Artificial Intelligence and the Labour Market in Japan

Japan faces serious shortages of labour and skills due to a declining birth rate and an ageing population and therefore aims to achieve economic growth and sustained wage increases by improving the productivity and working environment of each and every worker.

While AI alone cannot achieve these goals, the analysis in this report indicates that AI can be part of the solution. Indeed, workers in Japan tend to be very positive about the impact of AI on their job performance, working conditions and wages, and it seems AI could also help address labour shortages, complement worker skills, and support decision making. AI users in Japan are also more likely to expect that AI will lead to job creation than job loss. These positive effects of AI are widely distributed across Japanese workers, including those in small and medium-sized enterprises (SMEs), rural companies, persons with disabilities, and workers balancing work with childcare and/or long-term care responsibilities. However, Japanese AI users tend to perceive these improvements more modestly than in other countries. In addition, some groups of workers – such as older workers and non-regular employees – appear less likely to benefit.

This report identifies three areas in which Japan appears to be falling behind other countries: (i) the rate of AI use at work; (ii) the extent to which AI improves job performance and working conditions; and (iii) the implementation of initiatives which are associated with better outcomes for workers, such as: company training and self-learning, worker consultation, guidelines for the use of AI at work, and measures to ensure the safe and trustworthy use of AI at work. Across all industries, only 8.4% of workers in Japan report using AI in the workplace and, on average, 35.8% of AI users say it has improved their job performance or working conditions – highlighting the need for Japan to simultaneously reduce barriers to AI adoption and promote measures that enhance the outcomes of AI for workers.

In addition, Japan should ensure that no workers are left behind. Non-regular workers and older workers in particular are less likely to use AI at work, less likely to benefit from AI use, and also less likely to benefit from measures such as training and worker consultation. Improving older workers’ use of AI and ensuring they benefit from AI use at work is especially important in the context of Japan’s rapidly ageing society.

To maximise AI’s benefits and mitigate its risks, the OECD recommends that policymakers in Japan:

• Strengthen initiatives that enable companies to scale up the provision of training, including through financial support, to help employees work effectively with AI. The Japanese Ministry of Health, Labour and Welfare (MHLW) already provides subsidies for AI-related company training through the Human Resources Development Subsidies, but enhancing the accessibility of these subsidies could encourage more companies to implement training programmes. This report reveals regional disparities in the proportion of Japanese AI users who have access to resources for learning to work with AI. If companies are considering providing financial assistance to support employees’ studies at universities or other educational and training institutions or are outsourcing off-the‑job training (Off-JT) related to AI, relevant resources within the region need to be made available. The Regional Consortiums for Vocational Abilities Development Promotion, established in each prefecture of Japan, have the potential to serve as effective platforms through which stakeholders and relevant organisations can collaborate to expand the range of Off-JT related to AI, as well as the financial support that companies can provide to their employees for training to work effectively with AI, and in alignment with the needs of local businesses.

• Strengthen initiatives for workers to engage in self-directed learning to work effectively with AI. The Educational Training Benefits (ETB) has played an important role in supporting a wide range of workers in reskilling or upskilling to work with AI. However, among AI users in Japan who undertook reskilling or upskilling, only 55% used the ETB, indicating substantial room for further uptake. The ETB should also continue to expand the number of online courses – while ensuring the quality and effectiveness of training – in order to reduce regional disparities.

• Foster worker consultation on the adoption of new technologies at work. It is important for MHLW to raise awareness – using concrete examples and evidence – of the value of such worker consultation, which can deliver mutually beneficial outcomes for workers and employers, including in terms of job performance and working conditions.

• Encourage companies to establish guidelines for the appropriate use of generative AI (GEAI) in the workplace and ensure employees both understand and comply with such guidelines. The Japan Deep Learning Association (JDLA) has developed model guidelines for the use of GEAI, freely available to all on its website. Japanese companies should actively use these resources to develop guidelines tailored to their operational contexts. Moreover, it is important for companies to ensure that employees fully understand and comply with such guidelines.

• Support employers in building employee trust in addressing the risks associated with AI. The MHLW should compile good practices from companies that have successfully managed to reap the benefits of AI while also addressing the associated risks and disseminate such information – together with relevant data and evidence – in a manner that is easily accessible to a wide audience. Subsequently, policymakers could consider developing guidelines to support both employers and workers in addressing the benefits and risks associated with AI use in the workplace.

• Strengthen active labour market policies (ALMPs) to support workers through the transition. MHLW should enhance the matching functions of the local Public Employment Service (known as Hello Work in Japan) and provide vocational training for individuals who have been displaced due to AI. The use of AI at Hello Work should be promoted to improve job-matching and the working conditions of staff. Some workers may face difficulties in moving to higher-skilled occupations or in relocating to other regions. In the future, it may be useful to consider support measures that create new employment opportunities in fields where jobseekers can make the most of their existing human capital, in order to prevent declines in their wages or working conditions.

• Lower the barriers to AI adoption. When introducing AI, key challenges include: a shortage of personnel who can help the company introduce AI using their basic AI knowledge and workplace experience; a lack of employee skills to integrate AI into existing services and products; a shortage of AI developers; and concerns about AI-related risks such as safety, trustworthiness, and transparency. Japan should advance its efforts under the new AI Act, which aims to both promote AI research, development, and use, and address AI-related risks.

• Promote diverse career pathways, including job-based specialist roles with high autonomy. AI-related improvements in job performance, working conditions, and wages are more frequently reported in high-skilled occupations, particularly professional roles. However, Japan’s workforce development system has traditionally focussed on producing generalist workers without specific areas of expertise. Moreover, seniority-based promotion systems tend to foster hierarchical organisational structures, and the limited autonomy of workers may make it more difficult for them to recognise the benefits of AI. Therefore, it is important to promote awareness of the Job-Based Personnel Management Guidelines, which were jointly issued by the Cabinet Secretariat, the Ministry of Economy, Trade and Industry (METI), and the MHLW, as they provide practical examples to support companies in advancing job-based human resource management.