain and reskill their workforce and adopt flexible work-style models. Indeed, Japan’s 2019 strategy for AI emphasizes the need to train 250,000 people annually in fields such as data science and AI.