Labour and the workplace

Sarah O’Connor

FT employment columnist

In 2025, the world of work will be more flexible and inclusive for some of us, and more brutal, atomised and insecure for others.

Skilled professionals who were already established in the labour market when the Covid-19 crisis hit will be enjoying the fruits of “hybrid” work by 2025. Many will work one or two days a week at home. With presenteeism no longer a prerequisite for career progression, professional women will find it easier to keep their careers on track when they have children.

Corporate gender imbalance will begin to improve. The normalisation of remote work will create opportunities for talented people in developing countries to work for companies in the rich world.

But without strong policy action, the world of work for many others in 2025 will be worse. High unemployment in the years after the pandemic will erode the already weak bargaining power of young and low-skilled workers. Companies will retain a core of well-treated staff, but new hires in both blue and white-collar positions will increasingly be on temporary or freelance contracts.

For the young, bouts of joblessness will be common. It will become harder to find employers willing to provide them with training, progression or pensions. By 2025, they will be very angry.

Yukio Ishizuka

Nikkei senior staff writer

Arriving at the office every morning at a set hour to spend time and share space with bosses and colleagues — a way of working once seen as immutable — has been upended by the novel coronavirus. 

Now, working from home is the global trend. And particularly in Japan, the pandemic has unexpectedly become a driving force behind the collapse of traditional Japanese-style employment.

Japanese brewer Kirin Holdings in October announced that it will stop paying allowances for commuter passes for about 4,000 employees at its four group companies. Instead, it will pay a remote work allowance of 3,000 yen ($29) a month. The company will shift to a teleworking-based system, except for employees for whom it is difficult to work remotely, such as those at work in plants and logistics facilities.

Kirin has struggled to inspire employee’ creativity over the past few years, but teleworking — which it was forced to introduce due to Covid-19 — has given the company some new ideas.

“Remote working has increased employee morale because they can work at their own discretion,” the company says. The pandemic has also prompted it to promote group-wide work reforms, including lifting a ban on side jobs.

Attention is now centred on task-focused employment, which is common in Europe and the US. Top Japanese companies, including Hitachi, Fujitsu, Shiseido and Sompo Japan, say they will introduce it.

Companies are required to outline to employees responsibilities, goals and the skills required to achieve objectives. Task-focused employment translates naturally into remote working, as what should be done is clear regardless of where and when employees do their jobs. Companies can also improve productivity by placing the right people in the right work according to the skills of employees.

Japanese companies have long adopted seniority-based wage and life-long employment systems. In exchange, employees were expected to work long hours or at weekends and accept transfers or relocations. Japanese-style employment took root during the period of the country’s rapid economic growth decades ago, when companies needed to efficiently allocate labour to growth sectors.

But the economic situation changed, and the initial premise no longer held. Still, Japanese companies did not evolve their traditional working style, even though they knew it was inefficient. The emergency provoked by the pandemic, however, has finally prompted companies to change.

Japan is at a significant crossroads as its population declines. This year, the country’s population aged between 15 and 64 is estimated at about 74m. But that population is expected to decline by 2.36m from 2020 to 2025 and by 8.98m in the 2030s. That means the equivalent of the population of London will disappear from Japan in 10 years’ time.

Even today, Japan ranks lowest among developed countries in terms of productivity. For companies to remain competitive, they must become organisations that are productive and capable of innovating even with a small number of employees.

The next five years will be important for Japanese companies to experiment with new solutions and lay the groundwork for transformation in order to prevent a declining economy.


Gillian Tett

FT Chair of Editorial Board anD EDITOR-AT-LARGE, US

Markets go up and down. So do the fortunes of financial companies. But here is one prediction: by 2025 artificial intelligence will be reshaping global finance, sparking a competitive battle between companies and regions who want to dominate this new sphere.

China will almost certainly be playing a leading role: entities such as Ant Financial have already taken an early lead in AI-enabled finance, helped by the scale of the country’s databases.

But Japanese and US banks will be racing to catch up by 2025. Organisations such as Amazon are likely to be flirting with AI enabled finance too. The biggest competitive battle may be taking place between finance and tech groups, rather than just between banks.

Who wins will depend on another factor: what regulators do. By 2025 they will be scrutinising the AI black boxes with increased vigilance, and possibly alarm. In theory this new world should deliver benefits: greater efficiency, speed, customisation and cheaper costs of capital. In practice, it may also increase industry concentration, embed social biases and — most alarmingly — create feedback loops that regulators will struggle to police given opaque algorithms.

By 2025, regulators’ growing concerns about the inscrutability of AI and its attendant risks could be the source of the next financial shock.

Makoto Kajiwara

Nikkei commentator

If crisis is the mother of invention, can Covid-19 give rise to tech giants that will decide the future competitiveness of their country? 

From July to September, the number of new US businesses jumped 77 per cent to 1.57m on the previous quarter as individuals battered by the pandemic started their own businesses. Five years from now, some may become unicorns — privately held businesses with valuations of at least $1bn — and go public.

According to research company CB Insights, the US was ranked first in the number of unicorns last month with 242, followed by China with 119 and the UK and India with 24 each. Japan, meanwhile, had four unicorns last month, indicating an ageing economy.

The World Ahead: an FT-Nikkei special report

FT and Nikkei journalists look ahead to the next five years after a five-year alliance marked by tumultuous events, from Brexit and the Trump presidency to the coronavirus pandemic. Other articles include:

  • Martin Wolf, FT chief economics commentator, on the forces that will shape the next five years

  • Ryosuke Harada, Nikkei senior executive editor, on what the rise of China means for the rest of the world

  • A visual guide to the data shaping the 2020s and beyond

  • We asked for your predictions: a woman in the White House, yes, but no progress on climate change

But it is also expected to overtake the US in its number of listed companies. Over the past quarter century, the number of listed companies in the US has halved after peaking at 8,000 in 1996.

The question facing Japan, which has increased its number of listed companies to 3,800 from 3,000, is whether it can eliminate so-called zombie companies.

This is embarrassing for Japan, where the pressure for corporate reform remains weak: even companies with low growth potential have been able to survive, resulting in more listed companies.

Half of Japanese stocks have price-to-book-value ratios of less than one — twice as many as their US counterparts. Japanese stocks perform poorly, even in global stock rallies because Japan Inc. has failed to promote corporate renewal.

Japan will become a global financial hub only if its number of “robust” companies grows. Then Japanese households will shift financial assets of 1,800 trillion yen from savings to investments, prompting global financial institutions to flock to Japan. It is likely we will start seeing results well ahead of 2025.


David Sheppard

FT energy editor

For more than 100 years the oil sector has been characterised by boom and bust: low prices eventually lead to higher prices as under-investment and rising consumption catches up with the industry. With crude languishing near $40 a barrel in 2020, less than half the level of six years ago, it would seem natural to bet that oil prices will rise substantially by 2025 as the cycle turns.

But that is no longer certain. The global energy system is on the cusp of a once-in-a-century transformation. Ambitious government targets to cut emissions and growing adoption of electric cars is expected to lead to a peak in oil demand, potentially within 10 years. For an industry used to perpetual growth that is profoundly unsettling.

Could supplies fall short even as consumption goes into reverse, if energy companies stop investing? Or might the largest producers rush to pump every barrel they can, fearing they are sitting on a soon-to-be-stranded asset? The world was given a glimpse of that future when a brief price war erupted between Saudi Arabia and Russia.

No one knows for sure. But the approach of peak demand threatens to upend old certainties, even those as ingrained as the oil cycle.

Hirofumi Matsuo

Nikkei senior staff writer

The energy revolution is upon us. The shift to a decarbonised society is not only forcing change on the energy supply-demand structure, but also on international politics and business. The next five years will have much to do with determining who will lead that revolution.

In addition to the EU and Japan, US President-elect Joe Biden has pledged to ensure greenhouse gas emissions will reach net zero no later than 2050. China, the biggest emitter of greenhouse gases, has set a target of reducing emissions to zero by 2060.

Realising these goals will require drastic technological innovation and a shift in economic and social structures. According to the International Energy Agency, the total unit sales of electric vehicles will have to grow 20-fold and the supply of hydrogen 100-fold by the end of 2030.

The required shift to a power system centred on renewable energy is estimated to require investment totalling $1.6tn, or ¥166tn, four times the current levels.

In the decarbonised society, countries and businesses that control technologies enabling such a shift will have the competitive edge. If the 20th century was the age of oil led by the US, in the 21st century it is China that will challenge the US.

China is set to hold a dominant share in the global market for technologies and products that support climate change-combating measures — such as solar panels, wind turbines, electric vehicles and batteries used in them — because of the country’s programs to promote the introduction of renewable energy and boost related industries.

Major deposits of rare earth minerals, which are essential to manufacture magnets for electric vehicle motors and wind turbines, are located in China. Energy is now the frontline in US-China friction as they compete for technological dominance.

How will countries reliably secure core technologies and materials essential for achieving a decarbonised society? Resource security driven by the energy shift will become an important challenge for efforts to maintain growth.


John Gapper

FT business columnist

Before Covid-19, retail was moving towards a world in which people bought less in stores and more online; divided their purchases between luxury and discount with less in between, and shopped more ethically. By 2025, those trends will not have changed but the pace will be quicker.

Consumers who have been forced to order online, or collect without entering stores, have learnt a lesson. Buying remotely will be even easier and more convenient by 2025, and the global share of ecommerce is likely to grow to about a quarter from this year’s mid-teens.

The discount store packed with cheap goods, such as Don Quijote in Japan and Walmart in the US, will come under pressure: rather than packing into a small physical space, consumers will browse online. They will save their outings for fewer, more relaxing trips.

Generation Z, which abhors waste, wants to buy less and trades clothes online, will have come of age. As it does, fast fashion will have to slow down and provide greater value, not just financially but environmentally in what it does for the planet. The consumers of 2025 will be a careful crowd.

Atsushi Nakayama

Nikkei commentator

Large companies all over the world are starting to focus on intangible assets like patents, trademarks and software as new moneymakers.

Take a look at Sony in Japan. For the past five years, the company has squeezed facilities, plants and similar assets so much that the ratio of hard-to-soft asset revenue stood at 1:1 in March, the end of the company’s fiscal year. 

But intangibles — games, music and movies — accounted for more than half of operating profits, a sign that Sony may further distance itself from hardware over the next five years.

The strategic shift from tangibles is partly aimed at avoiding head-to-head competition with China and South Korea, which have similar industrial infrastructure. But even more significant is the digital wave sweeping many sectors and resulting in fresh management that is pursuing corporate value via increased returns to scale — a trend seen globally. 

The four American IT giants known collectively as the FAANGs — Facebook, Apple, Amazon and Google (as well as Netflix) — are the driving forces. They bank on intellectual property and software, not hardware.

But in Japan, investment in tangibles still dominates, in part because of the auto industry. Panasonic, for example, is pouring money into EV batteries, with the tangible-intangible ratio at 3:1.

In the US and UK, investment in tangibles and intangibles is now almost equal, and China and India are heading in the same direction.

In Japan, that same shift is also taking place, albeit more gradually, driven mainly by two factors. One is vehicle electrification. Electric vehicles are highly compatible with internet technology and software. As they proliferate in line with tougher environmental regulations around the world, the auto industry’s digitalisation and investment in software will also accelerate.

Tesla’s rapid advance is a case in point: The EV maker has garnered attention for its technology that enhances vehicle performance through software instead of hardware. Meanwhile, Toyota recently unveiled a “software-first” management goal.

The second factor is the proliferation of “digital twin” technology. The idea is to build a digital replica of humans, cars and infrastructure in virtual space, where many economic activities such as big data processing and product development can be realised.

In a seemingly unexpected move, US tech giants Amazon and Google have been increasing their tangible assets, including the acquisition of logistics companies. But the move is most likely one that will allow them to incorporate the real world into virtual space via “twins.”

The era of intangible assets is starting now.


Richard Waters

FT West Coast editor

The pandemic gave digital services a big lift that proved to be lasting. But the surprise in 2025 was the wider range of emerging digital “champions”, diluting some of the power of Big Tech.

Amazon and Google’s moves to spin off their cloud computing businesses led to a new generation of enterprise tech companies. Zoom was one of a handful that capitalised on strong demand during the pandemic to become broader platforms for communication and collaboration.

In the consumer internet, once regulators blocked the handful of giants from buying or killing nascent competitors, the scope for newcomers turned out to be greater than before. A generation of users brought up on digital services was hungry for new experiences — whether that meant communities inside gaming worlds, or a wider suite of communications apps to reflect different aspects of their lives. Top engineering talent seeped from the giants, feeding this shift.

We can look forward to a more diverse digital world by 2025. But the “winner takes most” dynamic in most markets still holds: each new category of online activity produced only one or two champions in the past, and an emerging oligopoly of digital powers is taking shape.

Kazuyuki Okudaira

Nikkei staff writer

Masayoshi Son, chief executive and chairman of SoftBank, who has gone from investing in personal computers to the internet and then to the mobile phone business, now says it “has become a company investing in the artificial intelligence revolution”. 

After suffering a major defeat over his investment in WeWork when the company’s excessive valuation backfired, Son has continued to put money in areas where he expects AI to play an important role, including mobility, real estate and healthcare.

The word “vertical” is now often heard in reference to a specific industry. Google chief executive Sundar Pichai, for example, says its cloud business has grown thanks to a strategy of focusing on sectors including financial services and retail.

Still, for an IT company, penetrating different industries is not all that easy. Karen DeSalvo, a former official at the US Department of Health and Human Services who joined Google late last year, said the company should hire personnel well versed in policies and regulations in those industries. “It needs to bring on medical and clinical talent . . . so that we do the right thing for the consumer,” DeSalvo said.

Rivals such as Amazon and Microsoft have also been actively hiring individuals with knowledge of specific industries. It has been nearly a decade since US investor Marc Andreessen said that “software is eating the world”. His prediction is coming true.

In Son’s words, it has “so far replaced the advertising industry, representing 1 per cent of GDP”. With a radical change in the remaining 99 per cent just around the corner, never has the value of vertical business expansion been higher.

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