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Unlocking the potential of Japan’s female workforce

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Newly hired employees of Japan Airlines (JAL) attend an initiation ceremony at a hangar of Haneda airport in Tokyo, Japan, 1 April 2024 (Photo: Reuters/Issei Kato).

In Brief

Japan has seen a significant increase in women's labour force participation over the last 15 years, but the impact of Japan's female workforce on overall productivity and GDP growth remains low due to an ongoing wage gap and under-representation in managerial roles. Adopting reforms at the firm level could help women maximise their workplace potential and transition to managerial roles or from irregular to regular employment.

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For many years, women’s labour force participation patterns in Japan and South Korea were distinct from those in other post-industrial economies. Both countries had a so-called M-shaped age curve for female labour force participation, with large numbers of women exiting the labour force upon marriage or childbearing and then returning to paid work once their children entered school. While this pattern has persisted in South Korea, it has undergone considerable change in Japan in the past 15 years. In 2006, just over 60 per cent of Japanese women aged 30–34 were in the paid labour force. By 2023, this had increased to 80 per cent.

Despite this remarkable increase in women’s employment in Japan, the female–male wage gap has barely budged and the percentage of managers who are women remains far below the target set by former prime minister Shinzo Abe. Women’s contribution to Japan’s overall productivity and GDP growth remains stubbornly low.

The increase in women’s employment was one of the central aims of Abe’s now-famous ‘Womenomics’ policy package. Indeed, by 2016 the Japanese government and media were able to tout that the overall female labour force participation rate in Japan exceeded that in the United States.

There are likely two reasons for this increase in labour force participation. First, more and more Japanese women have remained single and childless. Unless they are relying entirely on their parents for income, they are in the labour force. Second, it is highly likely that the expansion of work-life policies at the firm level has helped increase the continuity of married women’s employment throughout the childrearing stage. Among Japanese working mothers whose employment status qualifies them for childcare leave, about 80 per cent take it and then return to the firm once their leave has ended.

It is well-known that the growth of the female labour force in Japan has disproportionately occurred in part-time and non-regular employment. This contributes heavily to the male–female gap in lifetime wages. But women’s representation in regular employment has increased as well, and it is unclear whether managers and firms have become effective in drawing on the abilities and experience of women who — unlike previous cohorts — are staying in the firm as regular employees after marriage and childbirth.

For example, it is yet to be seen whether middle-level managers know how to shape the workload of new mothers who have taken the short work-hour option (jitan) while their children are young. Such women are highly motivated to finish their work within a six-hour workday rather than the conventional workday of eight or more hours.

Learning to work efficiently is not a behaviour that has traditionally been highly valued by Japanese firms. This needs to change, and it can start with managers rewarding mothers who have learned how to work more effectively. The spillover effect to women who are non-mothers and to men could be very positive and might well lead to higher productivity for Japan overall.

An especially important group to target is university-educated women, whose representation in Japan’s labour force relative to male university graduates is much lower than in nearly all other OECD countries. Japan’s low productivity could be boosted if these women were managed more effectively.

Japanese sociologist Kazuo Yamaguchi has demonstrated the productivity-enhancing effects of company adoption of Gender Equality of Opportunity and Work-Life Balance policies. Companies with an equality opportunity policy are those that express a commitment to encourage employees to fulfil their potential regardless of gender, and companies with a work-life balance policy are defined as ones that have a department devoted to work-life balance solutions for employees.

Yamaguchi found that companies with more female university graduates had higher productivity if they had equal opportunity policies. The positive effect on company productivity was even greater if companies had both an equal opportunity and a work-life balance policy.

Looking back at the last decade and a half of change, it is clear that the government’s goal of bringing more women into the labour force and using policy levers — such as extended childcare leave, higher childcare leave benefits and the short work-hour option — to retain them has been successful. Dual-earner couples constitute the majority of households with two adults, and the era of the housewife has passed.

The next hurdle is to utilise female labour more productively, which will help accomplish the as-yet incomplete goal of increasing the proportion of women in management and leadership positions. Helping highly able women transition from irregular to regular employment and helping those who are already regular employees to maximise their potential in the workplace need to be primary goals.

Mary C Brinton is the Reischauer Institute Professor of Sociology at Harvard University.

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