Recommendations to RoundTable Japan

Recommendations on Women in the Labour Force

Summary of policy recommendations for increasing female workforce participation and leadership, Roundtable Japan, 7 June 2014

For this session, the group led by Naomi Fink compiled a rough roadmap to promote greater female participation and leadership in the Japanese workforce, based on the assumption that greater participation would bolster Japanese productivity, and greater female leadership would provide incentives for highly performing women to remain in the workforce. Fink presented a summary of these recommendations to the floor during the final panel of the conference.

 

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The recommendations compiled by Fink and her group are summarized here:

1.    Groundwork not guesswork – data gathering: Throughout the conference Ms. Fink emphasized the necessity of collecting reliable underlying data for analysis, as a solid foundation for policy decisions.

For instance, although it is a common assumption that lack of childcare facilities is a large factor in women’s decision to refrain from joining or withdraw from the labour force, there is no detailed empirical evidence.  Empirical data on the contribution of factors surrounding participation have yet to be defined.  Whilst existing household survey data goes some way in helping to identify associated factors, they lack the clarity of a purpose-built survey.  First and foremost, we recommend the design and implementation of a nationwide survey of women, men (and if possible, separately, of hiring managers) when in regard to the factors relevant to female hiring and participation.  A key first step is the identification of stratification factors, geographic clusters and appropriate questions.  The Cabinet office already has an appropriate random sampling frame in the form of electoral registers.   Survey data should be made available to academic and private sector researchers who might independently check the robustness of the Cabinet office’s conclusions.  We see this step as an indispensible contingency for any ensuing policy measures.

 2.    Strategic targeting of SME’s:  The Japanese government has already recognized the advantages that promoting a productive Small Business workforce could provide, given the majority of Japanese employees work for SME’s and also given the predominance of the lower-productivity services sector among these SME’s.   Coupled with the greater ease with which SME’s might adapt with regard to their less agile large business counterparts, prioritizing implementation of a women-owned SME programme appears a quick win.

In the US, the Women Owned Business Contracting Program required the Federal Government to award  5% of its prime contracts to women-owned businesses as early as 1994.  Women-owned businesses are defined as those at least 51% owned and controlled by women.  Yet it was not until 2011, upon the implementation of the WOSB FCP legislation (which included contract set-asides) that the share of awards to women-owned businesses cleared the 5% level.    The US’s own experience in introducing diversity targets illustrates the time lag that many times characterizes policy implentations from time of inception, underscoring the need for effective incentives from the start.  Given the existence of examples abroad (such as that of the US), we would recommend that Japan begin by examining the successes and failures of these existing overseas programmes, alongside their merits and demerits were they to be implemented domestically.

 3.    Incentives for large firms: Once a small business initiative is in action, the Japanese government might feasibly (as do many US government bodies and agencies) select as a criterion of contract awards to large firms the fulfillment of diversity quotas amongst those firms themselves, as do many federal, state and local governments in the US.  Of course, this is not enough to ensure change in the underlying leadership and employee structure of large firms.  As such, it will mostly like be necessary to state outright a public target, and to introduce fiscal incentives (in the form of taxes or subsidies) to comply with the target.

 a.     Publicly stated target:  One member of my group suggested that as diversity rises, meritocratic hiring and promotion practices gather momentum in their own right when women form around 20-25% of the workforce, at all levels of seniority.  Empirical evidence might be gathered on this level by surveying firms directly.  Were we to identify the 20-25% level as indeed the likely tipping point for diversity momentum, we would likely set the target slightly higher (around 30%) to be conservative.

 b.    Women on the Board but first, women middle managers: Given the underlying idea is to hire and promote capable women (rather than engage in pure tokenism), it would most likely be necessary to assign not only a timeframe but a phased increase of female participation at the higher levels of leadership, to allow firms to identify, select and train new female leaders.   Moreover, given the veto power typically held by middle management on hiring and promotion in large Japanese firms (e.g. at Kacho level etc), identifying appropriate skilled female middle managers is likely to be just as important as increasing female participation at board-level. 

c.     Linking subsidies, tax incentives:  Positive enforcement of the above-mentioned targets might take the form of subsidies or tax deductions to firms whose increase in female workers (especially in senior positions) on a yearly basis exceeds a given rate.  A negative enforcement approach might consist of the implementation of lower corporate tax rates specifically for compliant firms, effectively imposing a relative penalty on non-compliant firms.  Of course, this would prove a greater incentive amongst profitable firms who pay taxes (less than one third of Japanese companies).

d.    Name and shame:  While allowing large firms a phased approach over a window of time to comply with the new target, publishing a list of compliant and non-compliant firms might also offer incentives (in the form of avoidance of public opprobrium) for firms to comply with targets for female managers and board members.

4.    Timing  – as public credibility is most likely tied to the implementation window of the programme, selecting a target time window for compliance neither overly ambitious nor arbitrarily far into the future is most likely necessary.  Given the psychological importance of the upcoming Tokyo Olympics a 5-year time frame might be reasonable. 

5.    Education and Training: As mentioned above, the idea is to appoint qualified professionals to positions of management, rather than engaging in tokenism, as the latter could damage rather than supplement productivity.   As such, leadership training for young professional women will likely prove necessary, both at the public and private levels.  In terms of policy, the government might examine tax waiver programmes for such training, funded by penalties paid by non-compliant firms.   Moreover, including leadership training in the national high school curriculum might cultivate female leadership at an early stage, reinforcing confidence and promoting assertiveness among capable women.  Similarly, applying similar guidelines at Japanese universities might also help.  Separately, encouraging greater competition among universities in Japan might also provide incentives to cultivate women leaders.  For example, Temple University, whose active diversity programmes might provide a model to its Japanese counterparts, has yet to receive recognition from the Ministry of Education, despite its 40-year presence in Tokyo and solid reputation in the United States.

6.    Data-supported incentives to stay in

a.     Child-care and other factors: It is likely that the availability of child-care, while an important factor in women’s decisions to work or to stay at home for child rearing, is probably not the only factor.   For instance, if companies’ attitudes regarding women balancing child-rearing and work were less forgiving than publicly advertised, reluctance to hire or promote new mothers might be hidden under the veil of limited child-care availability, when in fact there is a third factor at play.   Similarly, the contribution of the spousal tax deduction might play a role in the choice to work or stay home, yet might be related to the expected wage a woman who chooses not to work believes she might otherwise earn.  Effective survey design and bias correction would help to reduce this confusion, to isolate individual factors, and hence to construct effective incentives.

b.    Don’t forget the fathers:  a woman’s choice to join the labour force or to stay home is most likely not independent of the will of her partner’s willingness to share in child rearing or housework, or alternatively companies’ stance on male participation in such household duties.  As such, exploring the response to father-friendly policies (such as paternity leave or flexible working hours for men as well as women) might also help inform effective policy

7. Symbolic changes – women in the Cabinet, female Imperial succession:  Lastly, we address the element of policy perhaps least quantifiable in advance, which is the potential impact of role models upon female participation.  One (perhaps controversial) suggestion was to press for a change in the law of Imperial succession to allow for the succession of a female emperor.   Given the persistence in practice (if not in law) of primogeniture in much of regional Japan (to the detriment of all but first-born sons or only children), a greater symbolic shift might be needed for typically conservative households to challenge status quo.  The appointment of a greater number of female cabinet members in charge of important portfolios might also assist in this regard.  As mentioned above, SME’s most likely hold the key to the nation’s prouctivity as reflation progresses and skilled labour turns scarce.

In regional Japan, family-run SME’s often times are inherited, alongside family estates, dynastically, passing to the eldest son (or only child).  As we mentioned above, many of these SME’s do not pay, or even avoid, corporate tax.  During deflationary times, keeping these low-productivity firms alive with government money might have kept the employment rate from falling excessively low, and regional banks from accumulating excess non-performing loans. However, as he cyclical upturn progresses, allowing poorly-performing regional SME’s to fail whilst cultivating the birth of new (non-dynastic) family businesses could be vital to any regional productivity boost.

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