61 Human Capital Management
Human Capital Management (HCM) refers to a corporate strategy aimed at enhancing Return on Investment (ROI) by investing in human resources, which are now recognized as a form of capital capable of generating value. Traditionally, human resources were viewed merely as an operational cost. However, under the current framework of Human Capital Management, they are regarded as a strategic investment expected to yield long-term profits. In today’s rapidly changing and unpredictable business environment, investing in human resources has become essential for building a new value system that aligns with evolving corporate and individual needs.
The concept of Human Capital Management gained traction among Japanese companies following the release of a significant report by the Ministry of Economy, Trade, and Industry in 2022. Titled “The Report of the Study Consortium to Realize Human Capital Management—The Human Resources Version of the Ito Report,” this document emphasized the importance of aligning management strategy with human resources strategy. Key recommendations included the appointment of a Chief Human Resources Officer (CHRO) with expertise in management strategy and the identification of company-wide issues to address.
Starting with the securities reports for the fiscal year ending March 2023, it became mandatory for companies to disclose information related to their human resources. This development has enabled investors to incorporate human capital data, alongside Environmental, Social, and Governance (ESG) factors, into their investment decisions.
The year 2023, often referred to as “the first year of human resources information disclosure,” highlighted the significance of how such information is presented. Moving forward, the focus will increasingly shift to how effectively companies implement Human Capital Management practices. Several organizations have already begun integrating employee engagement metrics with executive compensation systems. As the link between human capital management and corporate value becomes more apparent, initiatives to enhance organizational performance through strategic human resource investments are expected to grow significantly.
62 Wage Issues and Wage Increase in Japan
While nominal wages are rising, real wages are not keeping pace due to the high cost of living. Real wages represent the amount workers earn after accounting for price fluctuations, calculated by dividing nominal wages by the consumer price index. Even if nominal wages remain unchanged, rising prices reduce the number of goods that can be purchased, and falling prices increase purchasing power. Real wages are a key measure of workers’ ability to buy goods and services. In June 2024, real wages increased by 1.1 percent compared to the same month in 2023. This growth, driven by higher summer bonuses, marked the first rise in real wages in over two years.
In the 2024 annual spring labor offensive, the average agreed-upon wage increase rate was 5.17 percent, surpassing the 5 percent mark for the first time in 33 years. However, for small and medium-sized companies with fewer than 300 employees, the average increase was 4.66 percent, falling just below the 5 percent threshold.
In July, the consumer price index (CPI) rose by 2.7 percent compared to the same month the previous year. Electricity and gas prices also increased following the discontinuation of government subsidies. To address this, the government reinstated subsidies from August to October in an effort to curb the rise in the CPI. Despite these measures, the positive impact of wage increases remained unclear. In the ‘Basic Policy on Economic and Fiscal Management and Reform 2024,’ released in June 2024, the government outlined its ongoing commitment to raising wages for employees at small and medium-sized enterprises.
In 2024, the minimum wage was set at 1,054 yen, an increase of 50 yen from the previous year. However, this rise in the minimum wage has had a negative effect on the so-called ‘annual income barrier.’ Furthermore, the government is tackling the issue of the gender pay gap by mandating that companies disclose their current gender pay gap statistics.
63 Employment Contract
An employment contract refers to a contract in which an employee agrees to work at an employer’s workplace, and the employer agrees to pay wages as compensation for labor. The contract guarantees permanent employment for full-time employees, while offering only fixed-term employment for finite-term workers, such as part-time employees, temporary workers, and contract workers. Fixed-term employment often leads to unstable work conditions, as the employment ends when the term expires unless the contract is renewed.
Part-time workers make up approximately 40 percent of finite-term workers. Some argue that low wages and unstable employment in part-time work significantly contribute to poverty among the younger generation. Part-time work also presents several challenges, such as limited opportunities for well-planned educational training and difficulties in establishing a professional career.The revised Labor Standards Act, enacted in 2024, added provisions requiring the disclosure of certain working conditions, including the workplace and the scope of business operations. Additionally, the act newly extended social insurance eligibility to part-time workers employed by companies with more than 50 employees, a change set to take effect in October 2024. Some measures to improve unreasonable working conditions for part-time workers are underway, but positive effects have yet to be seen.
64. Human Resource Development for Digital Transformation
As society rapidly digitalizes, the issue of the shortage of digital human resources is worsening. The government plans to foster 2.3 million digital human resources by FY 2026, bringing the total to 3.3 million, including the current one million. It is also actively supporting digital education in universities, technical colleges, and for working adults. Additionally, it has established ‘digital skill standards’ for companies, encouraging reskilling training by defining the required levels of capability and skill to promote DX (digital transformation) operations.
65 Jobs-to-Applicants Ratio of Expected University Graduates in 2025
In April 2024, the Recruit Works Institute reported that the jobs-to-applicants ratio for expected university graduates in 2025 reached 1.75, marking a 0.04-point increase compared to 2024. For expected graduates in 2021 and 2022, the ratio declined due to the impact of the COVID-19 pandemic but remained above 2.5. By 2024, the ratio had returned to pre-pandemic levels. Notably, the logistics industry recorded the highest ratio at 16.21, while the construction industry saw a decline to 9.35, a drop of 4.39 points. In contrast, the finance industry experienced a slight increase of 0.02 points.
66 Space development in Japan
Space development in Japan is led by the Japan Aerospace Exploration Agency (JAXA). This includes conducting experiments on the International Space Station (ISS), launching satellites for meteorology and military purposes such as detecting ballistic missile launches, and engaging in planetary exploration.
In January 2024, Japan’s lunar explorer ‘SLIM’ successfully landed on the moon, making Japan the fifth country in the world to achieve this milestone. This marked the first time a pinpoint landing—defined as landing within a 100-meter margin of error from the target—was accomplished. In July, Japan launched the large-scale ‘H3 Rocket 3.’ From 2025 to 2026, Japan plans to launch the unmanned supply ship ‘HTV-X’ and the lunar explorer ‘LUPEX,’ developed in collaboration with India. Additionally, efforts are underway to reduce the cost of launching the H3 rocket and to meet the growing demand for launching commercial satellites, such as those used for communication.
In the past, space development was carried out by individual countries, but it is now notable that private companies are entering this field. Notably, space start-up companies, known as ‘New Space,’ are growing in number and making significant strides in areas such as lunar landers, small-scale satellite constellations, and space debris removal.
Several locations across Japan are actively developing plans to construct spaceports, which will serve as launching bases for rockets and artificial satellites. Given Japan’s geographical advantage of being surrounded by the sea, establishing spaceports is relatively straightforward. Key candidates for these projects include Ooki in Hokkaido, Kushimoto in Wakayama, Oita Airport, and Shiojishima Airport.In 2024, the government launched the ‘Space Strategy Fund’ to support start-up companies and universities entering the space business sector. Through this initiative, the government aims to strengthen the Japanese space industry by providing a support budget of one trillion yen over the next decade.
宇宙産業は2040年に世界で現在の3倍以上の約150兆円に成長することが期待される有望分野の1つで、日本においても「宇宙産業ビジョン2030」にて国内の市場規模を2030年代初頭に2兆4,000億円までに倍増することが掲げられています。
NewSpace とは、従来の政府主導によって進められてきた宇宙開発とは一線を画する異業種からの参入やベンチャー企業や民間宇宙団体等の新興勢力によって進められる宇宙開発。
67 6G
6G refers to the sixth-generation mobile communication system, which is the successor to 5G. Communication system standards typically advance every ten years. 5G began its commercial operation in March 2020, and the current goal is to implement 6G services in the 2030s, a decade after 5G’s launch.
After the transition from 4G to 5G in 2020, a 100 times higher speed, a 1000 times larger capacity, and lower latency were achieved. 6G is expected to outperform 5G, with a tenfold increase in speed, capacity, and simultaneous connections, as well as a tenfold reduction in latency. It will expand industrial applications by enabling the simultaneous monitoring of a large number of sensor-equipped vehicles. The communication range of 6G will also be expanded, covering 100 percent of land areas, extending 200 nautical miles from coasts, and reaching altitudes of 10,000 meters. Additionally, 6G can serve as a critical communication infrastructure during emergencies, such as natural disasters.
As AI is being increasingly utilized across various fields, there is a growing initiative to connect multiple AIs through 6G networks to address complex problems. To further advance the use of AI, the development of 6G technology must be prioritized.
68 IOWN
IONW represents NTT’s vision for the next generation of communication infrastructure, currently under development and research. By leveraging the groundbreaking technology of light-based communication, this initiative aims to create a network characterized by low latency, minimal power consumption, high capacity, and exceptional quality.
We are now in an era where every device can be connected to the Internet. At the same time, data transfer volumes are rapidly increasing due to the widespread adoption of generative AI. This trend has raised concerns about the potential for enormous power consumption in the future. To address this issue, NTT has developed the IOWN concept, which utilizes photonics-electronics convergence technology instead of traditional electrical communication. This technology can reduce current latency to one-two hundredth of its current level and is expected to reduce power consumption to one-one hundredth of current levels in the future.
It is predicted that by the 2030s, significant technological advancements will be realized. For instance, cameras installed in automobiles will transmit visual data to an AI in the cloud, which will analyze and provide relevant information to the driver. Similarly, doctors will be able to perform surgeries by viewing high-definition video feeds. NTT aims to develop and promote the IOWN concept in collaboration with companies across various industries. This technology is expected to enable Japan to secure a leading position in the future era of 6G networks.
IOWN（アイオン）とは「Innovative Optical and Wireless Network」の略で「光ベースの革新的なネットワークの構想」という意味。
高速通信・大容量化により1秒間に1,000Tbpsを超えるデータのやり取りが可能です。 現在の光回線の一般的な通信速度は1Gbps、無線通信の5Gでは最大20Gbpsです。 1,000Gbpsが1Tbpsなので、現在よりもはるかに大容量のデータを短時間でやり取りできるようになります。
69 Cyber Attacks
The term ‘cyber-attack’ describes the malicious act of destroying, falsifying, or stealing data by illegally infiltrating computers and networks. When such actions are intended to disrupt society or threaten national security for political purposes, they are classified as ‘cyber-terrorism.’ This threat is growing more severe each year. Cyberspace is often called the ‘fifth battlefield,’ alongside land, sea, sky, and space.
In its ongoing conflict with Ukraine, Russia has adopted sophisticated strategies that incorporate non-military measures, including cyber-attacks targeting critical infrastructure such as power grids. To combat these threats, Ukraine has formed an ‘IT Army,’ enhancing its ability to defend against Russian cyber-attacks.
In September 2022, the Japanese government’s portal site was targeted in a DDoS (Distributed Denial of Service) attack, leading to significant browsing disruptions. The pro-Russian hacktivist group ‘Killnet’—a portmanteau of “hacker” and “activist”—claimed responsibility for the attack through a social networking site.Cyber-attacks come in many forms and cannot be effectively countered without advanced expertise. In March 2022, the Self-Defense Force formed the ‘SDF Cyber Defense Group.’ Later that year, in April, the National Police Agency established the ‘Cyber Police Agency,’ and the Kanto Regional Police Bureau introduced the ‘Cyber Special Investigation Team.’ At the same time, a report from the Information-technology Promotion Agency revealed that the underground trade of stolen IDs and cyber-attack tools is growing more active. This trend makes it easier for malicious actors to carry out cyber-attacks, intensifying the overall threat.
70 DX
DX is the abbreviated term for ‘Digital Transformation,’ which refers to the innovative changes driven by the adoption and digitalization of IT technologies. The concept of DX is based not only on the simple use of IT technologies but also on the creation of new value and convenience through the fundamental transformation of business models, workflows, and the quality of services (or goods).
Private companies are leading the adoption of DX in business operations. Notably, in the drug discovery industry, it is said that DX using AI has drastically transformed business practices. Previously, with the success rate of creating a new medicine being about one in thirty million, it was common for new drug development to take over ten years. However, the situation is changing. For example, an AI-driven drug discovery start-up designed a chemical compound in just 50 days, a process that traditionally took another company eight years to complete.
On the other hand, the shortage of human resources with DX expertise is becoming increasingly severe. Currently, there are only one million digital professionals in Japan, but the government aims to increase this number to 2.3 million by FY 2026.
