The Impact of DX and Work Style Changes in the Era of Living with COVID in Japan

March 22nd, 2023 [No. 108 – 2022]

Fujikazu Suzuki
Coordinator,
Research Center for Solidarity-based Society, Japan
 

The Impact of DX and Work Style Changes in the Era of Living with COVID in Japan
Part 3-1: DX, Human Resources Management, and Labor Relations at Companies

In today’s world, production resources and factors of all kinds are being digitized, so companies are using DX to drive basic changes in their business models. As a result, they desperately need people who are skilled at DX to lead their DX activities. Adapting human resource management and labor relations to DX has therefore become an extremely important issue. In this report I will look at the current situation in regard to attracting suitable human resources and developing communications with the workforce, along with related issues.

1) Attracting and Developing Human Resources for DX

The interim report (2020) of the Ministry of Economy, Trade and Industry’s Study Group for Acceleration of Digital Transformation states that “it is important for society as a whole to adjust its relearning structure so that individuals learn as the world changes around them.” It also points out that “how to provide places where people can go to keep updating their skills (reskilling)” has become an important policy issue.

“Reskilling” has become an important word for thinking about the future of human resource development. Reskilling is different to existing concepts such as “lifelong learning,” in which people aim to keep learning throughout their life. Instead, reskilling is related to the need for more advanced professional competencies (skills) in connection with the digital technology revolution. In other words, “reskilling” is “gaining or being given the skills needed to suit the enormous changes in the skills people need so they can be employed in new jobs or in today’s jobs.”

 Persol Career, which is a company that runs a website that helps people to change jobs, recently published a “Survey on Reskilling (Relearning)” (2020). The survey results showed that there is strong interest in reskilling. Regarding the current reskilling situation, 89.5% of the surveyed people said either that “I am currently reskilling” (60%) or “I am not currently reskilling, but I am planning to reskill or considering it in the future” (29.5%). The results for promotion of reskilling at the company level were quite different: only 38.0% of companies said, “We are currently promoting it,” but around half (44.5%) said that they are planning to promote it in the future. The two responses combined exceed 80%. Therefore, it seems that in the future, companies will update their systems and build an environment that makes it easier for their staff to reskill.

Regarding the reasons for reskilling, the most common response was the same for both individuals and companies: “To improve skills” (individuals: 47.5%, companies: 61.8%). However, for the second-ranked reason and below, the responses for individuals and companies varied significantly. In particular, for many individuals, “To improve my personal market value before changing my job” (36.7%) ranked second.

The findings also show that there are problems with reskilling. For both individuals and companies, “Making time” (individuals: 37.5%, companies: 6.8%) and “Staying motivated” (individuals: 30.0%, companies: 42.1%) were among the top responses. However, the number-one response for individuals, “Reskilling costs a lot of money” (38.3%), ranked only fifth (22.4%) for companies. Therefore, these results show that individuals and companies see reskilling in very different ways.

These results clearly indicate that individuals and companies have different expectations and preferences about reskilling. That is, companies focus on development of human resources within their organization. On the other hand, individuals think of reskilling as a way to gain an advantage when changing jobs. These differences indicate that to reduce the gap in how companies and individuals are adapting to the need for more advanced professional skills, the government needs to make and carry out policies from a macroeconomic-perspective that benefit both companies and individuals.

So far, Japanese companies have survived the waves of technological innovations through the human resource developments within the company. To adapt to the current technological revolution, in which DX is the key to progress, our society will have to change the system of how we reskill. At the same time, companies will have to improve how they upskill their employees. This means the three groups in labor relations (government, workers, and employers) must each make their strategic choices based on their specific interests about improving staff development systems and social systems that will benefit them in the long run. After that, Government, workers, and employers must discuss their policies together and put the policies into coordinated action.