Commentary: Gender bias is holding back Japan’s economy

William Pesek – Bloomberg (International Herald Tribune)

Published Tuesday, March 8, 2005
TOKYO That faint cracking noise heard around Japan this week is the sound of its glass ceiling being breached. At least one hopes so, as this male-dominated society waits to see if a woman will run a major Japanese company for the first time. The BMW Tokyo president, Fumiko Hayashi, 58, has been proposed for the presidency of the retailer Daiei.
While the job is among the most thankless in Japan – Daiei is perhaps the nation’s most notorious zombie company – the appointment of Hayashi would be an important step forward. Japan has done little to empower women and many companies are reluctant to increase their role in making decisions.
Stories like Hayashi’s are all too rare in Japan. The underutilization of the female work force is an economic problem that indirectly adds to the country’s huge public debt.
Women here have made some advances. Discrimination has been formally banned, and more and more women are trading in the office-lady uniforms that make them look like 1970s air hostesses and forging their own future. Yet women still have few chances to enter the executive suite, unless they’re playing a supporting role.
Corporate Women Directors International, a U.S. nonprofit organization, last year noted that only two women sit on the boards of 27 Japanese companies listed on Fortune’s Global 200 list. All 78 U.S. companies on the list had at least one female board member.
Japan has no monopoly on discrimination, yet how often does the Organization for Economic Cooperation and Development urge a developed nation to provide women with more job opportunities?
It’s doing just that in Japan, where even the minister in charge of gender issues is a man.
Tapping only half of the labor pool holds back growth. Companies that ignore their female workers may end up with a distinguished, white-haired man in charge, but that doesn’t mean the best person is getting the job.
Exclusion of women also exacerbates Japan’s biggest long-term challenge: demographics. The nation’s birth rate, or number of children per woman, fell to a record low of 1.29 in 2003 versus about two in the early 1970s. Preliminary government statistics suggest that the rate fell further in 2004.
Unless that trend is reversed, deaths in the rapidly aging nation could overtake the number of births by 2006, a government study said last year. That would be a crisis for a highly indebted nation of 127 million people that has yet to figure out how to fund the national pension system down the road.
Sexism deserves much of the blame. For many women, the decision to delay childbirth is a form of rebellion against societal expectations to have children and become housewives. Until having children is not a career-ending decision for millions of bright, ambitious and well-educated Japanese, the birthrate will drop and economic growth will lag.
All this has more to do with Japan’s massive national debt than politicians realize. Instead of trying a solution that many international economists say might do far more to bolster growth – empowering women – Japan has built roads, bridges, dams and just about anything else to create jobs.
The government has bailed out Daiei and myriad other deadbeat companies and pumped countless yen into banks that support profitless ventures, much of this financed with public debt. Instead of vibrant growth, rising stock valuations and strong productivity, Japan has a debt load approaching 150 percent of gross domestic product.
Fortunately, leaders are beginning to grapple for solutions. “The government,” Prime Minister Junichiro Koizumi said late last year, “will provide assistance so that women can exert their talents and take on challenges in various areas, including business.”
Nevertheless, many Japanese politicians, including former Prime Minister Yoshiro Mori, continue to deride women as selfish for not having children sooner.
Japan should use tax initiatives and investments to reduce the cost of daycare and child rearing. Until Japan has an extensive infrastructure allowing mothers to return to work, many women will have fewer babies, if any at all. The government also should encourage companies to seek more diversity in their executive suites.
The corporate sector has a big role to play here. “Companies have to make it easier for working women to have children,” says Hiroshi Okuda, head of the Japan Business Federation. “To do that, they will have to take on a bigger share of the costs.”
The traditionally minded men who run Japan seem to be realizing that their economic problems arise in part from gender inequality. If they do not do more to tap their female work force, economic growth may continue to underperform and national debt may continue to rise apace. It comes down to a simple choice: more babies or more bonds.

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