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.