How must the Role of Women in Japan Change in the Face of an Ageing Population?

How must the Role of Women in Japan Change in the Face of an Ageing Population?

22nd August 2015 Ideas 0
By Geoffrey Sato-Holt, Whitgift School

The principle concern currently about Japan is its demography, specifically its ageing population. Following its peak in 2007 of 128 million, the government estimates population will fall to 87 million by 2060. The age distribution will shift heavily, up to 40% of the 87 million mentioned will be 65 or older, compared to the current rate of just over 22%. The graph below shows a predicted effect on the old-age dependency ratio, which is set to be over double the world average.

These predictions are ominous for Japan. As population falls the active labour force will shrink. This causes decreased productive potential, as Japan can produce less with less workers. The entire economy will shrink, preventing Japan from remaining one of the world’s largest. The increased proportion of over-65s will lead to increased social security payments, adding to the huge national debt – $10.46 trillion as of 2013, over 200% of its GDP. Workers will have to support more dependants, and there may not be enough income to do so. There is the possibility of a demographic death spiral due to dwindling output and incomes. Action has to be taken to counter the ageing population, lest Japan fall out of global economic relevance.

Japan’s low fertility rate1 (1.40, ranked 208th in the world by the CIA), is the cause of its population troubles. There are less births each year than deaths, decreasing population. Combined with increased life expectancies, this has led to the age distribution problems. It is estimated that a rate of 2.07 is necessary to maintain Japan’s current population. Increasing the fertility rate is a necessary solution to the population problem.

The primary cause of the low fertility rate is that women in Japan feel that they must make a choice between a family and a career. It is expected that upon bearing child a woman will take up the traditional role of serving her husband and children. Those that do not abide by this often aren’t hired by employers because of the social stigma. Obtaining childcare in Japan is also unusually difficult, exacerbating the difficulty of raising a child whilst maintaining a work life. Ultimately women have the choice of pursuing their career or becoming a housewife. According to the OECD, around 60% of women in Japan leave the workforce permanently following childbirth.

Japan ranked 105th out of 136 countries in the Gender Gap Survey 2013, the worst out of all developed countries, reflecting the gender ideology that is common in the country. Japanese husbands spend on average only an hour a day helping with children and household chores. According to a Japanese Health Ministry survey, only 1.89% of men took paternity leave in 2012 compared to 83% of women who took maternity leave. This is in spite of the fact that both parents are allowed to take a year off following the birth of child. Many fathers who did take paternity leave have spoken about being harassed for doing so. Others express that they feel too under pressure, they must chase promotion and show devotion at work to be able to provide more for their family. Therefore they can’t take paternity leave. It is clear that the general belief in japan is that women are expected to look after their children while the husband works. This diminishes any chances of a successful career for mothers.

This social attitude will be very difficult to change. Following the past two decades of stagnant growth, Japanese citizens are realising that reform is necessary, and are becoming open to new ideas. However, these preconceptions are deeply rooted in Japanese society. Government pressure and legislations are necessary to provoke a significant change. One possible solution is imposing regulations so that women are required on the boards for all large firms, reinforcing the notion that women do have a place in the business world rather than just the household. According to the 2013 J-Win Diversity Census Report, women only make up 4.2% of business staff at the level of division-head or above. With such little influence at the top end of the Japanese business world, it is unsurprising these gender imbalances remain. By allowing women a larger representation, firms could become more understanding when employees want the opportunity to have children whilst continuing their work.

The long hours worked typically worked by the Japanese (many work over 50 hours a week) are a barrier for families. It is not possible for both parents to work these hours and raise a child. There isn’t enough flexibility for this. The father will be expected to continue working while the mother stays at home. OECD surveys have found that the gender pay gap in Japan is twice the OECD average, as the median income for a woman is two thirds that of men. The husband is therefore likely to earn more than his spouse, so the wife will give up her job to raise the children.

This situation can be remedied by improving and encouraging flexibility in working conditions. The Gender Gap Survey found that 63% of firms offer flexible working hours and 79% other work-life balance programmes. The Childcare and Family Care Leave Law was revised in 2010. This acted to increase childcare leave, increase holiday time to care for children and restrict overtime for certain types of family. The government must now make sure that workers are aware of these opportunities and that they are fully utilised, through awareness campaigns or regulations to make sure firms inform staff of their options. A survey by Expedia Japan showed that the Japanese only took 39% of their annual paid leave. There is a reluctance to halt work that explains the lack of childcare on the father’s part. However, if these opportunities are utilised, a better work-life balance can be struck, opening the door for families in which both spouses can work full-time while raising their children.

The alternative is a part-time job for the mother, in place of full-time work. ‘Non- regular’ work has become increasingly popular in Japan since the 1980s. However, wages for these jobs are much lower relative to full-time work, and there is little opportunity to improve human capital. This prevents the workers from furthering their career, and can lead to a cycle of short-term, low-paying jobs. This is not a fully viable option for mothers looking to pursue a successful career.

Solving the above problems would increase employment of women in Japan. However, this alone wouldn’t increase fertility rates, it would have the opposite effect. As work is more desirable relative to raising a child, more women will continue working instead of having children. This is why growth in the childcare market must be stimulated alongside these measures.

A survey by Wataru Suzuki, economics professor at Gakushuin University, found that average cost of a certified day-care in Japan is $200 a month, compared to $972 in the U.S., as found by the National Association of Child Care Resource & Referral Agencies. This is as Japanese day-care is subsidised by local governments, keeping cost low, especially for low income families. However, this has hindered construction of new day-care centres. Subsidising day-cares is very expensive for the government, and there is not enough leftover income to invest in more. Regulations prevent organic growth of private day-cares, e.g. they cannot reinvest profits in constructing more centres. There are not sufficient day-care centres in Japan to satisfy demand. The Ministry of Health, Labour and Welfare announced that about 44,118 children were on the waiting list for day-care centres in 2013. The government must increase access to day-cares through deregulation, while maintaining subsidies to keep costs low for families. This will allow women to continue with their jobs while raising children, knowing they can be left in responsible hands.

Maintaining the labour force is not the only goal the Japanese government must achieve. It is important they increase labour productivity in Japan, in order to mitigate the effects on production of a shrinking labour force. Regardless of the ageing population, this should be a target at the forefront of Japan’s policies, due to their weak labour productivity relative to other developed countries. OECD stats indicate it is only 62.5% of the U.S.’ productivity.

Again the role of women will play a large role in carrying out this objective. The current rate of female participation in the Japanese labour force is 63%, compared to 85% for men (source: Gender Gap Survey 2013), demonstrating how women are underutilised in the labour market. Out of those aged 25-34 in Japan, more women have completed tertiary education than men in Japan. Despite this, the participation rate of university-educated women is 68%, only slightly above the rate for high- school educated women, 64%. This indicates the productivity that is being wasted. By resolving the problems mentioned above, the situation will improve, but there is more to do. There more barriers that prevent women from working at the same capacity as men.

Reforms must be made to the benefits and taxation system, which currently encourages women to work few hours. Spouses with salaries of less than ¥1.3m are given many allowances, such as no tax on their earnings and being covered by the primary earner’s pension and health care insurance. This incentivises women to not work full-time, promoting the traditional family role. By removing these barriers, the government can generate more income and increase female labour participation.

This may lead to the formation of less families in the short run, as it is less incentivised financially. However this effect will be negated by other policies that increase the fertility rate. The positive effect on female labour market participation and productivity will benefit Japan more in the long-run, as the structural change concerning roles of female workers will lead to increased opportunities for raising children in the future, while also being able to work.

The lifetime employment system in Japan is a well-known paradigm of their economy, believed to have been in place since the 1950s. It is much less influential than believed. In the 1980s, only a fifth of workers stayed at one company for their whole career. This figure has fallen since, primarily due to the growth of non-regular work. However, there are similar phenomena still present in the Japanese economy. ‘Sogoshoku’, meaning career positions, are jobs that offer higher wages, and the opportunity for accumulation of human capital, in contrast to noncareer positions. These jobs are filled following graduation from university, and allow the possibility of long-term, even lifetime, employment in a large corporation (though this is less likely now). If one enters a noncareer position, it is much more difficult to increase human capital and move onto higher paying jobs in the future, although the job itself is less demanding.

A 2010 survey found women make up 6% of staff in career positions, though this is rising (12% hired in 2010 were women). This is a very low level, and it is difficult to pinpoint why this is the case. There may be concerns that women will leave to have children, not fully utilising the training the firms have paid for. It may again be a case of employers preferring men to be the engine of the workforce. Regardless, the proportion of women involved in these jobs must rise, through government intervention. One possibility is setting a minimum percentage of women that must be hired each year. Consequences of the low uptake of women into these jobs is few female managers in Japan (only 9% in 2009, compared to 43% in the U.S.), and the large gender wage gap, as men have more opportunities to accumulate human capital so can command higher wages. By hiring more women for manager positions or higher up, role models will be set for others to look up to, increasing motivation and female labour participation. Closing the gender wage gap increases motivation of female workers, as they earn more, increasing their productivity.

As career positions are dominated by men, it is unsurprising noncareer positions consist mostly of women. This is reflected also in the non-regular job market. 35% of women work part-time in Japan according to the Gender Gap Survey 2013, while only 10% of men work part-time. The shortcomings of non-regular jobs were mentioned earlier. They also offer little in improving human capital, and very little in job security. The employment of many women in the non-regular job market acts to inhibit their productivity, as they are unable to develop skills and unlikely to hold down a job.

Since 1994, labour market participation of women aged 25-54 has increased from Japan, from 65% to 71% in 2009. This may be seen as a positive sign. Over 90% of this increase is accounted for by women aged 25-34 entering the non-regular job market. They will have little opportunity to develop skills and further their careers, despite their young age. They are generating income, however at the current time have not truly entered the job market as they can’t build upon their careers from this position. Their potential productivity is not being suitably utilised. The government should take action to reduce duality in the Japanese job market. This means increasing job security of non-regulatory work, and closing the gap between that and full-time work. This would encourage firms to train staff and offer longer-term contracts. This would be effective as there are many women in the labour market that aren’t able to make use of their skills who would benefit from such a policy. It could lead to significant sustained productivity growth in Japan, as the non-regular job market looks likely to continue to expand.

Women in Japan that interrupt their job following child birth struggle to find work afterwards. The OECD found 18% of university-educated women were able to find full-time work and 12-13% of less educated women. Labour laws in Japan make it difficult to fire employees. Due to this, firms are reluctant to hire, especially those that have just returned from long breaks as they are especially risky. They prefer younger employees who have just graduated, as they are more likely to stay at the company for longer, and are easy to train.

Labour regulations should be reformed, decreasing job security. This will make it easier for mothers returning to the job market to find work, and will also decrease labour market duality. The government should also lengthen maternity leave. Studies have found that longer parental leave increases the chances of mothers returning to their jobs following childbirth. The models from France, Germany and Sweden could be followed, which allow leaves of up to three years. Mothers know they will have enough time to raise their child without having to leave their jobs. By keeping more mothers in jobs following childbirth, the labour force is increased and productivity is higher, especially as these workers will likely already have developed skills from previous work.

The role of women in Japan’s economy and society is in need of change, in order to both sustain its economy in the face of an ageing population, and to reflect its status as a developed country. It is not the only reform that should be identified when looking to mitigate the effects of the ageing population. If the policies concerning women are successfully implemented there will no doubt be a large time lag associated, so other policies such as immigration are needed. However these policies should be prioritised, as they may signify a large step in Japan’s economy and society.

1 Fertility Rate – Number of babies an average woman has in her lifetime

About the author

Andrew Tan: Head of Technology and Website Development. 2nd year Economist at St. John's College. Please e-mail me with any inquiries/issues regarding the website at itofficer@marshallsociety.com!

0 Comments

Would you like to share your thoughts?

Your email address will not be published. Required fields are marked *

Leave a Reply