The economic opportunity of digital skilling in Japan (insights from forthcoming research)

Digital skills are crucial to advance in today’s economy. Not only are they essential for workers in the technology sector, but increasingly, digital technologies are improving productivity in traditional sectors such as manufacturing and tourism. In Japan, this is particularly important given the current economic headwinds faced: the country struggles to escape deflation, and an ageing population is increasingly weighing down workforce participation and growth, intensifying the fiscal pressures of providing social security and healthcare benefits. Without drastically boosting productivity, growth in Japan could average just 1.3% through 2025. This makes it essential to understand the role of digital skills in Japan’s workforce – not only for workers in the technology sector, but also for workers across all sectors of the Japanese economy whose jobs are increasingly requiring some element of digital skills.

To address this knowledge gap, AlphaBeta is currently conducting research (supported by Google) to examine the value of digital skills for Japan’s economy and to identify ways in which government, the private sector, and civil society can come together to capture this opportunity. The initial findings of this research suggest that improving Japan’s digital skills base has the potential to allow it to match the performance of global leaders and deliver an annual GDP impact of ¥165 trillion (US$1.5 trillion) in 2030, which accounts for about 30% of the country’s forecast GDP.

Further findings of this initial research include:

  • Today, digital skills in Japan account for ¥86 trillion (US$785 billion) in terms of GDP contribution. This is equivalent to 16% of Japan’s GDP, with 75% of this value being derived from the non-technology sectors.
  • At the current pace of digital skills training, the GDP benefits could grow by 2.6% per annum to become ¥113 trillion (US$1 trillion in 2030).
  • However, there is an opportunity for Japan to accelerate performance on acquiring digital skills through a mutli-stakeholder approach (involving government, industry and civil society), which could deliver an even greater GDP impact in 2030, with the total GDP contribution from digital skills potentially growing by 6.2% per annum from today to become ¥165 trillion (US$1.5 trillion) in 2030. This is estimated to be ¥52 trillion (US$479 billion) or 9% of GDP greater than what can be achieved at the current pace of skilling.

This valuation of digital skills is based on an estimate of the GDP contributions from three groups of workers: a) workers in the technology sector (e.g., AI developers); b) digital workers in non-technology sectors (e.g., Building Information Modelling engineers in the construction industry); and c) non-digital workers in non-technology sectors who require digital skills to perform their jobs (e.g., factory workers in the manufacturing industry who require some level of IT proficiency to operate machinery).

The final report will be released in early 2020.

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