Population crisis: can Japan lead the way in finding a solution? - Stephen Mulrenan

Japan’s declining birthrate and ageing population have combined to produce a top-heavy society that the economy is struggling to support. Global Insight assesses whether the country can address the underlying issues – such as gender inequality in the workplace – and set a global precedent for change.

A fall in birthrate means that Japan’s overall population is becoming smaller. According to the country’s health ministry, an estimated 1,031,000 babies were born in 2013, which was down some 6,000 from 2012. Meanwhile, 1,275,000 people died last year; 19,000 more than in 2012.

With a record net reduction of 244,000 people in 2013, the Abe administration estimates that Japan’s population will fall byapproximately 15 per cent, or 20 million people, by 2040. A natural consequence of this will be a top-heavy population and a diminished workforce, which is unable to support its elderly citizens. There is a need, therefore, for a boost to both the population as a whole and the workforce in particular, and it is becoming increasingly apparent that women are crucial in both these areas.

Tradition v progress: getting more women into work

Currently Japan’s female workforce is underused. Goldman Sachs highlighted the seriousness of this problem in a 2010 study, which claimed that the number of people in employment in Japan could expand by 8.2 million, and its GDP could rise by 15 per cent, if the country could close its gender employment gap.

This fact has not been lost on the new administration of Prime Minister Shinzo Abe, which has, among other things, introduced subsidies for those companies that hire single mothers.

Japanese society remains very traditional, with a woman’s primary role defined as ryosaikenbo, or ‘good wife, wise mother’. Because of this, there is little encouragement for women to remain in work after having children. For those that do, they find that ryosaikenbo and Japan’s rigid work schedules do not easily co-exist. There is also the risk that women will find themselves being ‘career tracked’ onto the so-called ‘office lady’ route following an engagement to be married. ‘Office lady’ is a term used to refer to a support staff role and entails tasks such as making cups of tea, serving drinks at evening functions and general administrative and cleaning functions. For a time this was a recognised route into employment for women, with the expectation that they would leave work once they were married. However, that assumption has been challenged in recent decades as women with ambitions for a genuine career began to recognise and highlight its inequities.

‘Setting targets is easy but there are not that many candidates that can be senior managers [...] We should be doing more to increase the numbers of younger female leaders, and then maintain those numbers’

Akiko Sueoka
Mori Hamada & Matsumoto partner

According to a recent study from the think tank Center for Work-Life Policy, ‘Off-Ramps and On-Ramps Japan: Keeping Talented Women on the Road to Success’, 74 per cent of college-educated women in Japan voluntarily leave their jobs for six months or more to have children; more than twice the number of college-educated women in Germany or the US taking the same action. Indeed, a new generation of ambitious Japanese women have found that the best way to solve the conflict between the workplace and ryosaikenbo is to forego having children altogether, in order to develop a genuine career. However, this only exacerbates the wider population problem.

Harmony Residence is a Tokyo-based employment agency that has helped match its registered jobseekers with over 100 companies since it was established in 2007. With 80 per cent of its 1,500 candidates being single mothers, the agency specialises in recruiting this particular group to management positions. One of the factors that drove Harmony’s president, Makiko Fukui, to establish the agency was her own experience of giving up a career in order to get married and start a family. Fukui says that she wants to help build a society where women can work and bring up their children.

‘More and more we are receiving the same response from companies: that the top ten university graduates they would like to hire are women, because they are often better qualified and more talented than their male counterparts.’

She adds: ‘Companies in Japan have to work very hard to retain female talent. They have been losing them for a while and they know they have to do something about it.’

Japan takes action

The continuing absence of women from the senior levels of Japan’s workforce almost seems to make redundant Abe’s three stated ‘arrows’ of economic revival: a bold monetary policy; a flexible fiscal policy and growth-orientated structural reform. The threat is so significant that, in June 2013, Abe was quoted by The Washington Post as saying: ‘The mission that I have imposed upon myself is to thoroughly liberate the power that women possess.’

True to his word, Abe has made a number of symbolic female appointments to key positions in the ruling Liberal Democratic Party (LDP) when he assumed power for a second time in December 2012 (Abe previously served as Prime Minister from 2006 to 2007). These include Masako Mori, a lawyer and mother of two daughters, to her first Cabinet post of Minister of State for Measures for Declining Birthrate and Consumer Affairs and Food Safety. The previous incumbent of that post, Sanae Takaichi, has been appointed the first female chair of the LDP’s Policy Research Council, and the former postal minister Seiko Noda has been appointed chair of the LDP’s General Council, the highest decision-making body of the Party. In addition to these Cabinet appointments, Abe has ordered specific missions for several government ministries aimed at raising the profile of women in Japan.

For example, the Ministry of Economy, Trade and Industry (METI) and the Tokyo Stock Exchange (TSE) have jointly selected and publicised the names of some 70 listed companies that have demonstrated success in encouraging women in the workplace – granting them the ‘Nadeshiko Brand’ logo designation in recognition of their work.

The companies were scored on two factors: firstly, offering career support for women; and secondly, supporting women in balancing work and family. From that score, METI and TSE selected and publicised the names of the 17 recipients of the brand which also demonstrated a superior financial performance.

American Chamber of Commerce in Japan (ACCJ) vice-president Vicki Beyer, who works as an in-house lawyer at a global investment bank, says: ‘The Abe Government is doing what Japanese governments often do. They are working behind the scenes encouraging companies.’

In another demonstration of his commitment to the cause, Abe publicly set a government target of raising the participation of women in senior business leadership positions in the private sector to 30 per cent by 2020. Furthermore, an unidentified female minister is reportedly leading a government study group hosting closed meetings with the agenda of developing further ‘working mother’ initiatives.

Abe’s various initiatives have started to attract an increasing number of column inches from the mainstream media outlets in Japan (for example, The Nikkei daily newspaper has a dedicated column). While this has generated some backlash, particularly from those mothers who have chosen not to work, who feel that their traditional ryosaikenbo role is now under attack, Abe’s emphasis on economic growth seems to be the only policy that guarantees mass support these days.

All talk?

While Japan is not alone in having to confront and address challenges such as a declining birthrate, ageing population and energy and resource issues, its predicament is perhaps more extreme than in other developed countries. Abe’s hope is that Japan can pioneer the resolution of such challenges, which could then present opportunities for the country to become a global leader in subsequent and connected growth sectors.

Yet although Abe’s public position is that he sees the third arrow of economic revival – growth-orientated structural reform (in particular the role of women) – as the most important one for resolving these challenges, not everyone is convinced.

‘Abe’s third arrow is still very theoretical,’ says Beyer. ‘Part of the problem is that most politicians are not married to career women, so there is a lack of understanding and a lack of ideas. I don’t think they get it.’

Mori Hamada & Matsumoto partner Akiko Sueoka, says that although setting targets is helpful, not enough is being done to develop a pipeline of female managerial talent by getting women into middle management positions.

‘Setting targets is easy but there are not that many candidates that can be senior managers,’ she says. ‘We should be doing more to increase the numbers of younger female leaders, and then maintain those numbers.’

It is perhaps with that in mind that the American Chamber of Commerce recently launched a dedicated ‘Women in Business’ (WIB) committee, which has resulted in a growth in its overall female membership from approximately 18 per cent to 24 per cent. The WIB committee has three purposes: to support and provide useful information for working women in Japan; to facilitate networking opportunities for working women (such as 2013’s hugely successful ‘Women’s Summit’, which attracted 300 women leaders from Japan and overseas); and to conduct advocacy work.

According to ACCJ member Fukui, who also acts as vice-chair for advocacy, the focus of the committee in the next few months will be on utilising senior citizens to help with domestic work and childcare, which seems an innovative way of addressing the current imbalance in Japan’s population.

‘We have to propose something that will be beneficial for the whole society,’ Fukui says. ‘We need to increase the number of women going back to the workforce, but who will raise the children? Japanese women are facing this problem. We now need practical action.’

Making it work

Inadequate provision for childcare and flexible working presents a major hurdle for women in Japan who wish to return to work after having a child. Flexi-work is difficult to nurture in the country’s ‘morning-to-midnight’ corporate culture, where the vast majority of workers routinely put in overtime. There is also a shortage of privately-run childcare facilities in Japan, which means families rely on municipal government facilities. A quirk of government childcare facilities is that the child has to take up their place at the beginning of April every year, if not they will not have a place for the entire year. This often has an adverse effect on a women’s ability to use her maternity leave as intended. Mori Hamada partner Chisako Takaya says: ‘The issue of childcare leave is closely linked to the availability of nurseries. The reality is that, because of the lack of nurseries, many mothers cannot find places for their children.’

In 2009, Goldman Sachs opened a childcare facility in Tokyo offering full-time, part-time and back-up programmes for children of pre-elementary school age and after-school programmes for children up to 12 years old. Since then, it reports that its average post-maternity leave time has decreased significantly.

But Beyer says that the sheer expense involved in setting up and running such facilities makes them uncommon. ‘The Government should tell developers of office buildings that it will not approve their plans unless they have childcare centres in their buildings,’ she says. In light of these issues, the ACCJ recently started a small study group to look at how childcare services can be expanded more quickly.

Beyer also believes that, contrary to popular belief, the traditional Japanese concept of lifetime employment, with which many of Abe’s policies chime, is actually holding Japan back. ‘The Government is not doing anything to encourage a mid-career job market. It needs to introduce policies that allow companies to shed excess labour when they don’t need it, and hire when they do need it. This would enable women who leave the workforce to start their families to more easily come back into meaningful jobs.’

There are some positive signs of change emerging: a number of companies in Japan, such as Itochu Corp, Marubeni, Mitsubishi Corp, Mitsui & Co, Sumitomo Corp, recently started to introduce flexible working hours. For example, Mori Hamada & Matsumoto provides a range of flexible working arrangements as well as paid maternity leave and partial reimbursement of nursery fees.

‘At the ACCJ, one of the things that we’re advocating is the need to engage with Japanese institutions,’ says Beyer. ‘Working smart is widely recognised as better than working long, but many Japanese companies have been using the wrong metric to measure what constitutes a good employee.’

For example, many companies use an evaluation system that rewards total daily output, irrespective of how productive an employee might be on an hourly basis. As a result, those promoted have been those prepared – and, crucially, able – to put in the most hours in a day.

‘But, encouragingly, I do hear Japanese companies increasingly talk about working smart rather than working long,’ adds Beyer.

Whether Japan’s government is able to count on ‘girl power’ to reverse the country’s economic slide will depend on Abe’s ability to overcome a wide range of cultural assumptions about the role of women in society. Crucially, he will have to get corporate Japan onside, so that well-qualified women do not feel they have to choose between having a career and having a family. Equally, corporate Japan will have to do more to ensure that working women, with ambitions to marry and start a family, are not automatically shunted onto the ‘office lady’ career track. ‘Even though companies are not allowed to “career track” women, it still happens de facto,’ says Beyer. ‘It will not stop until we find ways in which women can have families and keep their careers.’   

Stephen Mulrenan is a freelance journalist based in Hong Kong. He can be contacted at stephen@prospect-media.net