Closing the gender pay gap in Japan is a tough task for the government

Image courtesy: Unsplash

Did you know the gender pay gap in Japan is the widest among the G-7 countries? In 2020, Japanese women earned, on average, almost 75% percent as much as their male counterparts for full-time work. Last year, the World Economic Forum’s global report ranked Japan 116 out of 146 countries for gender parity. The country stands at 104 of 190 countries in the latest report of the World Bank on women’s economic opportunities.

If you want to compare Japan’s position with the world gender pay gap, Statista says that the world’s uncontrolled gender pay gap was 0.83 (while the controlled gender pay stood at 0.99). This indicates that for every $1 earned by men, the female counterparts earned just $0.83.

Global gender pay gap from 2015-2023

Image courtesy: Statista

Interestingly, a survey by Statista Research Department published on August 5, 2022, found that 54% of female and 45% of male respondents worldwide stated that concerns about the gender pay gap were a response to a real problem. 

Perhaps the growing pay disparity between men and women, including in Japan, is a major reason why the World Economic Forum’s Growth Summit 2023 will focus on it. Scheduled to be held in Geneva between 2-3 May, one of its three central themes is accelerating economic equity, which includes advancing gender equality.

Coming back to Japan, despite the country’s successive governments trying to handle gender inequality, it still remains. In 2020, women’s share of labour income in the country stood at a mere 28.2%, which was far lower than the other 6 countries in G-7, according to the latest World Inequality Report.

Let’s take a look into a few different aspects related to the pay gap in Japan.

What’s the Gender Pay Gap in Japan Now?

According to the 2023 Gender Equality Global Report and Ranking by Equileap (data provider), Japan was identified as having the largest median gender pay gap among G7 countries, which stood at an average of 22.1%. Japan’s gender wage gap is almost twice the OECD average (which stood at 11.7%).

Japan’s GPIF (Government Pension Investment Fund), the largest asset owner across the world with $1.4 trillion in AuM (asset under management), has withdrawn a part of its assets administered under other ESG indices and allotted $3.7 billion to track the new index, which will create the foundation of its Japan-based strategy for gender diversity investment.

By putting its weight behind gender diversity and influencing companies to support more diversity in their employee pool and get more women on board, the GPIF could help improve Japan’s gender diversity practices, including a pay disparity, many believe.

How Japan’s Gender Pay Gap Has Changed Over the Last 15+ Years

YearGender Pay Gap
Year-wise gender pay gap in Japan
OECD pay disparity between genders

Image courtesy: Statista

According to OECD data, pay disparity between the genders is highly evident in Asian countries, including Japan. Japan’s wage gap between sexes was 22.1% in 2021. The year’s OECD average stood at almost 12%, the significant gap being driven by women working in part-time or lower-paid positions more frequently, and even earning less than their male counterparts with comparable jobs.

Key Reasons for Pay Disparity in Japan

Japanese women are grossly under-represented in jobs, especially in positions of power like legislative, senior, and managerial positions. In 2022, women represented just 11.4% of executives in major listed companies in Japan, but the figure is said to be going up recently.

Even among employed women, many are placed in the “non-career track” with a rigid hierarchy and minimal opportunities to go up the ladder, unlike most of their male counterparts in “career track” jobs.

The key reasons contributing to the pay disparity between genders in Japan still remain. These include inequality in educational attainment between the genders, dismal representation of women in the top positions, employers not focusing on promoting work-life balance, and a strict hierarchy that doesn’t let women climb up the ladder. Japan’s low birth rate with an increasingly aging population is another reason for women dropping out of the workforce to take care of the elderly in the family in the absence of adequate caregiver facilities.

But a glimmer of hope has come with the disclosure rules introduced last year that needs bigger companies to report their wage gap each year. From 2023, companies are needed to disclose additional information while submitting their regulatory filings and disclose (in some cases) the ratio of women in management positions. Such disclosure is believed to create pressure on companies to hire and promote more women to positions of power, which could decrease the gender pay gap in Japan in 2023.

Since the government will make the information available online for potential job seekers to research their employers, candidates looking for jobs can scrutinize their would-be employers to decide if they will like to come on board.

By 2023, Japan also aims to have the ratio of women among executives at 30% or more in companies listed on the Tokyo Stock Exchange’s Prime Market (the Prime Market being the leading sector of the stock exchange).

Wrapping Up

The gender pay gap in Japan is a reality but noticing the government’s eagerness to bridge it gives some hope. It remains to be seen how the rest of 2023 will unfold in terms of getting more women into the workforce, especially in management positions, to bridge the pay gap to a certain extent.

If you are looking to hire in Japan but are worried about the country’s gender pay gap affecting your recruitment process adversely, rely on experts like those on board InHunt World to hire the best talent for your open positions. Call us now! 

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