News Archive : Japan Real Estate

Friday, November 11, 2005

vgJapan needs a 'womenomics' touch to grow

Japan needs a 'womenomics' touch to grow
Peter Alford, Tokyo correspondent
The Australian 10nov05

GOLDMAN Sachs Japan's chief strategist Kathy Matsui says that if more Japanese women worked for a greater part of their lives, not only would economic growth improve significantly but those women would be more likely to marry and have children.

Matsui says women are Japan's "most under-utilised resource". She's been banging this drum for at least six years and as the country's demographic crisis gathers momentum her message only becomes more urgent.

Japan's population of 127 million, which probably stopped growing in a net sense earlier this year, is forecast to shrink by 6 per cent in the next 20 years. But the workforce has been contracting for at least three years already and in two decades the working-age population will have shrunk 10 per cent from current levels. By 2050, every three Japanese workers will be supporting two retirees.

Matsui points out in a new study, Womenomics: Japan's hidden asset, that increased female workforce participation offers the most promising opportunity to loosen this demographic bind.

Goldman Sachs says if Japanese women's workforce participation rose to the same level as the US - that is, from 55 per cent to 62 per cent - an additional 2.6 million people would be at work. Further, the direct contribution to economic output and to domestic consumption would raise Japan's trend GDP growth over the next 20 years from 1.3 per cent to 1.5 per cent. Lifting the male statutory retirement age by 10 years, a widely canvassed option, would add only another 0.1 per cent to trend growth.

Goldman Sachs has compiled a basket of 115 Japanese companies, many of them small-caps, that should over-perform as "womenomics" gathers strength. They are concentrated in services but cover an enormous range - from women-friendly finance, through childcare to property - illustrating the broad economic effect. Yet, it's widely assumed, and loudly argued by conservative politicians, that increased workforce participation by women means fewer marriages and further falls in birth and fertility rates.

Matsui rejects this and makes the point that those women who don't marry and those who don't return to work after child-bearing are often responding differently to the same problem: the severe disincentive to combine work and motherhood. These include scarcity of childcare and heavy social pressure still exerted on women to leave work once married. And former full-time workers who do return to work usually find only part-time or casual employment.

In other words, one strong disincentive to marry and procreate is the difficulty of being employed afterwards. Matsui describes the phenomenon as the M-curve in which Japanese women's workforce participation sags from a 70 per cent peak at age 30, to below 60 per cent in the next five years and never returns to comparable levels.

Last year, there were fewer than two million childcare places, mainly government-managed, available in the whole country. Only 34 per cent of children between three years and school age are in the system, compared to 70 per cent in the US. At-home childcare is prohibitively expensive for most families. A woman would spend 62 per cent of an average wage on four hours-a-day of childcare.

Matsui points out that developed countries with high female workforce participation, like the US, France and Australia, also have relatively higher birth rates. Those countries also have high immigration rates, and immigrant populations in the developed world are relatively younger and more fertile. But Japanese social conservatives are latching on to France's troubles to draw precisely the wrong conclusion: that immigration barriers should rise even higher.

Because of intense cultural and political resistance to mass immigration, Matsui discounts that option. But she proposes freer entry to domestic, nursing and aged-care workers.

Much has been made of the Government's recent decision to allow about 100 Filipino nurses into Japanese hospitals next year. Some 80,000 temporary "entertainment" visas will also be issued to Filipinos, almost all women. Many will end up working - illegally - as nannies and housekeepers for Japanese working women.