Why Women Will Shape Japan’s Furture

29.07.19 Publication:

Women will determine the future of Japan’s economy and of many Japanese businesses.
That is the proposition I have put forward in a new book which was published on June 21 st
by Nikkei Publishing. Many readers will consider this to be a rather bold statement. So I will
try to explain.

What I mean by this proposition is that I believe that one of the leading factors that
will shape Japan’s economic future in the coming decades will be how well businesses prove
able to adapt their corporate cultures and procedures to recruit and retain the growing
numbers of female professionals who are now aged in their 20s, 30s and 40s. In fact, I think
this could prove to be the singlest biggest factor determining success or relative failure.

I say this for three main reasons. The first is simple: demography. The rapid ageing
and shrinking of Japan’s working age population means that there is a growing shortage of
well educated professional men, which in the past has been the main source of
management-track recruitment, especially for big companies. So it is becoming crucially
important for firms to recruit and, most vitally, retain the services of, female potential
management-track staff.

Fortunately, the second reason is that the available supply of such female
professionals is now larger than at any previous time in modern history. This is because of
the decision by families in the 1990s and 2000s to send their daughters to full four-year
university courses rather than two-year junior colleges.

In the 1980s, the decade when most of today’s top male managers graduated from
university, the gender gap in higher education was huge: only around 10-12% of girls went
to four-year university courses compared with 35-40% of boys. By 2000 the gap was still
wide, with 30% of girls but 45-50% of boys going to such courses. But by 2010 45% of girls
were going to four-year courses and now the figure is 50%, against 55% for boys.

It naturally takes time before such female graduates can rise to managerial positions.
But this trend means that even with some level of drop-out by women in mid-career to raise
families, the supply of professional, well-educated women is now rising in all age groups.
The proportion of managerial roles currently occupied by women is lower in Japan than in
other developed countries, but thanks to this rising supply alongside demographic shortages
it is destined to grow, quite rapidly.

In fact, it is crucial for the whole Japanese economy that it should do so. Why? This is
because the third reason why women will determine the future is that Japan’s biggest
economic weakness is one shared by both men and women: low rates of productivity
growth. Until 20 years ago, productivity growth in Japan was one of the highest in the
world; now it is among the lowest.

This is because too many employees are in low wage, low productivity jobs,
especially as part-time and non-regular workers, who are in work that is below their true
skill levels and who get little training and development from the companies that employ
them. The largest proportion of these low-productivity workers are female.

With labour now in very short supply, it is vital that workers are moved from low-
productivity roles to ones in which their human capital can be put to better use and even
improved through training. That is especially true of women. Female labour-force
participation has risen substantially over the past 10 years, overtaking levels in the US and
some European countries. But there remains a big gap in terms of productivity. The longer
this gap persists, the more that the university education such workers received will have
been wasted.

For Japan’s national interest, it is vital that everyone’s human capital gets the chance
to be used in the most productive ways. In fact, I would say that developing, nurturing and
enhancing human capital is the biggest challenge facing Japan over the coming decades. In
an era of artificial intelligence and other technological breakthroughs, the basic source of
prosperity will be the ability to combine human skills and advanced technology.

So that is why I have said that women will determine the future of Japan. Many
women are ready to do so and are already having great success in their chosen professions.
The question is whether corporate cultures and procedures can adapt themselves
sufficiently to make full use of female human capital, by introducing more flexibility in
promotion systems and in working hours and methods.

If they can adapt, then I believe Japan’s future will be bright. If they fail to do so, it
will be more disappointing.

Image by Gerd Altmann from Pixabay