Japan faces a demographic crisis — somehow it needs to find a way to produce the goods and services its rising retired population needs. An EU trade deal could be the tonic, as innovative European techs try to solve Japan’s productivity problem.
Japan is ageing. No less than 26.7% of the total population is aged 65 or over. And this number is rising — up 3.7% in five years.
Even more worrying, it is projected that by 2040 this number will have risen to a staggering 40%.
The numbers are telling: one birth every 31 seconds, one death every 23 seconds. One net migrant every 11 minutes, and one less person living in Japan every two minutes.
The pool of workers is diminishing fast, the ocean of retirees is getting bigger.
At the same time, growth in Japan’s productivity is awful. In the context described here, productivity refers to either a country’s output relative to the numbers of workers, or relative to hours worked. And across the G7, Japan’s productivity growth has seen the worst performance for many years.
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Yet, Japan has to find a way to produce more goods and services to meet the needs of its retired population from the ever diminishing number of workers. In other words, Japan needs the opposite of what it has got. It needs to see rapid growth in productivity — or output per worker.
Automation clearly provides a potential fix.
And both AI and robotics process automation (RPA) could be the answer. RPA is already beginning to have an impact.
RPA company UiPath, for example, has stated that it wants to see a robot on every desk.
The idea is that RPA can take the more routine, mundane tasks, and take them on, leaving human workers to focus on the less predictable stuff, such as dealing directly with customers on a one to one basis and their unique requirements.
And this creates an opportunity.
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Recently, Guy Kirkwood, UiPath’s chief evangelist, told Information Age that no less than 80% of Japanese companies that are in the Fortune 500 employ UiPath technology. “We’ve got 85% of Japan’s banks as customers,” Guy told us.
Now the EU Japan trade deal has been signed.
The agreement has been described as the world’s largest ever trade deals, it does after-all cover two regions that between them enjoy one third of the world’s GDP.
“EU firms already export over €58 billion in goods and €28 billion in services to Japan every year, “ said the EU Commission, but “European firms face barriers in exporting to Japan.”
The EU Commission added that the deal will “remove these barriers, help us shape global trade rules in line with our high standards and shared values and send a powerful signal that two of the world’s biggest economies reject protectionism.”
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Cecilia Malmström, Commissioner for Trade at the EU Commission said that the EU Japan trade deal will “bring clear benefits to our companies, farmers, service providers and others. Those benefits also go hand in hand with a commitment on both sides to uphold the highest standards for our workers, consumers and the environment. That’s good news for the EU and all supporters of an open and fair international trading system.”
Although it is thought that European farmers may be the main beneficiaries of the trade deal among European exporters, it is possible that the potential for European techs is being underestimated.
Back in march 2017, when European RPA company UiPath set up a Japanese entity called UiPath KK, its founder and CEO Daniel Dines said: “The global RPA market is expected to reach $8.75 billion by 2024 and we see Japan leading this growth trend.”
On news of the conclusion of the EU Japan trade deal, Guy Kirkwood said: “Successful conclusion of the trade agreement between Japan and the EU should accelerate the adoption of automation to transform productivity in Japan.
“Much of the focus on automation has rightly been on the provision of care to the elderly in Japan where the number of over-65s is expected to increase rapidly. Yet more forward-looking Japanese firms such as the advertising giant Dentsu are already well-advanced in the deployment of automation, freeing their employees for more creative and profitable tasks, while countering the damaging culture of long working hours that has plagued Japanese society. This global company has deployed software robots to automate an estimated 2,500 processes, vastly increasing the overall productivity of the business.
“With the conclusion of the EU Japan trade deal, we can expect to see the expansion of software robots to assist Japanese workers, empowering them to become hugely more productive while filling the skills gap in an ageing society.”