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2019 OECD Economic Surveys: Japan 2019

image of OECD Economic Surveys: Japan 2019

Japan’s current economic expansion is its longest of the post-war era, with per capita output growth nearly matching the OECD area since 2012. However, the expansion has peaked and global uncertainties weigh on the outlook. Growth is projected to continue at a moderate rate, supported by expansionary monetary policies and fiscal measures to offset the 2019 consumption tax rate hike. Notwithstanding rising female participation, labour shortages are intensifying, reflecting Japan’s shrinking and ageing population, thus underlining the importance of labour market reform. Traditional labour practices, such as seniority-based wages and mandatory retirement, are poorly suited to the era of 100-year lives. Comprehensive reforms, including abolishing the right of firms to set mandatory retirement and removing obstacles to female employment, are essential. Population ageing also puts further upward pressure on public social spending and government debt, which relative to GDP is already the highest ever recorded in the OECD area. Japan needs a comprehensive fiscal consolidation plan covering specific spending cuts and revenue increases to ensure fiscal sustainability. It is essential to contain the rise in health and long-term care spending, while expanding the joint provision of local public services across jurisdictions and developing compact cities in the context of depopulation.

SPECIAL FEATURES: LABOUR REFORM IN AN AGEING SOCIETY; ENSURING FISCAL SUSTAINABILITY

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Basic Statistics of Japan, 2017

(Numbers in parentheses refer to the OECD average)*

This Survey is published on the responsibility of the Economic and Development Review Committee (EDRC) of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of Japan were reviewed by the Committee on 4 March 2019. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 2 April 2019.The Secretariat’s draft report was prepared for the Committee by Randall S. Jones and Haruki Seitani, with contributions from Andrés Fuentes Hutfilter, under the supervision of Vincent Koen. Research assistance was provided by Lutécia Daniel and Secretarial assistance by Sisse Nielsen.The previous Survey of Japan was issued in April 2017.

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