On a narrow side street in a residential neighborhood in the suburbs of Tokyo, a new apartment building is being built from scratch. Six construction workers are putting up the four-story building using prefabricated parts, while another six workers are manning the different roads leading into the construction site. Holding light wands, the six non-construction workers direct the trucks transporting materials to the site and apologize to each pedestrian who happen to walk by the construction.
In a nearby university, an important exam is taking place. Some 500 test-takers are divided into about 20 classrooms. Aside from the 20 people who each monitor one classroom to prevent cheating, the exam operator also hired an additional 60 staff to count the right number of chairs, tables and papers needed for each classroom. Given that the 20 staff who monitor the classrooms can, by themselves, do the counting and checking before and after the exam is finished and the test-takers leave the classrooms, the 60 "extra" staff do little but sit around, in case their assistance is needed in unforeseen circumstances.
Such everyday examples can help to illustrate Japan's relatively low productivity levels compared to countries at similar levels of economic development. OECD data shows that in 2016, the Japanese created $41.54 in GDP for every hour worked, below the OECD average of $46.98 and the Group of Seven average of $55.39. Japan's GDP per hour worked is the lowest in the G7, and lower than all major economies in the OECD except South Korea. Its productivity remains significantly lower than the United States at $63.26, the EU at $47.64, and roughly half that of top-ranked Ireland at $82.15.