Seminar with Japanese business leaders on "Global Economic Challenges and the Way forward with Promoting Diversity"
Hosted by the Japanese Center for Economic Research (JCER)
Remarks by Angel Gurría,
11 April 2016
(As prepared for delivery)
Ladies and Gentlemen,
With sluggish growth over the past quarter century, Japan’s per capita income has fallen behind leading OECD countries. Japan’s GDP per capita grew by an average annual rate of 0.8% in real terms between 1990 and 2014, compared to 1.4% across the OECD. Revitalising Japan’s growth will require policy measures to boost labour productivity and a better use of Japan’s pool of talent.
In this context, women represent a vast untapped resource for Japan. Their employment rate in 2014 was fully 18 percentage points below that of men. This is far above the OECD average of 11, and among high-income OECD countries, only Italy has a similar gap. Closing that gap is particularly urgent for Japan: the total population in Japan has already begun to fall and is projected to decline by almost 25% by 2050. Moreover, the share of the elderly (65+) is projected to rise from around 26% today to almost 40% at mid-century.
Fortunately, progress is being made. Even though Japan’s working age population is now declining, total employment has actually increased in recent years, and this is due to rising female labour force participation. Policy changes have made a difference. But this is only a start.
Japanese women are among the most highly educated and most talented in the world. Their performance in reading, mathematics and science at age 15 is well above the OECD average. Women have the ability, the potential, and the desire to contribute more to the country’s economic and public life. Policy and business leaders need to empower them to do so!
This is in everybody’s interest. By closing gender gaps in labour force participation, Japan can boost its labour force and promote economic growth. OECD estimates show that if female employment converged to male employment rates over the next 20 years, GDP would be higher by almost 20%. Japan’s G20 commitment to reduce the gender gap by 25% by 2025 is therefore a step in the right direction.
Businesses also have a business case for enhancing the role of women in the workplace, to attract and retain the best talent and to improve decision making and performance through greater diversity in their companies.
So what needs to be done to improve gender diversity? In Japan, more than in other countries, women do the bulk of care work. On average they do 4 hours of unpaid work per day more than men. The OECD average gap is 2 hours. Providing public support care for children and the elderly is crucial to help mothers and fathers better reconcile family and work responsibilities. Japan has taken decisive action to promote better work-life balance for parents. For example, it expanded the availability of childcare facilities and it increased the rate of replacement pay for the first part of parental leave and for leave to care for the elderly. And one year of paid leave is reserved just for the father — one the most generous allowance in the OECD. However few fathers take advantage of paternity leave.
Which brings me to the other type of change that needs to take place to capitalise on women’s potential. Employers are less likely to invest in women’s career development because they still expect women to withdraw from the labour force around marriage or childbirth. When women return to the labour force, they are frequently relegated to relatively poorly paid, non-regular jobs. In regular jobs, remuneration is seniority-based, and there is considerable employment security in return for high commitment to the firm, often in the form of very long working hours.
Businesses and other labour market actors need to do more to promote gender equality. Remuneration systems and career progression should be based on performance and not on seniority. Businesses should work to change the culture of long working hours, making the workplace more attractive to both fathers and mothers. Senior managers should lead by example, by taking their own holidays and a greater part of their leave entitlements.
Monitoring progress in promoting gender diversity at all management levels is important too. Disclosure requirements can be a powerful tool for pushing progress. So the Act for the Promotion of Women’s Participation and Advancement in the Workplace is a welcome move in this direction.
Ladies and Gentlemen,
Promoting gender equality cannot be compartmentalised as a women’s matter. It is in everybody’s interest. So let us all work together towards better gender policies for better lives and a more diverse and inclusive society.