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Narrowing gender gap could boost Japan’s GDP by 12.5%: Goldman Sachs

AFP-JIJI

Japan could boost its gross domestic product by 12.5 percent if it closes the gender gap and gets more women into the workforce, a new report says.

The finding, by Goldman Sachs in its latest “Womenomics” report, echoes calls by economists and Prime Minister Shinzo Abe for women to be given more opportunities, in a bid to lessen the impact of a shrinking and graying population.

“If Japan’s female employment rate as of 2013 (62.5 percent) rose to that of males (80.6 percent), this would add 7.1 million employees to the workforce,” the Goldman Sachs report says.

“We estimate the absolute level of Japan’s GDP could be lifted by as much as 12.5 percent,” it says.

The potential increase would be among the highest in the world, although it would still lag Greece, at 18 percent, and Italy, at 16 percent.

The Abe administration has said it is determined to make better use of the nation’s potential female workforce as part of its strategy to revitalize an underperforming economy.

“Japan must become a place where women shine,” has been a mantra in a number of speeches in which Abe has said he wants women to account for 30 percent of leading positions by 2020, the year Tokyo hosts the Summer Olympics and Paralympics.

Most commentators believe the target is highly ambitious — the rate is currently around 11 percent in the private sector, and lower than that in the public sector.

Economists agree that well-educated women in Japan are a huge source of untapped potential, with many dropping out of the workforce when they have children and few returning to their careers. The country’s birthrate is one of the world’s lowest, at around 1.4 percent, while the population is expected to shrink by nearly 40 percent by 2060 in the worst-case scenario.

“Since the three key determinants for economic growth are labor, capital and productivity, Japan’s severe demographic headwinds mean that unless radical steps are taken quickly, the nation faces the risk not only of longer-term economic stagnation, but of economic contraction and lower standards of living as well,” the report warns.

The report, an update of the previous version issued in 2010, which put the potential boon at 15 percent, called for a number of reforms. Among suggestions were the deregulation of the day care and nursing care sectors, amendments to tax and social security codes, and mandated gender-related corporate disclosures.

“Perhaps one of the greatest barriers to higher Japanese female employment is Japanese society itself,” the report notes.

In a 2012 Cabinet Office survey, 52 percent of respondents stated that women should stay at home and that men should be the ones going to work, up 10 percentage points from the previous survey in 2009.

“In order to help change the (current) mindset, much work needs to be done to dispel myths and encourage greater gender equality at home,” the report concludes.

  • http://getironic.blogspot.com/ getironic

    There are many ways to raise GDP, not just the politically fashionable ones of the current moment.

  • EvigtRegn

    Getting women to work more definitely won’t help the low birthrate either and that must be deemed a more pressing problem.

    I believe instead that men must work considerably less overtime so that they have time for family and energy left when they come home. To think how to work more productively but fewer hours…

    • Claire Stathas

      I disagree. Finland has one of the smallest gender gaps when it comes to employment and has a higher birthrate than Japan. (http://www.economist.com/node/21539925) Moreover, other countries with higher female participation than Japan also have higher birthrates.

      • EvigtRegn

        Finland’s birth rate may be better than Japan’s but it’s still well below replacement level and is as such not sustainable.

        Who wants to have kids when both parents work full time + often some overtime? There is no time and energy left for the kids and they get left in front of the TV. Of course you get fewer children.

        in Japan it is the opposite problem. The women are home and can take of the kids but the fathers work so much overtime that they are almost never around other than to provide with the paycheck, which putts too much pressure on both the mothers and the fathers but in different ways.

        Some sort of mixture between the two ought to be best. Like Japan but with men only working 40 hours a week, not all that overtime they customarily do or like Finland but women working a lot less than full time. Perhaps 30-50%.

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  • EvigtRegn

    Claire Strathas: (for some reason it doesn’t allow me to answer you directly since the comment was awaiting moderation so I hope you come back to see this): Finland’s birth rate may be better than Japan’s but it’s still well below replacement level and is as such not sustainable.

    Who want’s to have kids when both parents work full time + often some overtime? There is no time and energy left for the kids. Of course you get fewer children.

    in Japan it is the opposite problem. The women are home and can take of the kids but the fathers work so much overtime that they are almost never around other than to provide with the paycheck, which putts too much pressure on both the mothers and the fathers but in different ways.

    Some sort of mixture between the two ought to be best. Like Japan but with men only working 40 hours a week, not all that overtime they customarily do or like Finland but women working a lot less than full time. Perhaps 30-50%.

  • EvigtRegn

    There is a relationship but it’s more indirect. High female labor participation often (but not always) coincide with values where women prioritize career over family which is bad for birth rate since instead of the average woman giving birth at around age 20-25, it is instead around 30-35 or higher which leads to a lot less children being born. Not only because of the lack of time but because they expect work to be their main thing and children as a side thing, and not the other way around.

    Feminists have been claiming forever that women “can have everything” but let’s face it, there is limited time and energy. Being the CEO of a multinational corporation and best mom ever of 4 kids (or even just 2) is not something you can combine. It’s impossible. Not to mention that your body and mind will need time to just sleep/relax at times. Fathers have known this all along and have never acutally tried to “have it all” in the same way. They always knew that in their duty to provide for their families, they would have to be away from home more than they’d like (but not as much as japanese men hopefully).

    I myself have a mother who tried to “have it all” and ended up with just one kid in the end so I know of what I speak.

    I don’t mean to be rude but what offends you is just a matter of perspective and is of no consequence in political policy making. Women have been taught since about the 60s/70s that taking care of their own children is bad/boring/oppressive but taking care of other peoples children is a career (kindergarten teacher) and is good/freedom/fun.
    Isn’t that quite funny? Speaking of perspective that is.

    I’d probably say that 80-90% of the jobs out there is not worth prioritizing over a family. Most people simply do not have these jobs and it’s the saddest thing in the world to see people priotizing being a mid level administrator of some sort over their families.

    Poor countries give birth to a lot more children than rich countries so increased GDP is not sure to help anything sadly.