Japan may have greeted the first year of the new decade in an upbeat mood as it prepares to host the 2020 Olympics and Paralympics — events that, since the nation won the right in 2013 to host the summer games for the first time in more than half a century, have been much anticipated to once again boost the nation’s image on the global stage.
The Rugby World Cup held here last year — to much greater enthusiasm at home and leaving a better impression throughout the world than expected — has added to such hopes. The cheering crowd of well-wishers for the new emperor and empress during the New Year’s holidays also appeared to represent people’s hopes for the new era of Reiwa.
Despite the positive tone for the new year, Japan at the outset of the 2020s is confronted with myriad problems. The nation is far behind others in the digitalization of society, corporate human resources practices are outdated amid the rapid aging of society and steep declines in the working-age population, and labor productivity remains persistently low despite the slogan of “work-style reforms.” Its education system is not offering the knowledge and skills required for the new decade.
These contrasting views lead to two different scenarios for the nation ahead:
Scenario 1: Japan is back on the steady growth path, with its people equipped with the mentality/mindset and ability to judge and think about what actions need to be taken.
Scenario 2: Japan is almost forgotten worldwide amid deferred actions and lack of serious consideration for the future, as during the past three decades.
As we reflect on our actions in the past decade or so, we cannot but be pessimistic and think that the second scenario is more likely. Considering the nation’s record of rapid economic development in the early post-World War II years, however, I believe the first scenario is not impossible, though very challenging. What needs to be done to make the first scenario a reality?
2020 will be a critical year to see which one of the two scenarios will prevail, as we are quickly running out of time. First there are several things that we all need to realize: No external factors, such as easing of the trade disputes between the United States and China or the yen turning weaker against other currencies, will resolve the problems we face; no major events such as the Olympic Games will set a path to renewed growth; and we cannot just wait and see, expecting the government, companies or schools to solve our problems.
Over the past three decades, Japan’s economic growth has fared poorly when measured against other developed countries, and share prices in Tokyo, despite the ups and downs over the period, remain well below what they were 30 years ago, unlike steep gains in the New York market. Disposable household income has stayed nearly flat.
Japanese companies have disappeared from the global list of firms with the highest market valuation, which is now dominated by U.S. and Chinese companies. One of the reasons is Japan’s failure to restructure our economy by hesitating to disrupt the past success formula led by the traditional manufacturing sectors. Not recognizing the global trend toward software technology and data-driven business practices, we have almost lost the once valuable capabilities and assets of manufacturing. Our low growth has not been caused by trade disputes or foreign exchange rates.
The government, schools and a majority of our companies do not seem to be aware of the seriousness of the problems we face. The digital transformation and necessary data standardization (in health care, for example) for government procedures has been discussed but to little real progress. The gender gap remains large (according to the latest report by the World Economic Forum), despite work-style reform by the administration of Prime Minister Shinzo Abe.
Many Japanese companies still follow outdated human resources practices of recruiting and manpower development with emphasis on Japanese, not international talents. They have not addressed the urgent need of re-skilling older-generation workers, while the domestic labor shortage is set to become even more severe.
The school curriculum still focuses on knowledge transfer and not enough time is spent on having students learn the skills they need to navigate the world. Schools rigidly follow the curriculum, even for skills such as communication and coding, rather than let students see how they can use these skills to do what they want to do. The system is not designed to develop people with a passion for learning and ability to use newly acquired skills.
There is a general consensus among leaders and experts at such institutions as the World Economic Forum that the ability to deal with the huge amount of information available today, define complex problems and develop a variety of creative and innovative solutions is necessary for people to lead good and meaningful lives wherever they are in the world.
We need to make constant efforts to renew our knowledge, instead of depending solely on the knowledge we acquired years ago. We need people with the mindset to question conventional thinking and develop new insights, people equipped with the necessary tools to do so, such as communication (English for now), and technological skills such as programming and computer science, and people who can think deeply to develop insights, analyses and perspectives, and act.
It is time for each one of us to take action to realize a brighter scenario. Not just the younger generations, but all of us need to face the reality that we can no longer rely on government policies or educational reform. After all, each one of us is accountable for our own future.
The new year is an ideal time for us to realize our own responsibility and take action, instead of just discussing action. Let us choose three skills or types of knowledge we can develop and start learning today, and pick three activities to drop in order to make time for learning. Breaking New Year’s resolutions may be common for all of us, but remember this year that a no hope/no vision country (as in scenario 2) will result if we do so. Are you ready to take on the challenge?
Yoko Ishikura is a professor emeritus of Hitotsubashi University and is an independent consultant in the area of global strategy, competitiveness and global talent. She is a member of the World Economic Forum’s Expert Network.