Japan

With a number of ongoing structural difficulties, Japan scores relatively poorly with regard to economic policy (rank 32). Its score on this measure has declined by 0.2 points relative to 2014.

The pandemic struck as growth was waning. However, after a very sharp decline in GDP in 2020, modest growth returned in 2021. Structural constraints and labor market rigidities continue to cast a shadow on future growth. Consumption and domestic investment rates remain sluggish.

The pandemic’s labor market effects were relatively mild, with the unemployment rate returning to 2.9% in late 2021. Non-regular employment is a concern for young people and for women, with half of working women holding such jobs in 2021. The country faces a growing labor shortage due to population aging and decline.

The government has run deficits for years, dropping to a negative fiscal balance of 10.3% of GDP in 2020. A goal of reaching budgetary balance by 2025 now appears unlikely by 2027, even under a high-growth scenario. Debt levels are very high. While still strong, the country’s R&D capacities have been declining over past decades.

Facing equity and sustainability concerns, Japan falls into the lower-middle ranks (rank 25) in the area of social policies. Its score on this measure has improved by 0.2 points since 2014.

The country fared better than most other OECD countries in terms of COVID-19 cases and deaths, but the pandemic nonetheless strained the health system. The vaccination campaign was slow to roll out, but uptake was swift. A number of educational reforms are underway, seeking to improve creativity and add digital elements to the curriculum, for example. Education quality is a growing concern.

Generous childcare and other positive polices have not allowed women to advance careers, due to labor-market discrimination. The gender wage gap is large. A policy focus on social inclusion in recent years has not led to clearly positive outcomes. Income inequality is on the rise, and the population of “socially withdrawn” people is growing dramatically.

A pension reform has made it easier for part-time and contract workers to join corporate pension schemes. Old-age poverty is a serious problem. A series of piecemeal measures have in sum expanded the inflow of foreign workers considerably, though immigration policy remains restrictive overall. Crime rates are low.

Showing continued lack of clarity over future energy policy, Japan falls into the middle ranks (rank 20) with regard to environmental policy. Its score on this measure has improved by 0.2 points relative to 2014.

After the complete shutdown of all nuclear reactors following the Fukushima disaster, only five plants with a total of nine reactors had restarted by 2021, following new, stricter safety standards. The government has said nuclear power will remain a part of the energy mix.

Climate promises have been ambiguous. The government has pledged to step up its activities, increasing funding to climate finance and phasing out the use of coal. However, it almost immediately backtracked by slowing down the shift away from fossil fuels.

A strategic plan envisions a 22% to 24% share for renewable energy and a 20% to 22% share for nuclear energy by 2030, along with a net-zero emissions target by 2050. Critics say these goals look shaky. The country is the second-largest per capita user of single-use plastic packaging in the world, following the United States. Substantial progress has been made in the area of wastewater management.

With a number of varied concerns, Japan’s democratic system scores relatively poorly in international comparison (rank 35). Its score on this measure has fallen by 0.6 points since 2014.

The party- and campaign-financing system lacks transparency, and funding scandals remain alarmingly common. Lower-house electoral districts were redrawn in 2017 to diminish size disparities, but imbalances have reemerged.

The government has actively acted to block access to records, or in some cases deliberately failed to keep records of key meetings. The print and broadcast-media sectors are oligopolistically controlled. Government pressure has led to policy changes at some major media outlets. Citizens enjoy considerable predictability with regard to the rule of law.

Gender discrimination remains significant, particularly in the workplace. A measure intended to prevent sexual harassment contains no sanctions for employer noncompliance. Human rights abuses of foreign workers are a rising concern. Several lawmakers were recently arrested for office abuse.

Despite a recent shift of power toward the core executive, Japan receives middling scores overall (rank 22) in the area of executive capacity. Its score on this measure has improved by 0.1 point since 2014.

Policymaking has been centralized in recent years. Planning on key issues is carried out by the prime minister’s Cabinet Office. The large Cabinet Secretariat has significant sectoral expertise. New bodies such as the National Security Council have helped minimize veto players. Many sensitive issues are negotiated informally, with cabinet meetings largely a formality.

RIA quality has improved in recent years. A new government digitalization initiative is underway. Under Prime Minister Abe, the government failed to realize major aspects of its transformation program, and reforms were sidelined by the pandemic. Societal actors are not well integrated into policymaking processes. Comments have recently been solicited from the public via a digital platform.

Regulatory enforcement is in some cases biased toward the interests of large enterprises. An ongoing program of merging municipalities has created economies of scale in some instances, but created difficulties in rural areas. Japan has joined with Australia, India and the United States in promoting initiatives countering Chinese influence in the region.

With a mixed record on accountability issues, Japan falls into the lower-middle ranks (rank 25) with regard to executive accountability. Its score has improved by 0.6 points relative to its 2014 level.

A substantial amount of policy information is available to citizens. However, levels of public trust in the government are low, and turnout rates are falling. While occasionally critical of government policy, the major traditional media organizations do little to expose major scandals. New online sources of news are gaining influence, but are contributing to the emergence of partisan media.

The parliament has broad oversight powers, and members have substantial policy-assessment resources at their disposal. The Board of Audit successfully plays a watchdog role, though is sometimes ignored by core government institutions. A data-protection entity has been recently established, and helped shape a law requiring firms to improve protections for personal data.

Political parties are insider-oriented, with decisions driven by leading politicians. Economic organizations are well-funded and sophisticated. Civil-society groups have played an increasing role in expressing public concern and organizing mass rallies, if sometimes with little visible effect on policy.