Japan is experiencing the most severe labor shortage in over two decades, said the country's annual white paper on the economy and fiscal policy on Friday.

According to the white paper released by Japan's Cabinet Office on Friday, some industries such as transportation services and construction may have already been suffering from it.

To deal with the problem, the white paper suggested Japan invest more in technology such as artificial intelligence and robots and train more tech-savvy workers to make up for the shrinking labor force.

"It is crucial that we invest in human resource development and implement features of the fourth Industrial Revolution such as AI, IoT (internet of things), and robots," said the white paper.

Japan has been suffering from a trend of population decrease for decades, with its birthrate in 2016 falling to 7.8 births per 1,000 persons, the lowest level since 1899.

Japanese Prime Minister Shinzo Abe has said that he wants to halt the slide and maintain Japan's population at 100 million people by 2060, by raising the fertility rate from 1.4 births per woman to 1.8 by the end of fiscal 2025, among other measures.

Earlier government estimates, however, showed that population of Japan could fall to 88.1 million by 2065, almost a third less than the 127.1 million in 2015.

The report also said that Japan has been enjoying a moderate recovery for the past five and a half years.

The recovery probably marked the second longest stretch of uninterrupted growth since World War II, following the one that lasted for 73 months from February 2002 to February 2008.

The annual government report attributed the recovery mainly to the world economic pick-up, improvement of employment and income especially for women and senior people, corporate investment in new technologies, as well as urban redevelopment.