Working women’s pay gap keeps wages low for everyone in Japan
(Bloomberg) — In recent years, Japan has championed its growing number of working women as a response to the country’s shrinking population and lackluster economy. But rather than feeling empowered, many harbor a growing sense of inequality.
“I don’t think we are paid fairly,” said Sakiko Takasawa. As a caregiver for the elderly, she is part of a female-dominated industry paid far less than the national average. “There is still such a deep-rooted gender inequality,” added the 35-year-old, who was drawn to the profession in college as she watched her grandmother struggle with dementia.
While it is common around the world for wages in female-dominated professions such as nursing to be lower than in male-dominated industries, Japan’s gender pay gap, which measures the difference in wages between gender, is highest among the rich countries of the Group of Seven.
Anxiety over wage disparities runs high in the country as Prime Minister Fumio Kishida pledges to revitalize the economy with his ‘new capitalism’ program to bolster wages and distribution, and as major employers and Japanese unions are holding annual pay talks, called Shunto, in the coming weeks.
Takasawa considers herself lucky to be hired full-time, as the majority of women work part-time or on non-permanent contracts.
Daiji Kawaguchi, an economics professor at the University of Tokyo, said the gap was the main factor behind the country’s lack of wage growth over the past two decades.
“The growing number of women in the labor force means wages are not rising,” he said.
Kishida called on companies in this year’s Shunto to accept wage increases of at least 3% after years of minimal or no increases beyond seniority-based increases. Still, economists doubt such government-led efforts will work, with companies likely to avoid costly hiring amid concerns over the pandemic and Russia’s invasion of Ukraine.
Few would dispute that wage increases are long overdue in Japan, with a labor market near its tightest level on record and a working-age population now 17% lower than it was in 1995.
In dollars, wages in the world’s third-largest economy have remained stable over the past two decades, while they have increased by 25% in the United States and 18% in France. South Korean workers have earned more than Japanese per capita since 2015, according to the Organization for Economic Co-operation and Development.
Kishida’s call for wage hikes is also intended to address criticism from his predecessor Shinzo Abe, whose expansionary “Abenomics” policies are seen as having led to a recovery in business and benefited shareholders, but not the average worker.
The government blames stagnant wages for dampening the impact of stimulus measures, including the Bank of Japan’s massive monetary easing and repeated rounds of fiscal spending. Policymakers say large wage increases would help boost consumer spending, triggering a virtuous cycle of stable inflation and stronger domestic investment.
In addition to publicly calling out executives, Kishida has rolled out additional tax breaks for those who increase employee salaries starting this year. But less than 40% of companies pay the corresponding corporate taxes to begin with, due to a range of tax avoidance measures. The majority would not see that as an incentive, the economists said.
Some companies such as Toyota Motor Corp. promised major pay rises after strong global sales. But a recent Nikkei survey of more than 6,000 companies showed that 30% will not raise wages at all, with most predicting wage increases well below 3%.
A prolonged pandemic and soaring energy prices accentuated by war in Ukraine mean companies will likely continue to hire more non-regular workers, including part-timers and workers sent by third-party agencies, said economists. These workers, who have few opportunities for training or career advancement, make up about 37% of the workforce, up from 29% in 2002.
The rise of this new underclass of workers was fostered by labor deregulation in the early 2000s and overlapped with an increased participation of women in employment. Last year, women occupied more than two-thirds of these non-regular jobs, while only 22% of men are employed in such conditions.
“Because there were an increasing number of women entering the workforce, companies had no incentive to raise wages,” said Kawaguchi of the University of Tokyo. Real wages, which explain inflation, fell by about 6% between 2000 and 2017, and he estimates that about two-thirds of that drop is due to the gender gap.
Of course, few people fault Abe for advocating for more women in the workforce. Many women also prefer to work part-time, given the Japanese corporate culture in which overtime is normal and assignments to remote locations are hard to turn down for permanent employees. As women still do most of the household chores and childcare, many find this to be the only way to balance the responsibilities.
Sonoko Tsukada, 51, mother of three and receptionist at an osteopathy clinic, is one of them.
“When you’re raising kids, you can’t work overtime and you can’t work weekends,” said Tsukada, who was once a full-time salesman but now works three days a week. “My son played badminton in primary school and there were games at the weekend…I’m glad I could be there.”
Yet she too isn’t entirely satisfied, saying she would like to put her English skills and study abroad experience to good use one day. She also hasn’t had a raise in 10 years.
“The prices keep going up. Food, lessons for kids like swimming, they keep going up,” she said, adding that she had tried to find a full-time job with better pay but was struggling. to find that at his age.
The increase in the number of non-regular part-time workers, such as Tsukada, has led to a decline in union membership. According to the Ministry of Labor, guild enrollment in Japan is now below 17%, gradually declining from a peak of 56% in 1949. It is even lower among women at below 13% – a trend that the union organizers hoped to change by choosing Tomoko. Yoshino as the first woman to head the Japan Confederation of Trade Unions, the country’s largest union, last year.
Unions today are mostly cooperative with management, and wage negotiations are rarely as combative as they were around the 1950s when Shunto, which means “Spring Offensive” in Japanese, began.
The collapse of Japan’s asset inflation bubble in the early 1990s also prompted unions to focus on lifelong job protection and regular, seniority-based wage increases for workers. members rather than campaigning for wage increases. This compromise has helped the official unemployment rate to remain generally below 3% throughout the pandemic.
Given Shunto’s reduced impact, Koichi Kurosawa, general secretary of the National Confederation of Trade Unions, said it was time to mobilize for a minimum wage increase.
It’s not just union officials who say raising wages for the nation’s lowest earners would help narrow the gender gap and bolster overall pay. Michio Goto, professor emeritus at the University of Tsuru, said the current minimum wage of around 930 yen ($8) was based on the assumption that this wage was largely for women and therefore complementary to a household. .
Kishida, sensing the discontent of lower paid workers disproportionately affected by Covid-19, recently announced increases for public sector workers in nursing and child care. This included an increase of 4,000 yen per month for nurses and an increase of 9,000 yen per month for elderly caregivers.
Takasawa, who is recovering from Covid after an outbreak at work, said she was unimpressed. Despite night shifts and physically exhausting routines, social workers’ monthly salary of around 240,000 yen is a third less than the average salary.
“Don’t be smug for a simple 9,000 yen hike,” she said. “It should be 10 times higher.”
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