Are women really ‘shining’ in Japan?

Japan was ranked 104th out of 136 countries on the World Economic Forum’s 2013 Global Gender Gap report. This means that Japan has the second-largest labour-market gender gap among the advanced economies, next to South Korea. The government is advocating the “20-30” campaign, which aims to raise the percentage of women in management positions from the current 10% to 30% by 2020. Prime Minister Shinzo Abe has made “womenomics” one of the key elements of his growth strategy, in order to create “a society in which women shine”.

Commonalities among Japan, China and South Korea

Located in north-east Asia, Japan, China, and South Korea share similar ideas from Confucian ideology which are closely related to the division of gender roles. So, significant gender gaps are observed in the workplace, and elsewhere in these societies. As shown in Figure 1, economic gender gaps – such as wage inequalities and female ratios in management positions – are large in all three countries. In the coming years, these nations will be playing increasingly important roles in the Asian and world economies, and there will be greater intra-regional cross-border flows of companies and workers.

This article examines the current status of gender diversity in management – i.e. corporate management – in Japan, China and South Korea, using data obtained in company surveys. By presenting a comparison of the three countries, and thereby enabling us to learn from our neighbours, it aims to help realize a society in which women shine and contribute to the revitalization of the Japanese economy.

For the purpose of this article, I performed an aggregate analysis of data from the 2013 Corporate Survey of Human Resource Utilization (China and South Korea) conducted by the Research Institute of Economy, Trade and Industry (RIETI) and compared aggregate data on Chinese and South Korean companies with those on Japanese companies, to identify any issues that merit further investigation. In the next section, I will briefly discuss my findings on five of these issues.

Figure 1. The economic gender gap is big in Japan, China and South Korea

Source: Global Gender Gap Index Report 2013 

Current status of gender diversity in management

Using numerical data from the two surveys, I compared Japan, China and South Korea in terms of:

• Business performance and the utilization of women in the workforce
• Quantity of female employees
• Quality of women’s employment (measured in terms of promotion)
• Work-life balance and relevant programmes and customary practices
• Affirmative action programmes in South Korea and their impact on the employment of women

Key findings on each of the five issues are as follows.

• First, regarding the relationship between business performance and the utilization of the female workforce, Japanese companies with a high percentage of management positions filled by women and/or any female executives, tend to have better earnings performance than those without.

In the case of Chinese companies, the higher the proportion of women among full-time and permanent employees, the greater the earning performance. Likewise, in South Korea, the higher the proportion of women in top management positions, the greater the company earnings.

• Second, regarding the quantity of women in the workforce, the number of women at work is lower than that of men across all levels, and the proportion of women in senior management positions remains low in all three countries.

However, a comparison among the three countries shows that China has the highest proportion of women as full-time employees, managers and top managers, and South Korea is at least better than Japan. Meanwhile, making the most of the female workforce was counted among the top 10 strategic issues by a relatively high percentage of Chinese companies – i.e. 82.4% of medium-size companies and 74.2% of major companies – compared with only 32% of medium-size companies and a somewhat higher 44.2% of major companies in South Korea. Although a direct comparison cannot be made, McKinsey & Company (2012) shows that only 25% of Japanese companies list the promotion of women in the workforce among their top 10 strategic issues. If the fact remains that the percentage of women is low, whether in total employment or in management positions, and the promotion of women is not high on the agenda, what is crucially needed is the top managers’ ability to deliver results.

• Third, regarding the quality of employment of women in terms of promotion, Chinese companies in urban areas have a higher proportion of women in all levels – i.e. in total employment, managers and top managers – than those in Japan and South Korea.

While women-specific welfare programmes are nearly non-existent, working hours are not too long and most female workers are in continuous employment. In South Korea, the participation of women in the labour force is lower, and the tendency for women to discontinue working because of pregnancy and childcare is more conspicuous than in Japan. Meanwhile, Japan is characteristic in that the pace of promotion is relatively slow for both men and women. In particular, the proportion of women in management positions is the lowest among the three countries. In Japan, the lowest age limit for getting promoted to a managerial position tends to be higher, the length of service is relatively long, and it takes more time for women to be promoted than for men.

• Fourth, work-life balance and relevant programmes and customary practices.

As shown in Figure 2, the overall level of labour-force participation rates for women in Japan is not necessarily lower than those in urban China and South Korea. However, the tendency for women to discontinue working in the middle of their careers as well as significant disparities in treatment between the first half and second half of their career (represented respectively by the left half and right half of the M-shaped curve) are problematic.

While many of those in the left half hold full-time permanent positions, those in the right half are mostly non-permanent and/or part-time workers, who typically earn low wages and receive no fringe benefits. However, in comparing the three countries, unique background factors for China, such as gender-specific retirement ages and the one-child policy, should be taken into consideration.

Figure 2. Labour force participation rate in Japan, China, and South Korea.

Source: Ministry of Internal Affairs and Communications Statistics Bureau

• Fifth, the impact of South Korea’s affirmative action programmes on the employment of women is not necessarily clear-cut.

Preceding studies have found no statistically significant correlation between the implementation of such programmes and the proportion of women. However, Figure 3 shows that following the introduction of the programmes, the proportion of women has increased gradually both in total employment and in management positions (even top management roles), though such positions are not covered by the programmes.

Figure 3. Changes in the proportion of women in total employment, managers and senior officers in South Korean companies subject to the affirmative action (AA) policy by size group in 2006 through 2011 (Unit: %)

Chart based on data provided by the Ministry of Employment of Labour of the Republic of Korea.

Notes: 1) Numbers shown in the figure are the mean percentages for AA policy-covered companies by size group; 2) Total employment means the total number of full-time permanent employees; 3) The scope of companies covered by the AA policy was expanded in 2008 to include those with 500 to 999 employees. Therefore, data for those companies for 2007 and before are not available.

It is hard to say how much the Japanese government has achieved in its promotion of “womenomics”. However, against the backdrop of a population downturn and mounting fiscal deficits, there have been growing calls for greater female participation. The Japanese government has taken a step forward, and gender diversity in management is beginning to emerge in companies. I am looking forward to seeing how things develop.

Published in collaboration with Vox.

Author: Hiromi Ishizuka, Professor at the School of Management, Sanno University.

Image: A woman is silhouetted next to a solar panel display in Tokyo, March 2, 2011. REUTERS/Yuriko Nakao