Japan was ranked 104th out of 136 countries on the World Economic Forum (WEF)’s Global Gender Gap sub-index on economic participation and opportunity in 2013. This means that Japan has the second largest labour market gender gap among the advanced economies, next only to South Korea. Meanwhile, Japan’s population peaked in 2008 and has been on the decline since. As such, high hopes are being pinned on women as a potential workforce and also as the gender that can give birth. The government is advocating the ‘20-30’ campaign that calls for raising the percentage of women in management positions from the current 10% to 30% by 2020. Prime Minister Shinzo Abe has made ‘Womenomics’ one of the key elements of his growth strategy, calling for “creating a society in which women shine,” while Japanese companies have just begun taking steps toward gender diversity in management.
Commonalities among Japan, China, and South Korea
Located in northeast Asia, Japan, China, and South Korea share similar ideas from Confucian ideology which are closely related to the division of gender roles. So, significant gender gaps are observed at the workplace and elsewhere in these societies. As shown in Figure 1, economic gender gaps – such as wage inequalities and female ratios in management positions – are large in all of the three countries.1 In the coming years, the three countries will be playing increasingly important roles in the Asian and world economies, and there will be greater intra-regional cross-border flows of companies and workers.
This article examines the current status of gender diversity in management – i.e., corporate management approach – that seeks to generate positive results by bringing gender diversity into the workplace in Japan, China, and South Korea, using data obtained in company surveys conducted in the three countries. By presenting a comparison of the three countries and thereby enabling us to learn from our neighbours, it aims to help realise a society in which women shine and contribute to the revitalisation of the Japanese economy.
For the purpose of this article, I performed an aggregate analysis of data from the 2013 Corporate Survey of Human Resource Utilisation (China and South Korea) conducted by the Research Institute of Economy, Trade and Industry (RIETI) and compared aggregate data on Chinese and South Korean companies with those on Japanese companies, to identify issues to be examined. In the next section, I will briefly discuss my findings on five such issues. For detailed analysis, the readers are referred to my other articles.
Figure 1. Economic gender gap is big in Japan, China, and South Korea
Source: ‘Global Gender Gap Index Report 2013’ by the World Economic Forum.
Current status of gender diversity in management
Using numerical data from the two surveys, I compared Japan, China, and South Korea in terms of:
- Business performance and the utilisation of female workforce;
- Quantity of female workforce employed;
- Quality of employment of women measured in terms of promotion;
- Work-life balance and relevant programmes and customary practices; and
- Affirmative action programmes in South Korea and their impact on the employment of women.
Key findings on each of the five issues are as follows.
- First, regarding the relationship between business performance and the utilisation of the female workforce, Japanese companies that have a high percentage of management positions filled by women and/or any female executives, tend to have better earnings performance than those that do not.
In the case of Chinese companies, the higher the proportion of women among full-time and permanent employees, the greater is the earning performance. Likewise, in South Korea, the higher the proportion of women in top management positions, the greater is the earning performance.
- Second, regarding the quantity of the female workforce, the number of women at work is lower than that of men across all levels, and the proportion of women in senior management positions remains low in all three countries.
However, a comparison among the three countries shows that China has the highest proportion of women as full-time employees, managers, and top managers, and South Korea is at least better than Japan. Meanwhile, the promotion of the utilisation of the female workforce was counted among the top 10 strategic issues by a relatively high percentage of Chinese companies – i.e., 82.4% of medium-sized companies and 74.2% of major companies – compared to only 32% of medium-sized companies and a somewhat higher 44.2% of major companies in South Korea. Although a direct comparison cannot be made, McKinsey & Company (2012) shows that only 25% of Japanese companies list the promotion of the utilisation of female workforce among their top 10 strategic issues. If the fact remains that the percentage of women is low whether in total employment or in management positions and the promotion of women is not high on the agenda, what is crucially needed is the top managers’ ability to deliver results.
- Third, regarding the quality of employment of women in terms of promotion, Chinese companies in urban areas have a higher proportion of women in all levels – i.e., in total employment, managers, and top managers – than those in Japan and South Korea.
While women-specific welfare programmes are nearly non-existent, working hours are not too long and most female workers are in ‘continuous employment’, meaning that they have been employed by the same employer for one year or longer. In South Korea, the labour force participation rate of women is lower, and the tendency for women to discontinue working because of pregnancy and childcare is more conspicuous than in Japan. Meanwhile, Japan is characteristic in that the pace of promotion is relatively slow for both men and women. In particular, the proportion of women in management positions is the lowest among the three countries. In Japan, the lowest age limit for getting promoted to a managerial position tends to be higher, the length of service is relatively long, and it takes more time for women to be promoted than for men.
- Fourth, let’s take a look at work-life balance and relevant programmes and customary practices.
As shown in Figure 2, the overall level of labour force participation rates for women in Japan is not necessarily lower than those in urban China and South Korea. However, the tendency for women to discontinue working in the middle of their careers as well as significant disparities in treatment between the first half and second half of their career (represented respectively by the left half and right half of the M-shaped curve) are problematic.
While many of those in the left half hold fulltime permanent positions, those in the right half are mostly non-permanent and/or part-time workers, who typically earn low wages and receive no fringe benefits. However, in comparing the three countries, unique background factors for China, such as gender-specific retirement ages and the one-child policy, should be taken into consideration.
Figure 2. Labour force participation rate in Japan, China, and South Korea.
Source: Ministry of Internal Affairs and Communications Statistics Bureau, ‘The Labour Force Survey 2010’ in Japan. National Bureau of Statistics, ‘The 2010 National Population Census’ in China. ILO ‘Yearbook of Labour Statistics 2010’ in Korea.
- Fifth, the impact of South Korea’s affirmative action programmes on the employment women is not necessarily clear-cut.
Preceding studies have found no statistically significant correlation between the implementation of such programmes and the proportion of women. However, Figure 3 shows that following the introduction of the programmes, the proportion of women has increased gradually both in total employment and in management positions, and even in top managers, though such positions are not covered by the programmes.
Figure 3. Changes in the proportion of women in total employment, managers, and senior officers in South Korean companies subject to the affirmative action (AA) policy by size group in 2006 through 2011 (Unit: %)
Source: Created by the author based on data provided by the Ministry of Employment of Labour of the Republic of Korea.
Notes: 1) Numbers shown in the figure are the mean percentages for AA policy-covered companies by size group; 2) ‘Total employment’ means the total number of fulltime permanent employees; 3) The scope of companies covered by the AA policy was expanded in 2008 to include those with 500 to 999 employees. Therefore, data for those companies for 2007 and before are not available.
It is hard to say that the Japanese government has endeavoured for many years to promote Womenomics. However, against the backdrop of a population downturn and mounting fiscal deficits, there have been growing calls for greater female participation both from within and outside of Japan. And finally, the Japanese government has taken a tiny step forward, and gender diversity in management is beginning to emerge in companies. I am looking forward to monitoring further developments.
Meanwhile, the remaining challenge in my research is to conduct more rigorous analysis of the above-discussed five issues by utilising those meaningful data used for this article.
Editor's Note: The main research on which this column is based (Ishizuka 2014a) first appeared as a Discussion Paper of the Research Institute of Economy, Trade and Industry (RIETI) of Japan.
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1 In the overall Global Gender Gap Index 2013, which covers education, health, and political empowerment in addition to economic participation, Japan was ranked 105th out of the 136 countries, as compared to China and South Korea ranked 69th and 111th, respectively.