Why Japan's workplaces are dragging their feet on AI

Facing acute labour shortages, ageing demographics and chronic productivity problems, Japanese companies should be fertile ground for the take-up of artificial intelligence (AI). Yet, compared with the US and UK, adoption in many workplaces remains sluggish and cautious.

Japan's response to AI is beginning to resemble one of the country's slow-moving, traditional Noh plays.

All the masked characters up on stage agree that action is urgent, and the call is repeated with solemn agreement. Yet the actors remain frozen in place.

Great for heightening drama, terrible for addressing the country's immediate difficulties.

Data showing the use of AI in the workplace suggests that Japan has fallen behind. Just 8.4% of Japanese workers use AI as part of their job, according to a report by the Organisation for Economic Co-operation and Development (OECD).

By contrast, separate statistics puts the US figure at 50%, and the UK at 32%. In Singapore, which is said to have seen the second-highest take up of AI after the United Arab Emirates, and the most in Asia, 56% of workers are said to use AI "multiple times a week".

So why is Japan dragging its feet? Austin Xu, co-founder of US start-up Kuse AI, says it is due to Japanese companies being conservative and risk adverse. His business recently set up an office in Japan to sell its AI systems to firms in the country.

"There are organisations where process and consensus culture genuinely slow things down," he says. "Where tolerance for AI mistakes is close to zero, especially in anything client facing. Some would rather leave a role unfilled than let a machine handle it."

Xu says the situation in the US is very different, with some businesses already allowing AI agents far more freedom to boost productivity. "In the US, AI colleagues enter as helpers and gradually become part of the workflow. The attitude [of US bosses] is often - let it try, then correct it."

He adds that Japanese companies need more proof before they trust AI enough to use it.

Parrisa Haghirian, professor of international management at the Kyoto University of Advanced Science, agrees that many Japanese companies are too risk adverse to look at AI.

"The challenges of adopting it are the same as adopting any change in Japanese firms. This is why AI use is still quite limited and cautious, especially in the workplace."

Haghirian also contrasts this with the more entrepreneurial culture of the US, arguing that Japanese firms are highly sensitive to error, uncertainty and reputational risk.

"Since generative AI is still not fully reliable, it is mainly used [in Japan] for low-risk tasks such as writing, summarising, or information gathering, but much less for core operations or decision-making and for improving overall processes," she says.

Japan's healthcare sector is said to be particularly slow to look at AI, with some hospitals yet to even fully digitalise patient files. "Paper documents accumulate at a staggering scale," says one employee at a Japanese hospital, who asked not to be named. "It's like the Stone Age."

The Japanese government is aware of the wider problem of low AI adoption, and is trying to get more companies to take up the technology. Last year its AI Promotion Act was passed by the country's parliament.

This aims to use light-touch regulation to encourage businesses to invest more in AI. Tokyo pledges that Japan will become "the world's most-friendly country for developing and utilizing AI".

The government believes that the increased use of AI can help Japan improve its productivity. Currently it continues to have the worst level in the G7 group of advanced nations.

Japan's Ministry of Finance says that AI adoption by businesses has already increased substantially, with 75% of companies now using the technology, up from 11% five years ago.

However, critics argue that at each of these businesses only a tiny proportion of staff are actually using the AI, and that those who do so are only using it to a very limited extent.

Prof Yasushi Ogasawara, an expert on Japan's social system and technology at Meiji University, says there aren't enough tech-savvy people in the workforce.

"Although the Japanese like playing with gadgets such as smartphones, digital literacy is low here," he says.

This is highlighted by one report earlier this year which said Japan faced a shortfall of almost 800,000 IT professionals by 2030.

Many companies are also said to struggle with out-of-date computer systems, with around 60% more than 20-years-old.

Moreover, Ogasawara adds that Japanese companies are under more pressure to avoid fuelling unemployment than they are to develop AI which could result in job losses.

"The government is talking about AI, re-skilling, digital skills, but in reality, it is difficult to adapt human resources to digital skills because the top priority is to maintain full employment," he says.

But there is a shift in recruitment, with some companies now prioritising "AI literacy" in their new graduate hiring.

In the private sector, larger firms such as Kanematsu, a major general trading company, are hiring savvy graduates such as Uta Yamaguchi who joined in April.

"I use AI quite often at work," she says. "Many of my colleagues use it a lot. For writing emails for my boss, summarising complicated documents, meeting recording and summarising."

But, by contrast with the US, she says AI systems that can autonomously handle multi-step work are still virtually unheard of in Japan.

However, her employer, known for its forward thinking, now has them onboard.

Ogasawara says that "change in Japan is limited". He adds: "Japanese society expects painless reform, so I think it can be said that drastic reform is difficult, to say the least."

Disruption may be a dirty word in Japan, but without it the productivity gains the country needs could remain elusive.