Non-compete and related clauses are fairly common in Japan. According to employers, between 22% and 31% of private-sector employees are currently bound by a non-compete clause compared to an average of 20% to 30% across the OECD countries covered by the survey (Figure 1, Panel A). Results from the employee survey confirm a high prevalence: 16% of workers report being bound by a non-compete clause, with an additional 28% who believe they “probably” are, compared to an average of 15% and 21% across the OECD countries covered by the survey (Figure 1, Panel B). In many countries, including Japan, the higher incidence reported by employees is essentially driven by higher uncertainty among employees than employers, reflected in the high share of “probably yes” answers.
Japan Economic Snapshot
This snapshot offers an overview of Japan's economic trends and prospects, including GDP and inflation projections, growth prospects, and structural reform priorities, drawing from the OECD Economic Survey, Economic Outlook, and Foundations for Growth and Competitiveness reports.
Key links
Key findings on non-compete and related clauses for Japan, July 2026
Non-compete and related clauses are widespread and their use is rising
Economic Outlook: GDP and inflation projections, June 2026
Real GDP growth is projected to ease slightly to 0.6% in 2026 and 0.8% in 2027. Despite the headwinds from the rising cost of energy imports, domestic demand will be the main driver of growth. Robust wage growth and energy subsidies will support private consumption. Government consumption is set to remain high. Government subsidies and high corporate profits will boost investment in 2026, partly offsetting the energy shock. The increase in energy prices will be partly mitigated by government measures in 2026, and headline consumer price inflation is projected to move towards the 2% target in late 2027.
The fiscal stance is projected to be expansionary in 2026, following 2025 tax reforms and additional energy subsidies. In the absence of supplementary budgets, fiscal policy will tighten in 2027. Given rising interest rates, elaborating a clear and credible medium-term fiscal consolidation plan, underpinned by specific expenditure and tax measures, is needed to secure medium-term fiscal sustainability. While increased uncertainty due to the evolving conflict in the Middle East creates challenges, the gradual withdrawal of monetary accommodation should be continued, given robust wage growth and projected inflation around the 2% target. Enhancing energy security requires stepping up the promotion of research, development and deployment of green technologies and increasing renewable energy production.
Latest Economic Survey of Japan, May 2026
Japan’s economy has demonstrated resilience despite global headwinds, with growth projected to continue at a moderate pace supported by domestic demand. As Japan transitions toward a new equilibrium of higher prices and wages, macroeconomic policies must be carefully calibrated to balance maintaining inflation near the 2% target, securing fiscal sustainability, and fostering long term growth in an ageing society. Rising debt servicing costs highlight the importance of placing public debt on a downward path by addressing ageing related spending pressures, increasing tax revenues, and limiting reliance on supplementary budgets. In the context of a shrinking working-age population, boosting productivity and labour supply are needed to sustain living standards. Boosting productivity hinges on revitalising business dynamism, enhancing innovation spillovers, attracting more foreign capital, and fully harnessing digitalisation. Further raising female labour force participation and job quality, expanding the role of foreign workers, increasing labour market flexibility and strengthening adult learning systems are needed to ease labour shortages and counter demographic headwinds. Ensuring the additionality of Green Transformation (GX) investment, improving climate policy governance, simplifying permitting procedures and reinforcing the electricity grid would help meet climate targets.
SPECIAL FEATURE: BOOSTING PRODUCTIVITY GROWTH
Further reading
Reviving business dynamism in Japan, Blog post
Foundations for Growth and Competitiveness, April 2026
Per capita income has remained around 30% below the upper half of OECD countries, with labour productivity among the lowest in the OECD, and sluggish growth over the past decades. Private investment as a share of GDP is relatively high in international perspective but real fixed assets per worker have been roughly flat for the past two decades, despite the need to compensate for a shrinking working-age population. The rising participation rates of women and older persons have supported employment, and the unemployment rate is the lowest in the OECD.
Boosting business dynamism, by facilitating firm entry and exit, and further attracting foreign capital are key to higher productivity growth. More intensive collaboration between firms and universities can facilitate the diffusion of technologies to a larger number of firms and sectors. Changing skill needs, including those to complement new technologies and extended working lives, highlight the importance of re-skilling and upskilling. Enhancing the use of renewable electricity supply would help Japan boost energy security and affordability, whilst achieving its ambitious climate targets.
