The COVID‑19 pandemic sparked one of the sharpest contractions in economic activity in living memory. A swifter than expected recovery followed, but the crisis exposed a number of flaws in the current labour market and skills systems in many, if not all, countries. The extent to which workers can adapt to changes in the type and content of jobs depends critically on the readiness and flexibility of adult learning systems to help people develop and maintain relevant skills over their working careers.

At a time when the global COVID‑19 pandemic has profoundly altered the type and content of jobs, investing in skills is more important than ever to build resilient and inclusive labour markets. Ongoing policy efforts to make the Japanese labour market more inclusive were disrupted by the pandemic as the government’s focus quickly shifted to dealing with the state of emergency and countering the negative consequences of a global lockdown. The policy responses have been largely successful, with the Japanese labour market experiencing limited increases in unemployment compared to other OECD countries. Yet, the pandemic has altered the labour market in ways that are only starting to become evident and that will provide new challenges for policy makers in the years to come. Now, more than ever, Japan’s policy makers must strengthen the adult learning system to make individuals and enterprises more responsive to change and foster stronger growth and well-being.

In general, the Japanese labour market has avoided many of the negative consequences of the COVID‑19 crisis observed internationally; a small number of industries and some socio‑economic groups have borne the brunt of the pandemic’s effect. This chapter first provides an overview of the impact of the pandemic on the labour market, focusing particularly on those segments of the workforce most affected. It then discusses how the demand and supply of skills had been changing prior to the pandemic. Finally, using innovative methods, the chapter presents an overview of skill requirements in the Japanese labour market and how the pandemic has affected key skills trends.

Japan’s response to the pandemic has been prompt and wide‑ranging. This chapter provides an overview of policies in three main areas related to the labour market: employment subsidies, online career guidance and teleworking. The chapter summarises the main challenges and responses and provides international comparisons and best-practice. The chapter also explores how digitalisation of public services and increase in remote work modes have improved flexibilities for some while increasing inequalities for others. Finally, the chapter provides direction on how to further tailor and improve these policies to build a resilient and sustainable labour market.

Japan needs to ensure that upskilling and reskilling policies are targeted, inclusive, and based on a more systematic analysis of labour market developments. This chapter reviews how Japan has adapted its adult learning policies after the outbreak of the COVID‑19 pandemic, and explores the need for digital, modular, and flexible training opportunities. Furthermore, the chapter emphasises the need of better leveraging existing data to create analytical tools to assess and anticipate skills needs to enable decision makers to quickly adapt training offers and career guidance services to the evolving world of work.