Womenomics
Kathy Matsui coined the term “womenomics” in 1999 when she suggested that increased participation from women in the Japanese workforce could help Japan grow and prosper. Prime Minister Shinzo Abe took notice, and since he took office in 2012, as a part of the structural reform in Abenomics economic policy, Japan has pursued “womenomics” by incentivizing women’s participation in the workforce to help solve the nation’s labor shortages. In 2014, Matsui, who was raised in the United States and attended Harvard University, co-authored a Goldman Sachs Portfolio Strategy Research paper, Womenomics 4.0: Time to Walk the Talk, in which she made these recommendations for closing the gender employment gap:
The government should deregulate daycare/nursing care sectors, reform immigration laws, neutralize the tax and social security codes, mandate gender-related corporate disclosures, equalize part-time and full-time work, and boost female representation in the government.
The private sector should stress the business case for diversity, create more flexible work environments, adopt objective evaluation schemes, set diversity targets, introduce a more flexible employment contract, and engage male champions of diversity.
Society at large also needs to work to dispel various myths about Womenomics and encourage greater gender equality at home.
Challenges in the Private Sector
I’d like to focus the remainder of this posting on the private sector, as that’s where I have the most first hand experience. We know that Japan’s corporations often struggle for growth overseas, and have very different work environments than many of their host countries. Their success, however, could be bolstered immensely by incorporating more local leadership into the management team, and in many developed countries, that local leadership is likely to include female executives. Japan’s expatriate executives need to be prepared to work with local women, and Japanese companies bringing their own female executives to the table would certainly make this easier. In my experience working with Japanese companies outside of Japan, I rarely ran across senior level female executives. I knew some female Japanese executives working in Japan, but they could not leave, likely for fear of negatively impacting their existing role upon their return. This seems counter-intuitive, but the international experience isn’t universally valued back in Japan. We’ll likely deal with that phenomenon in another posting. To have higher-level female Japanese executives on overseas assignment, there needs to be more of them in Japan. However, in Japan’s corporate environment, there remain challenges related to:
Lack of child care (both in-home or through daycare)
Japanese business culture, and in particular overtime expectations
Lack of female corporate upward mobility
Strong gender norms that discourage men from staying home
Japanese business culture, especially zangyou (unpaid overtime) and enforced corporate bonding (usually in the form of drinking and eating after work) also pose issues for women. It is nearly impossible to care for a family when both parents arrive home after 10PM, an issue that is compounded by the shortage of daycare. Lastly, due to long-held biases, women face discrimination which prevent them from receiving equal opportunity for promotion and managerial positions.
Labor Force Participation and Gender Wage Gap
Based on the Federal Reserve Bank of St. Louis’ analysis of OECD data, as of November 2018, 77.1% of women 25-54 were working, up from 68% in 2010. I have charted below the percent employment for women ages 25-54 every five years (based on the data from January of each year) from 1985 until the most recent data in November of 2018. You can see the jump after Abe announced his economic policies in 2012, reflected in the last two bars.
It’s a nice jump, but what about Japan’s working mothers and the gender wage gap overall? While 71% of women with children were working according to the Japanese government’s numbers -- an all-time high -- the work is mostly part-time. In Japan, that means little-to-no benefits, poor job security, few opportunities for promotion, and abysmal pay. Not only are these women working worse jobs, but they are doing so for less pay. As of 2017, Japan’s gender pay gap was 24.5%, the third highest of all developed nations (only ahead of Estonia and South Korea) and 10.7 percentage points higher than the OECD average, as shown by the graph below.
Women in Management
Womenomics is having a positive impact, but as with so many large and sweeping initiatives, progress will be slow, and requires patience, perseverance, and strong leadership. The Japanese government initially set the lofty goal of having about 30% of all senior positions in Japanese corporations and government held by women by 2020, but in 2015 they dialed back the number to a meager 15%, which also seems unachievable now. Reuters released the results of their 2018 poll of Japanese businesses covering how many female managers they employed and the number of female applicants they hired. Based on their survey, only 10% of Japanese corporations could say that 10% or more of their management team were women, one-third placed their numbers at less than 10%, and a staggering 15% said they had absolutely no female managers. Looking at the very top of companies, as of April 2018, only 7.8% of company presidents were women (that number is up from 5.5% in 1998), but those numbers were heavily skewed towards small businesses. Only 1.3% of businesses with sales over 10 billion yen (about $92 million) had female presidents.
Female Board Participation
According to Yukie Sato in her research titled Female Board of Directors and Organisational Diversity in Japan, from 2010 until 2016, the number of female board members for Japan’s top corporations (Tokyo Stock Exchange 1st Section [TSE]) increased each year with more dramatic increases in the years following Abe’s Abenomics policy starting in 2012. That being said, women still make up a dismal total percent of board members, only reaching 3.4% of the total in 2016 when compared to 18% for America’s top 3,000 publicly traded companies in 2018.
Other interesting take-aways from Sato-san’s work are:
More foreign ownership results in higher female board participation
Female board membership increases with outside board positions
The larger the company, the higher the female board participation
State Street Bank and US proxy adviser Glass, Lewis & Co have each taken steps to drive more rapid change from outside of Japan through their influence or control in proxy votes.
What About Government?
Implementation of the prime minister’s plans have noticeably fallen short for women in government. Only about 10% of all Japanese politicians were women in 2017, 47 of the total 465. Based on Inter-Parliamentary Union findings, Japan ranked 29th out of 34 total lower or single parliamentary houses that they analyzed for the number of female politicians. Most of their company in the lower half of the standings were nations from the developing world. This is an issue because women in positions of political power are instrumental in pushing through the change necessary for women to be successful both as workers and leaders.
Looking to the Future
Abe’s womenomics are a starting point for Japan, but there is still a long way to go in order to achieve women’s equality in the workplace, or even come close to the standards of other nations in the developed world. While Japanese women began officially working for wages in factories during the Meiji Period (1868-1912), starting a family equated to ending a woman’s professional career until fairly recently in Japan’s modern history. Even today, there are many barriers in place that prevent young women from continuing to work if they have a child, forcing many young women in Japan to choose between a professional career or marriage and a family. Womenomics clearly achieved its intended economic benefit of increasing women’s participation in the workforce, but more sweeping change is necessary in order to change Japan’s societal norms and fully tap into the potential of female business professionals while also closing the large gender wage gap. I believe we will continue to see change in Japan. As the older generation of male government officials and corporate leaders retire, more progressive, younger politicians and business people will replace them, more of whom, hopefully, will be women. This will be the generation that ushers in the social progress that Japan needs in order to fully utilize the talents of Japanese women. Womenomics is just the beginning. While Japan ranks low in many global categories as they relate to gender equality, numbers have been steadily improving. Women may be the key to Japan’s future -- so long as they are helped by all levels of leadership in dismantling the engines of systematic bias against their success.