Why aren’t there more women leaders in corporate Japan?

Author: Kumiko Nemoto, Senshu University

Japan is still a long way from reaching the government’s goal of having 30 per cent of its leaders be women. In 2019, only 11 per cent of managers in Japanese companies and only 5 per cent of board members were women, compared to 43 per cent of managers in the United States and 39 per cent in Sweden.

Japan differs from liberal market economies like the United States, where women are incorporated into the economy and gender equality contributes to market efficiency and corporate profits. In contrast with social democratic countries — like in Scandinavia, where states are responsive to gender-egalitarian reforms in both the private and public sphere — Japan has traditionally relied heavily on gendered labour divisions in both the workforce and the family.

For decades, Japanese companies have only hired a small number of highly educated women in management tracks, while hiring thousands of men for the same positions. Years of gender-skewed hiring practices mean that today, many Japanese firms have few or no women leaders. To save on labour costs, many firms continue to rely on large numbers of non-managerial, part-time and temporary workers, who are mostly women. In 2020, around 55 per cent of employed women worked as ‘non-regular workers’ while only 22 per cent of men did.

An age-based system of hierarchy, pay and promotions plus daily overwork are central to Japan’s tradition of lifetime employment. Promotion chances are largely determined by age, not by individual skills or performance and it can take 20 to 30 years to become a manager. Long years of work before promotion and daily overwork, combined with caretaker responsibilities, make it difficult for women to coordinate career and family and reduce aspirations for leadership.

Japanese businesses and politics continues to be controlled by men in their seventies, eighties and nineties. Having worked through Japan’s postwar growth, these leaders seem reluctant to make changes to existing corporate systems, including gender-skewed customs. But foreign shareholders have pressured Japan to adopt corporate practices to more closely resemble Anglo–American norms of workplace gender equality.

Japanese firms have undertaken some superficial adjustments, more to increase their share prices than to make fundamental changes, all the while continuing to preserve the traditional business model. With the globalisation of corporate governance, and pressure from foreign investors and US proxy advisors, Japanese companies have increased their numbers of female board members and executives to please foreign investors and stabilise stock prices, with the number increasing from 1 per cent in 2006 to 5 per cent in 2018.

This means Japanese businesses see gender inequality not as a social problem, but as an investor relation issue. Increasing female board members tokenistically is not a solution. While foreign institutional investors play a disciplinary role in corporate governance reform, the majority of shareholders in many Japanese firms are Japanese, including banks, institutional investors, business firms and individuals. This means foreign pressure has a limited impact.

If Japanese investors join foreign investors in pressuring firms to act on gender inequality, or if they follow the example of Japan’s corporate activism — like the 30 per cent Club Japan, originally started in the United Kingdom, which aims for diversity management across 25 institutional investors — serious change may be possible.

In education, women’s college entrance rates have been steadily increasing and are close to equal for women and men. But the gender gap in elite colleges remains wide. Japanese firms hire college graduates based on university brands and rankings, so an increase in women’s enrolment could greatly enhance corporate hiring of women. Currently, women make up roughly 20 per cent of all students at the University of Tokyo and 22 per cent at Kyoto University.

At this point, Japan’s top graduates prefer to work for US and European firms, rather than Japanese firms. Elite female graduates in Japan have been known to intentionally avoid Japanese firms due to their gender barriers, instead strategically enrolling in overseas MBA programs to make themselves stronger candidates in the global labour market.

Japanese families also continue to be shaped by unequal gender divisions. Women are expected to develop leadership skills and gain economic independence, but also undertake the unequal labour division expected in marriage and family life. On average, women with children under the age of six spend a total of 454 minutes on housework and childcare per day, where men spend 83 minutes. Even though Japan’s ideological emphasis on women as wives, mothers and caretakers of the family has been slowly dissipating, gender-unequal division in the family remains strong, mirroring women’s lack of power at work.

Japanese companies and policymakers have not done enough to change sex-segregated Japanese management and business customs, or align with Anglo–American or Scandinavian models of workplace gender equality. But there are steps Japan can take to increase the number of women leaders, starting with expanding the hiring of and promotion of women, equalising educational gaps and promoting egalitarian marriage and family life.

Kumiko Nemoto is Professor of Management in the School of Business Administration at Senshu University, Tokyo.

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