July 22, 2020
The low productivity of the service industry, which accounts for 70% of both the national GDP and the total workforce in Japan, is a long-standing challenge for the Japanese economy, since it has the potential to curb wage growth. To address this, the Ministry of Economy, Trade and Industry (METI) will inaugurate a new study group that will hold discussions on three issues: [i] ideal approaches to improving productivity of a variety of businesses in the service industry toward developing an economy that will flourish in this new-normal era that has been triggered by the recent spread of the novel coronavirus disease; [ii] policies to encourage the approaches mentioned in [i]; and [iii] ideal approaches to policies and related key performance indicators (KPIs) targeting industry goals related to improving productivity.
1. Purpose and background
The low productivity of the service industry, an industry accounting for 70% of both the national GDP and the total workforce in Japan, is a major challenge for the Japanese economy as it leads to low wage growth. To address this, Japan has been implementing policies based on the following KPI stipulated in the Japan Revitalization Strategy revised in 2014: “Japan should aim to achieve a growth rate for labor productivity in the service industry of 2.0% by 2020.”
Between FY2014 when the target KPI was set and today, the service industry has faced a variety of changes, such as those in employment environments (empowerment of women and the elderly), consumption patterns and customer interface and enhanced ease of investment in IT backed by the popularization of cloud computing. Moreover, from early 2020, persistent spread of the novel coronavirus disease is causing structural changes (creating a “new-normal”) that the economy, industry and society are forced to face, and this situation has forced the service industry to make significant changes and investments to meet public requests for enhancing its resilience in responding to situations caused by the disease, such as ensuring social distancing between customers, providing hygiene measures including using antiseptics and establishing flexible interface with customers.
Against this backdrop, METI will inaugurate a new study group bringing together experts from a variety of related fields in order to assess the current KPIs in use today, review a variety of the challenges that the service industry is facing, discuss future directions for new policies encouraging the service industry to improve productivity in parallel with addressing a “new-normal”, and study approaches to future ideal KPIs.
2. Matters for consideration for the study group
- Changes that the service industry has faced between 2014 and today (the new “with-coronavirus” era)
Examples: Consumption patterns and customer interface, employment (empowerment of women and the elderly, non-regular workers and working styles), investment (investment in IT, business facilities or intangible assets), financial situations, etc.
- Organizing necessary actions for improving the productivity of the service industry in the future in the “with- or post-coronavirus” eras
- New approaches to KPIs
3. List of study group members
4. Future schedule
The study group will hold its first meeting as below:
Date and time of the first meeting: July 27 (Mon.), 2020; from 16:00 to 18:00
Please note that the meetings will not be open to the public, but a summary of the minutes of the meetings will be made public on the METI website at a later date.
Note: The second and following meetings will be held around once a month.
Division in Charge
Service Affairs Policy Division, Commerce and Service Industry Policy Group