Take the ratio 3.1%. It represents the share of board seats held by women in Japanese companies, according to a 2014 survey by Catalyst, a leading non-profit organisation focused on expanding opportunities for women and business. Norway leads the way with 35.5% of board seats, the UK 22.8%, and the US 19.2%.
A new corporate governance code published in March by the Tokyo Stock Exchange and the Financial Services Agency is a step in the right direction. It includes a principle on Ensuring Diversity and Including Participation of Women: “Companies should recognise that the existence of diverse perspectives and values reflecting a variety of experiences, skills, and characteristics, is a strength that supports their sustainable growth. As such, companies should promote diversity of personnel, including the active participation of women.”
While these measures are not mandatory, when they are introduced later this year, firms are expected to comply or explain why they cannot.
In the spirit of this new corporate governance code, adding women to the board can be done in either of two ways: one would be to appoint women as independent board directors, such as the current ANA independent director, Izumi Kobayashi, former President of Merrill Lynch Japan and Executive Vice President of the World Bank. However, how many Izumi Kobayashis are there? Not enough to go round all the listed companies in Japan (the Tokyo Stock Exchange alone has 2,292 listed firms).
The other way is to promote from within. This will require raising the number of women managers at Japanese companies, in order to have a pool of talented internal candidates from which to choose.
With Womenomics a core part of Abenomics, the government has set an ambitious target to have women occupying 30% of senior managerial roles by 2020, in order to boost the domestic economy. The economics makes sense. A 2012 IMF Report noted that Japan could increase its per capita gross domestic product by nearly 10% simply by increasing the number of women in the workforce to the levels seen in northern Europe. Current female participation in the Japanese labour force is only 63%. It’s 76% in Norway.
However, in order to raise the number of women at managerial levels in companies here, the first challenge is reducing the number of women who drop out of the workforce — or making it easier for them to re-enter the workforce. In 2010, the Japanese Ministry of Internal Affairs and Communications published a survey of why Japanese women were not participating in the workforce. Housework was cited by 34% of respondents, while 14% said working hours. When women in Japan have their first child, 70% of them stop working for a decade or more, compared with just 30% in countries like the US. Many of the 70% are gone for good.
In 2012, women made up 77% of Japan’s part-time and temporary workforce.
How can Japan reduce the number of women dropping out of the workforce and entice those who left for child-rearing reasons to get back in? In an ACCJ Viewpoint, we asked the government to:
Expand after-school care programmes to include children from years 4 to 6 (and to 8:00 p.m.), thereby allowing women to accept management positions that they may otherwise turn down.
Adopt more flexible immigration laws to allow for home help for families.
The Abe government has already stated an objective is to improve preschool childcare facilities, one of the biggest drawbacks to women returning to the workforce. However there is work to be done. Temporary labour contracts need to be overhauled, as does the current practice of overtime. These measures will benefit not only women, but also men.
Ultimately, as more firms begin to see the benefits of having a greater number of women in management — and therefore more board candidates — the resulting economic growth may benefit Japan as a whole.© Japan Today