By paying women less, is Japan deepening its own deflation?

Corporate Japan’s sexism is so internalized that even the good news on women in the workforce tends to be bad

When he returned to office in 2012, Prime Minister Shinzo Abe doused his manifesto in pink, sensing the need to broaden his Liberal Democratic Party’s appeal, he made empowering women a central pillar of Abenomics.

Abe’s “womenomics” was patriarchal Japan’s first real crack at better utilizing the other half of the labor pool to inspire greater innovation, increase productivity and support a shrinking workforce.

And last week brought good news that’s really a downer. The female labor participation rate hit 66% in 2016, the highest since the data series began 49 years ago.

It’s an improvement over 2011, when the rate was 63%. The bad news: most of these jobs are irregular, meaning they pay less, have few benefits and security and offer scant opportunity for advancement.

Since Japan, in other words, limits immigration, women too often get the gigs that in Singapore, France or the U.S. might go to low-wage migrants. Progress?

On the top end of the labor market, closer to the executive suite, women are making far fewer inroads.

That’s why, despite Abe’s womenomics, Japan’s ranking in the World Economic Forum’s gender equality index is worse now -– 111th –- than its 98th place finish in 2011.

For all the government’s hype about “creating a society in which all women can shine,” statistical results are rather devoid of bling. That can be seen, too, in wages, which have barely increased during that time. By paying women less, corporate Japan may be deepening deflation.

What to do?

You’ll have to forgive Organization for Economic Cooperation and Development officials like Monika Queisser and Stephane Carcillo, both of whom visited Tokyo recently, if they lack patience with the question.

Long before Abe’s return, the OECD had been urging Tokyo to get serious about economic sexism. The message Queisser and Carcillo delivered here earlier this month: Equality won’t happen on its own. Only clear, bold and forward-looking policies can do that.

Japan’s 66% landmark is tainted by the fact that women also now account for about 66% of non-regular workers.

Tokyo seemed to think merely talking about disparities and sponsoring a few splashy conferences would narrow wage and employment gaps. That, it was hoped, would encourage more women to rush into the labor market.

Abe’s team further hoped modest moves to increase childcare options and urging companies to offer more flexible schedules – again, mostly talk – would do the trick.

Trouble is, Japan Inc.’s rigid employment matrix clings to productivity-killing customs like seniority-based promotions and wage-increase schedules, as much overtime as companies can get away with and a stubborn preference for workers who won’t go off and get pregnant.

“Removing the obstacles that limit female employment is crucial to increase fairness and inclusive growth by allowing women to fulfil their potential,” OECD said in an April report. “In addition, it would help mitigate the economic impact of demographic trends.”

In Tokyo, Queisser and Stephane Carcillo pushed one of OECD’s favorite reforms: mandatory quotas. It’s a third-rail topic in male-dominated Japan, but it’s the fastest way to boost economic growth and social vitality.

Tokyo, of course, likes its gender upgrades small and gradual. Hence the focus since 2010 on the “Ikumen Project” encouraging fathers to change diapers and help with household chores.

Quotas would force a business culture that likes things as they are to operate differently.

It would compel boardrooms loaded with 60-something men to shelve reservations about women in top positions. It would inject desperately-needed diversity into decision-making and strategy.

It would pump meritocratic forces into a business culture largely impervious to it. It would ensure a more women-friendly business ethos that empowers the other half to lean in and demand change.

It also might help Japan do better than Nepal (110th on the WEF scale) and Ethiopia (109th) in empowering women.

Only by internalizing the depth of Japan’s gender troubles can Abe change a narrative that continues to paint the growth outlook in a bad light.

William Pesek is a Tokyo-based journalist, former columnist for Barron’s and Bloomberg and author of “Japanization: What the World Can Learn from Japan’s Lost Decades.” Twitter: @williampesek

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