AI and robots to fix Japan’s shrinking labor force

Japan’s largest recruitment agency, Recruit Holdings Co., believes that artificial intelligence (AI) can address the country’s labor shortages, but cautions that its impact will be limited until people trust the new technology.

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Japan is facing a shrinking labour pool due to a declining population and an ageing workforce, which is pushing many industries to adopt automation and AI technologies to mend the gap.
According to independent research firm Recruit Works Institute, with an ageing population of 123.3 million and low birth rates, the world’s fourth-largest economy might lack 11 million workers in 2040.
In Japan, the adoption of AI technology often comes with direct worker consultation, ensuring that employers and employees agree on its implementation, which can lead to better results for workers in terms of productivity and working conditions.

Why does it matter?

Companies throughout Japan are being forced to rethink their entire strategies due to a labour shortage. Thirty per cent of the population is over the age of 65, putting a strain on the quality of basic services and public infrastructure. Prime Minister Fumio Kishida often raised concerns about a shrinking population and workforce, saying last year that ‘Japan is standing on the brink of whether we can continue to function as a society.’

In 2017, the Japanese government announced a significant initiative called ‘Society 5.0‘ to fundamentally restructure the economy. Its goal is to build a ‘human-centered society that reconciles economic progress and social problem resolution through the integration of cyberspace and the real world.’

AI technologies can improve the quality of services in sectors such as shipping, delivery, healthcare, retail, and education, all of which have been affected by labour shortages. As Japan addresses its workforce deficit, and even with the current mistrust in AI technologies, the integration of AI and robots in daily life is still expected to move at a faster pace than in many other advanced economies.