Digital Transformation in Japan: Potential in Human Resources

Japan’s manufacturing sector is one of the most technologically advanced in the world. However, when compared to other developed economies, it falls behind in terms of the overall performance of digital transformation (DX). To explain and find the reasons for Japan’s lag in that regard one should look into the country’s specific socio-economic and cultural context, which has shaped mindsets, behaviors, practices, and values. Japanese employers used to rely on traditional employment practices and the young hires thought of a hiring company as the one they would commit to for a lifetime. As one of the consequences, their otherwise highly educated human resources acquired firm-specific skills, not necessarily corresponding with the market needs. The recent acceleration in digitalization of the economy triggered by the COVID-19 pandemic underscored the shortcomings of the system. Limited flexibility in the labor market severely restricts mid-career workers’ options for career changes. The urgent need to reskill employees collides not just with the workload, but is further hampered by little incentive to learn new skills, and a general lack of motivation. Yet, signs of hope can be seen in recent companies’ initiatives, engagement in the development of IT training courses, and their increasing awareness of human resources being at the heart of DX, proving that the speed of change has increased and that the shift is towards empowering talent.