The Strategist

'Womenomics' in Japan: is it working?

08/04/2016 - 15:17

Some time ago, Japanese Prime Minister Shinzo Abe launched a policy of "womenomics", which suggests a greater participation of women in the economy. So far, however, the changes have not brought any significant results.

Masahiro Hayata
Masahiro Hayata
According to statistics, 60% of Japanese women quit their jobs after birth of their first child. In many cases, there’s a good reason for this.

Acute lack of jobs has long meant that many women simply cannot return to work. including due to the inflexible policy of the companies in relation to the number of working hours.

As a result, Japan is now at the very bottom of the Global Gender Gap Index of the World Economic Forum, which since 2006 is designed to measure equity performance between men and women in the labor force.

In 2014, Goldman Sachs estimated that Japanese GDP could be increased by nearly 13% is the government managed to close the gender gap in the labor market.

Abe heard the warning. This year, he said that "women work force is the most underutilized resource in Japan". "Japan should become a place where women will flourish" - Abe said.

Since then, Abe's government has tried several ways to implemented its "womenomics" program. Among them are policies aimed at improving financial status of parents due to benefits for working mothers. Now, companies are also required to disclose gender diversity of the workforce.

As a result, grants for child care in Japan are now among the highest in the developed world. Requirements for companies also helped significantly increase number of female managers.

According to the data of Goldman, participation of women in the labor force in Japan rose in February to 66%, a record level. Even the US has a lower figure (64%).

Earlier this week, the Japanese government approved a stimulus package of 28 trillion yen (about $ 280 billion), which includes payments to citizens with low incomes, increase in pensions and scholarships, as well as additional costs for infrastructure. The package also implies establishment of a large number of pre-school institutions, as well as benefits in the form of large sums to be paid during maternity leave.

Indeed, the labor shortage in Japan has forced many companies to hire women, but it is rather an exception, and it is still nearly impossible to meet female leaders.

Despite all the positive developments, the gender gap index is 101th out of 145 in Japan. According to WEF (World Economic Forum)’s report, women spend an average of 299 minutes a day on unpaid work, while the figure is 62 minutes for men. Proportion of women in leadership positions does not exceed 4%.

Goldman Sachs notes that the new legislation on women's employment promotion stipulates no penalties for companies that fail to comply with quotas for female executives. Moreover, these "advices" do not refer to small and medium-sized enterprises with less than 300 employees.

Biggest number of women on the labor market improves performance of economies in several ways. For example, increase in women's income leads to an increase in household expenditure on education of girls, which is a key precondition for more rapid development in the long term. Equality of women and men in employment provides companies with a wide range of talent that could potentially lead to an increase in creativity, innovation and productivity. Moreover, increased number of working women in developed countries can help deal with reduction of number of employees, and mitigate losses associated with aging of the population.

So what is the cause of preservation of inequalities and halt of the progress? Legal, regulatory and societal discrimination against women in many countries still prevents them from seeking work in formal sectors of the economy. As a result, women predominate in the informal economy, where jobs are often unstable and wages are low. In addition, tax systems and social security schemes in many countries have developed in a way that does not favor employment of women.
Taking all this into account, the government's policy of taxing and spending, as well as legislation in the labor market, must be reformed in order to stimulate women employment. For example, taxation of income of each individual would facilitate job search for women. Setting volume of social benefits depending on participation in work, training activities, or active labor market programs can also help. Other efficient steps would be affordable high-quality childcare services, or expanded opportunities for maternity care for mothers and fathers. In Brazil, for example, proportion of women in the working population has increased dramatically over the past 20 years, from about 40% to about 60%, partly due to the family policies.

These are just a few examples, but world can do much more. Women can benefit from introduction of flexible working hours and reduced differences between working conditions for full and part-time, what has been done in the Netherlands with success. In developing countries, improvement of water supply and transport systems in rural areas can help women manage their time better. Establishment and observance of equal property and inheritance rights can make loan and other production resources more accessible to women, and legal education in general would help to reduce discrimination.