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Why Women Are The Key To Japan's Economic Revival

In Tokyo
In Tokyo
Yann Rousseau

TOKYO -A few months ago, Shin Sugimoto, Human Resources director at Bristol-Myers Squibb in Tokyo, revolutionized the traditional methods of recruitment in Japan.

Instead of automatically promoting the most experienced man, as it is traditionally done – who had patiently been waiting for his turn for years – Sugimoto proposed to choose the next product director by examining the performance of potential candidates, who remained anonymous.

"We didn’t have the name, the gender, or the age of the candidates," he explains. After discussions, one CV stood out – that of a young woman. “The other employees widely criticized this choice and it was very difficult to convince her to take the job. She was worried about how the staff would react,” says Sugimoto who is trying, along with other executives, to change the attitudes of an ultraconservative Japan Inc., where women are considered as a “subclass” and shunned from the job market and responsibilities.

A marathon with one leg

Last month, conservative Prime Minister Shinzo Abe denounced this himself. “Women are Japan’s most underused resource,” he stated. Abe wants to raise the rate of female employment in the context of his bold plan for the revival of the archipelago, called “Abenomics.” This, he says, will boost national growth.

Experts widely agree with this analysis. “Japan is lagging because it’s running a marathon with one leg,” says Kathy Matsui, chief strategist at Goldman Sachs Tokyo, who has been arguing for years in favor of the integration of “the other half” of Japan’s 126 million people.

Currently, the employment rate for women of working age is only 60% – while it’s more than 80% for men. If the level of female employment reached the level of male employment, Japan could increase its workforce by 8.2 million people.

“The economy is very simple: if you want to increase your potential growth, you need to employ more people, use more capital per worker or increase productivity,” explains Matsui. By raising the rate of female employment, the country’s GDP could expand by 15%, she says. Consumption would go up and the state will have more wages to tax. “Women could actually save Japan,” said IMF director Christine Lagarde during a visit to Tokyo last fall.

Integrating more women into the workforce is essential for a country that is running out of manpower. With a rapidly aging population and a falling birthrate, Japan’s workforce is plunging alarmingly. After reaching a “peak” of 87 million people in 1995, there will only be 55 million potential workers in 2050.

“This is approximately the size of the workforce at the end of World War II,” said an alarmist IMF report published in Oct. 2012. If female labor participation is not encouraged, Japan’s GDP, which excludes recourse to immigration, will shrink and fall behind that of many of its neighbors.

In Tokyo, at the headquarters of Japan’s most globalized companies such as Toyota, Panasonic or Toshiba, the only women who foreigners see are serving tea or providing translations. “Yet our studies show that the companies directed by women usually make more profit: over 15% more,” says Georges Desvaux, head of McKinsey Japan. “But in this country, only 25% of CEOs believe that gender diversity is a top 10 priority. In Europe, this proportion reaches 53%.”

Victims of Confucianism…

Male CEOs of Japanese companies believe that their female employees will leave the company to give birth and raise their children. So why invest in them or encourage their ascent up the corporate ladder? “We are still victims of the Confucianism that weighs on people’s minds,” regrets Etsuko Katsu, vice-president of the International, Political and Economy Sciences Chair at Tokyo’s Meiji University. As soon as they enter the company, every young recruit must tell the employer whether or not they want to opt for the management-track called “sogo shoku,” which means office hours from 9 a.m. until midnight and accepting being posted on the other side of the country – which young male recruits agree to unconditionally – or if they prefer to opt for a less constraining and less gratifying clerical-track called the “ippan shoku.” According to the IMF, 94% of those who opt for sogo shoku are men. This explains the huge wage gap between men and women. Women have the lowest paying jobs – earning 29% less on average.

Women are not encouraged to return to work after the birth of their children. “About 70% of Japanese women quit working after giving birth to their first child,” says Matsui. “It’s sad because they leave the workforce when they start a family, a little before they are 30 and until their late 40s. These are the years where their careers would be most fertile,” she says. Studies show that three-fourths of these women would like to go back to work.

…And social policy

Social policies are also holding back young women’s ambitions. There aren’t enough places in public childcare and private childcare is often too expensive for low to middle-income families. Only 28% of Japanese children below the age of three are in childcare. This number reaches 43% in France. Women sometimes don’t have any other choice than to raise their babies, which they often have to do on their own –Japanese husbands only spend an hour a day doing household chores. “Out of these 60 minutes, only about 33 minutes are spent with their children,” says Matsui. She adds that because of the chronic lack of caregivers in Japan, women are also forced to care for their elderly family members as well.

In this context, the few women who manage to return to work after the birth of their children usually have to settle with part-time jobs because they can’t handle the hours imposed on “salarymen” by the big corporations. Currently, the vast majority of the low-paid, poorly protected and unstable jobs are occupied by women.

As part of his Abenomics “growth strategy,” Prime Minister Abe seems to be betting on a progressive shift of attitudes. He has mentioned the creation of a database of talented women who deserve to be integrated in the company boards. He has also said he would create 250,000 childcare places. He will also encourage companies to extend parental leave to three years, to allow employees to spend time with their baby. However, this new long leave would only apply to women.

“Attitudes are slowly changing,” says Sugimoto, who encourages his male employees to take parental leave. Last year, in his company, only one man dared to seize the opportunity.

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