It might come as a surprise, but Japan—often caricatured as a bureaucratic society—has the lowest public sector employment among all major developed countries. Meanwhile, the United States, long held up as a champion of small government and free enterprise, employs nearly twice as many people in its public sector.

Here's the data:

Japan: 8% of the workforce in the public sector

Germany: 12%

Italy: 14%

United States: 15%

United Kingdom: 17%

Canada: 21%

France: 22%

China: 23%

Russia: 31%

Source: OECD

This flips a common narrative on its head: the West is not as lean or free-market driven as it claims, and Japan is not as bureaucratic as often portrayed.

The Real Role of Government Jobs

Public sector employment is more than a number—it's a signal. High government employment can indicate job security, economic stabilization, and strong welfare commitments. But it can also suggest inefficiency, wage stagnation, and bloated institutions.

Japan’s 8% figure isn’t a fluke. It reflects a deliberate societal structure where job security is handled by the private sector, especially large corporations, rather than the government. The downside? Risk-averse companies, low labor turnover, and limited innovation in workplace culture. The upside? A more agile state, and potentially higher private sector productivity per worker.

Economic Slowdowns and Government Absorption

One plausible explanation for higher public sector employment in places like Canada, France, and the U.S. is that governments are absorbing employment during economic downturns. In that view, public employment serves as a buffer—but at the cost of long-term efficiency.

Japan, in contrast, has no such cushion. With fewer people working in government, automation and capital investment per employee must be much higher, especially in labor-strained sectors like manufacturing and elder care.

Spending ≠ Headcount

What’s especially telling is that Japan and Canada spend a similar share of GDP on the public sector of about 20%, despite Canada employing three times more people in it. Why?

Canada’s spending is spread across more salaries in education, healthcare, and bureaucracy.

Japan spends more on elder care, pensions, and long-term infrastructure, reflecting its aging population and capital-intensive approach.

So, a smaller government workforce doesn’t mean a smaller government impact—just different priorities.

Some argue that more public sector jobs help families feel secure and plan for children. But Japan and Canada—despite starkly different public employment numbers—have almost identical fertility rates:

Japan: 1.2

Canada: 1.3

This weakens the case that public employment leads to family satisfaction or demographic stability. Clearly, other forces—like cost of living, housing, and cultural norms—play a stronger role.

Final Thought: Is Leaner the Future?

Japan’s model isn’t perfect. It shifts the responsibility of job security to private companies, which can limit labor mobility and entrench traditional practices. But in the coming age of automation and AI-driven productivity, Japan may be better positioned than countries with bloated public sectors.

As technology accelerates, investment per employee becomes the critical variable—not just headcount. Nations with leaner governments will have fewer institutional obstacles to adopting new tools, automating repetitive tasks, and retraining workers for higher-value roles. In contrast, countries with high public sector employment may face resistance to technological adoption, as large segments of the workforce see automation as a threat rather than an upgrade.

The future won't reward countries with the most government jobs—it will reward those that empower individuals to become more productive through innovation.

Japan, with its capital-intensive approach and smaller bureaucratic footprint, may be quietly preparing for that future.