Where does Japan’s “Womenomics” stand now?

Kathy Matsui, Vice Chair of Goldman Sachs Japan, coined the term “Womenomics” in 1999 with the hope to change Japan’s predominantly male-oriented work culture.

After 20 years, Matsui, known as one of the few profound female business leaders in Japan, says she feels her long-term efforts has started to come to fruition.

“I definitely feel that perceptions have finally started to shift. The word ‘diversity’ is now finally part of the daily vernacular,” Matsui said during an exclusive interview with LinkedIn.

“But rules are continuously changing … [N]ot only will you be challenged in recruiting and retaining talent given the labor shortages, but you will also be limited in the amount of work you can extract from each individual. This means that not only will you need to find ways to boost productivity via automation, but you will also need to tap into other pools of talent, including women.”

As a part of global LinkedIn Editors’ special coverage for the International Women’s Day 2019 (#IWD2019), Satoshi Ebitani has asked Kathy Matsui about her take on gender balance in Japanese workplaces and what we need to do to achieve this year’s theme: “Balance for Better.”

- Raising awareness among both men and women about gender inequality in the workplace is crucial in Japan, whose ranking in the 2018 Global Gender Gap Index, compiled by the World Economic Forum, was 110th out of 147 countries and regions – and bottom among the G7 members. Kathy, what are your thoughts on this?

Matsui: I have a lot of thoughts about this. As someone who has been analyzing Japan’s economy and demographics for the past 30 years, that ranking didn’t really come as much of a surprise since many countries around the world are making good progress on diversity. However, I personally believe there has been gradual but continuous improvement here.

In Japan, having men go out to work while women stay at home was long the norm during the post-war era, and businesses organized themselves to adjust to that social structure. While men were automatically placed in career track roles, women had to choose between a career track or non-career track position.

There was an unspoken presumption that women would eventually give up their careers to stay at home and raise children. Personally, I think there was nothing inherently wrong with this social structure. After all, during Japan’s high economic growth era from the 1960s through the 1980s, everyone in society was able to benefit from it.

- So, economic growth was essential in order for the social structure to continue?

Matsui: That’s right. That’s why the system began to fall apart once Japan’s economic growth started to stagnate. Japan has been suffering from two main headwinds, namely deflation and labor shortages - which have made it increasingly difficult to generate high growth.

- So you’re saying it’s no longer sustainable to rely on men alone as the principal workforce?

Matsui: That’s part of it. And I believe that’s why Prime Minister Shinzo Abe has made “womenomics” – and getting more women into the workforce - a key part of his national growth strategy, ‘Abenomics.’ This, along with the cooperation of the business community, has led to a significant improvement in employment rates for Japanese women over the last few years. Today, seventy percent of women between the ages of 15 and 64 are working outside the home, which is a higher proportion than in the U.S., which stands at around 67%. So on this measure, at least, we can say that Japan is perhaps not as far behind the rest of the world in terms of gender disparity as you might think.

But the devil is in the details. Of the seventy percent of Japanese women who are working outside the home, many are not employed in full-time roles. On top of that, while the number of women advancing to managerial or leadership positions has risen, the percentages are still much lower than in other developed countries.

We can’t expect to solve gender inequality overnight. It will happen in stages. Over the past few years, we have seen increasing numbers of women make the move from the home into the workplace. What needs to happen next is for more of these women to work in a full-time capacity, then be trained for decision-making positions. That’s why I said that I’m not surprised by the current situation – things may be moving slowly, but at least there’s finally some visible progress in the right direction.

DEALING WITH UNCONSCIOUS BIAS

- What are the things we need to do to increase women’s representation in organizations?

Matsui: I think there are several approaches. The first is a “hardware issue”. We need better caregiving support infrastructure, i.e. expanded preschool capacity, and more options for both childcare as well as elder care. We need facilities that support parents – both women and men - who want to work.

The second is a “software issue”. Here, I’m talking about the systems, processes and culture inside organizations. For example, many studies show that women tend to lack self-confidence regarding promotion opportunities relative to their male peers. We need more robust mentorship and sponsorship programs, as well as hands-on career management to help encourage and guide women to pursue the careers they really want.

The third issue is the need for societal and mindset changes. I think education in Japan is more or less equal for boys and girls through high school. But for some reason, this seems to change once students enter university. For example, despite Japanese high school girls scoring very highly in mathematics and science subjects, only a small percentage decide to pursue STEM (Science, Technology, Engineering and Mathematics) majors in university and this is one reason why Japan has the lowest ratio of female researchers among developed countries.

A final challenge we need to overcome is that of unconscious bias. For example, we have to overcome stereotypes that are often put forward by the media. Let’s take TV commercials for laundry detergent as an example. More often than not, the person depicted doing the housework is a woman. This hasn’t changed materially even in this age of the ikumen – a Japanese term that describes men who take an active role in child-rearing and housekeeping. Why can’t we have commercials that show women going out to work and men in the home doing laundry and looking after the kids? Or why not show both mothers and fathers sharing household chores? We cannot underestimate the critical impact such stereotypes have in shaping children’s perceptions of gender roles.

So unfortunately there is no single ‘silver bullet’ to solve gender inequality; rather, everyone in society needs to recognize that a more diverse society will lead to greater innovation, better economic growth, and, ultimately, a higher standard of living for posterity. We should all be thinking about what kind of society we want to leave behind for our children and grandchildren.

- So you’re saying that we need to change the way we think.

Matsui: But I am optimistic about the future. I am surrounded by young people every day, and am struck by the fact that many younger men these days seem to have a different mindset and values about work compared to older generations. For instance, I now hear more young men saying that work is not everything, that they want to spend time with their children, and they would actually like their spouses to work rather than stay at home. This is a material change compared to 10-20 years ago and is a very encouraging shift, in my view. I think we should all be hopeful that the millennial generation is well on its way to creating a society with better gender balance.

INVESTING IN ESG

- Do you think the mindset of Japanese businesses is also changing?

Matsui: As the personnel shortages become more acute and widespread, labor has increasingly become a seller’s market. If companies fail to create a work environment and culture that are appealing to their current and future employees, they will struggle to attract and retain high-quality talent.

Getting the work culture (the Japanese term is ‘shafu’) right is imperative to attracting the best people. Creating a hip and cool office space is helpful, but ultimately, it comes down to the culture – i.e. whether a company can offer an environment where people of diverse backgrounds and points of view are able to bring their best selves and maximize their individual potential at work.

Another reason that companies can no longer ignore diversity is the explosive growth of so-called “ESG” (Environment, Social, and Governance) globally as well as in Japan. Two years ago, the Japanese Government Pension Investment Fund (GPIF), the world’s largest pension fund, made its first investment into ESG indices, comprised of listed Japanese firms that are leaders based on ESG metrics. One of these indices was the MSCI Japan Empowering Women Index (WIN), which aims to represent the performance of companies that are actively promoting gender diversity. This triggered other Japanese pension funds to follow the GPIF’s lead, and as a result, more and more institutional investors are now including ESG factors such as diversity and governance in their investment criteria.

Previously, it would have been impossible for investors and analysts to assess metrics like diversity at the company level because of insufficient disclosures. Three years ago, however, Japan’s Cabinet Office started requiring companies to disclose diversity-related data as well as set diversity targets. This was a huge step forward because it’s hard to move the diversity needle if you don’t know where the needle lies. While many observers will still argue that Japan will never change in terms of diversity, I think they underestimate the power of the Japanese ‘herd mentality.’ In other words, if one company announces that it is going to set a target of twenty percent female managers by 2020, then a rival firm may try to outdo it by announcing a twenty-five percent target. Such healthy competition may actually move the needle faster than many think.

THE PLACE OF "WOMENOMICS"

- It has been nearly twenty years since you first coined the term “womenomics” in 1999. Do you think we’ve finally reached the goal in which you had imagined back then?

Matsui: I definitely feel that perceptions have finally started to shift and that the term ‘diversity’ is now finally part of the daily vernacular. Of course, several different factors have converged to bring us to the point we’re at today. For example, if the labor shortages were not as serious as they are now, we may not have seen the sizeable boost in female labor participation over the past six years.

And changing labor regulations are also forcing employers to pay greater attention to diversity. Starting this April, new limits on overtime work will come into effect, and this means that as an employer, not only will you be challenged in recruiting and retaining talent given the labor shortages, but you will also be limited in the amount of work you can extract from each individual. This means that not only will you need to find ways to boost productivity via automation, robotics, AI, etc, but you will also need to tap into other pools of talent, including women, older workers and foreigners.

- What can we all, including men, do to keep this momentum going?

Matsui: Among the many challenges to improving diversity, I believe we can all do a better job at correcting unconscious biases. We all have them – about women, men, LGBT, persons with disabilities, foreigners, and so forth. It’s important that we all become more educated and sensitized to stereotypes and question them from a young age, starting in the home and in the schools. Biases are by no means unique to Japan or Japanese society. They exist everywhere, but I’m convinced that greater empathy will go a long way towards improving gender equality.

-Satoshi Ebitani, Shusuke Murai