'Womenomics' still isn't working

'Womenomics' still isn't working

The people of Japan have had a lot to celebrate lately. On May 1 they welcomed their new emperor along with the Reiwa imperial era. The event came in the middle of an unprecedented 10-day Golden Week break for the country's famously hardworking citizens.

Emperor Naruhito is inheriting a Japan vastly different from the one that existed at the start of his father's reign in 1989, when the economic bubble was about to burst, ushering in a prolonged recession even as the tech revolution took hold.

Japan's key social and economic challenge today is demographic: the population has fallen for nine years straight and one in three people are now 60 or older. This, combined with low birth rates, has put the country on course to lose 40% of its working-age population by 2055. That presents enormous challenge as businesses lose both customers and workers, undermining the incentive to invest at home, and the government faces rising welfare costs and a declining pool of taxpayers to support the system.

A major barrier to kickstarting the stalled economy is a lack of female leadership in both politics and business. Raising the proportion of women in work to match that of men, with each working longer hours to their full potential, would give a 15% boost to Japan's chronic low-growth economy, experts say.

Prime Minister Shinzo Abe jumped on the "Womenomics" bandwagon after he returned to office in 2012, becoming an unlikely champion of working women. Among his pledges to tackle the "national crisis" was to put women in 30% of management positions in all fields and 10% of all board directorships by 2020.

But Japan still ranks a pitiful 110th in the latest World Economic Forum (WEF) Gender Gap report. Even though women's participation in the labour market has improved dramatically, catching up with most developed economies, Japan still has the third highest gender gap in terms of wages among Organisation for Economic Cooperation and Development (OECD) members at 25.7%.

As for politics, only 10% of lower house lawmakers are female, and Mr Abe has only one woman in his 19-member cabinet. Japan ranks 165th of 193 countries in political representation for women, according to the Inter-Parliamentary Union.

Women's share of seats on the boards of listed companies stands below 4% in Japan, compared with over 20% in most European and North American countries. Pressure has been mounting in the capital markets to take the issue seriously. Big US institutional investors including Black Rock have started to demand that the companies they invest in meet diversity requirements at the board level.

It is encouraging that the Corporate Governance Code set out by the Tokyo Stock Exchange and the Financial Services Agency was revised last year to stipulate that at least one female board member is expected at every listed company. That may not sound like an ambitious target, but in a country where 60% of companies have all-male boards, securing one female executive will be no easy task.

It's not all bad news, though. In a new Goldman Sachs study, chief Japan strategist Kathy Matsui noted that ever-increasing numbers of women have been entering the labour market, with 3 million more now working outside the home than in 2012. The labour participation rate for women has surged to 71% -- higher than in the US and Europe, despite blatant gender discrimination in fields from education to politics.

However, the female workforce still earns only three quarters as much as men on average, partly because so many are in part-time roles. This indicates that Japanese women still trail their peers in other developed economies in many aspects.

Japan clearly needs to pick up the pace of change or risk being overtaken by a demographic crisis. The government needs to bring an end to a tax system that pushes married women to be housewives and to break down the barriers between regular and non-regular workers. Looser immigration rules to allow foreign caregivers would help, so women will find it easier to leave the home and housework to join the paid workforce.

Meanwhile, Mr Abe's pledge to encourage men taken paternity leave should be strengthened so that mothers can stay in their jobs. Japanese receive some of the most generous parental leave allowances in the world, yet few men take advantage of them, and women face barriers to returning to work because of childcare shortages.

Besides giving a boost to the economy, these changes will empower families to strike a healthy work-life balance. Thus, it's a very smart thing to do.

Nareerat Wiriyapong

Acting Asia Focus Editor

Acting Asia Focus Editor

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