Mr. Kishida: To Get 30% Female Executives, Enforce the Law

Kishida Issues 30% Goal But No Accompanying Practical Measures

Source: Cabinet Office at https://www.gender.go.jp/english_contents/about_danjo/whitepaper/pdf/5th_bpg.pdf

It was a thrilling moment. The Japanese Prime Minister vowed to raise to 30% the number of female managers at private companies—and to do so in 13 years. That PM was Junichiro Koizumi, and the promise was made in 2003. Ten years later, Shinzo Abe repeated the 30% promise with the same 2020 deadline. Two years later, he admitted the goal would not be reached and halved the target to 15%. That, too, was not reached. Now, another ten years have passed, and yet another Prime Minister, this time Fumio Kishida, has vowed that 30% of corporate executives will be women. Once again, seven years is the promised timeline.

            Kishida, like Abe and others before him, has a habit of announcing lofty goals without creating any effective measures to turn the goal into reality. He says he is appointing a committee to come up with measures, but he did the same regarding other big issues, from creating startups, to raising the birth rate, to fixing the maldistribution of income, and reviving nuclear power plants.

Moreover, Kishida’s goal is less lofty than that of Koizumi and Abe. Kishida referred only to executives, not all managers. Moreover, he only talked about this goal being reached by top companies in the prime section of the stock exchange, where only a sliver of Japan’s workers are employed.

So far, empty promises are working for Kishida, if not for Japan. His poll ratings have bounced back to levels good enough to keep him in power: 52% in the latest Nikkei poll. Moreover, his Liberal Democratic Party (LDP) has done well in a series of recent local elections.

Glacial Progress

It’s not as if there has been no progress on women’s equality in companies. But the pace has been glacial pace. Thirty years ago, women held less than 5% of kakaricho (sub-section chief) posts. That’s the first rung on the ladder, and one attained by almost all men. By 2019, the female share was up to 19% (the government has not announced more recent data). During the same period, the female share of kachos (section chief) has risen from 2% to 11.4%. Among buchos (department heads), it has risen to 6.9% (see chart at the top).

            Those women who do get managerial roles acquire them much later in life. Within five years of joining the management track at a sizeable firm, 14% of men have been promoted to the post of kacho, but just 1% of the women. By the 20th year (age 42 for a college grad), a third of the men have attained the level of kacho or higher, but just 8% of the women. That limits the opportunity for future promotion all the way up How can women become 30% of executives if so few have even reached the bucho post?

Moreover, many firms seeking to show good numbers give women a managerial title but not the authority and the experience that normally come with that. In her 2016 book, Too Few Women at the Top, Kumiko Nemoto cites a thirty-eight-year-old male deputy general manager in a bank’s investment banking section, who reported that he does not see many female managers in the workplace who possess real organizational power. “Many of them have been given the job title but no subordinates to manage.”

Source: https://www.jil.go.jp/english/JLR/documents/2016/JLR51_yamaguchi.pdf

Japan Ranks 131st

If the government wants to have more women managers, get equal wages, etc., the first step is just to enforce the law, which outlaws gender discrimination on wages and promotion. And equal promotion is just one part of the problem.

            Women are paid less even when other factors, like occupation and education, are equal. Men and women with university degrees start at around the same pay at age 20-24. By the time the male reaches 50-54, his pay has almost tripled, but a woman’s pay has just doubled. According to the World Economic Forum, among 153 countries in 2020, Japan ranked 67th for wage equality, 110th for the number of professional and technical workers, and 131st for leadership roles in government and managerial roles in companies.

            Having lower salaries means women accumulate less money to pour into a firm, so a female-founded firm is likely to be smaller and hence less successful. So, there are far fewer female entrepreneurs. Beyond that, banks are even more reluctant to lend to women. Only 12% of female-owned startups got bank loans vs. 26% for men.

Mr. Kishida: Just Enforce the Law

All this discrimination is at odds with Japan’s Labor Standards Act, whose words seem quite clear: “An employer shall not engage in discriminatory treatment of a woman as compared with a man with respect to wages by reason of the worker being a woman.” In addition, the 1986 Equal Employment Opportunity Law (EEOL) forbids discriminating against women on matters of promotion, or even using criteria that appear to be gender-neutral but result in discrimination. These laws are routinely ignored and there is no government agency mandated to enforce them. The victim must spend her time and money to seek redress in court. Worse yet, class-action lawsuits are not available in labor cases.

            A lawyer who always represents companies in such suits told me that his clients routinely get around the “equal pay for equal work” principle by tweaking the job description, to argue it is not equal work. The courts almost always back the employer in such cases. Even when, in response to complaints, a government agency finds that a firm has violated the law, it is just given an administrative order to rectify its practice but is not penalized.

            By the way, the same anti-discrimination laws apply to non-regular workers, and there is no enforcement in that case either.

            Partly in reaction to the anti-discrimination clauses of the EEOL, firms created two separate tracks: ippan shoku (clerical or general track) dominated by women and nicknamed “the mommy track” and the sogo shook (managerial track) dominated by men. As late as 1992, 40% of firms felt no shame in justifying the track system by saying that they put women into jobs “for which the female and sensitivity can best be used.” At age 45, a person on the management track will earn nearly 2.5 times as much as his counterpart on the general track. As of 2011, about half of firms with at least 1,000 employees still acknowledged using this two-track system.

            The solution is to mandate that the Labor Ministry investigate and penalize violations of the law. Japan does have labor inspectors who examine the practices of individual companies. But mostly, they focus on violations like excessive overtime or lack of payment for overtime. They regard matters of equal pay as a contract dispute and not within their purview.

            If Kishida wants to be serious, he would mandate that these inspectors investigate discrimination on pay and promotion, and he would ensure that the Labor Ministry penalize violations via stiff fines and publicity. Despite talk of “womenomics,” Abe declined to take this obvious step. Alas, Kishida’s track record on matching goals with measures does not give reason for much hope that he will do any better.