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Japan’s largest business lobby aims to have women occupying more than 30% of the executive positions at major companies by 2030, the latest sign that the private sector is gearing up to diversify the workforce to stay competitive.

The target, set by the Japan Business Federation in its growth strategy released earlier this month, is ambitious given that women made up only 5.2% of executives at all listed Japanese companies as of 2019, according to government data.

The low representation of women in corporate leadership roles is one factor contributing to Japan occupying the last place among major advanced economies in the World Economic Forum’s gender-gap rankings. Last year, Japan stood 121st among 153 countries.

Among the 100 leading companies listed on the first section of the Tokyo Stock Exchange, the percentage of women in board-level positions stood at 12.9% as of July 2020, up 2.4% from last year, according to the Japan chapter of The 30 Percent Club, a group founded in the U.K. that works to boost female representation on company boards.

With the current female-to-male ratio in the population at 100 to 94.8, “it is only natural” that women should fill around half of all leadership positions, the lobby known as Keidanren said in its growth strategy.

“Given Japan’s current social structure, we cannot realistically move forward (on women’s participation in the workforce) without setting a clear target,” Keidanren Chairman Hiroaki Nakanishi said during a news conference.

“We have decided to set a target despite concern it may be too ambitious because increasing women in the workforce is important in terms of inclusivity and diversity in businesses,” said Nakanishi, also chairman of Hitachi Ltd.

In 2003, the government unveiled a plan to have women occupy 30% of leadership positions in 2020 but failed to achieve the target.

It is expected to decide on a revised target in December when the Cabinet approves a new five-year basic policy for gender equality promotion.

Japan’s proportion of women in managerial roles is extremely low compared to other developed countries. Around 40% of those positions are held by women in the United States and in Sweden, while the figure for the U.K. and France was more than 30%, according to International Labor Organization statistics.

Analysts say the long-held labor practice in Japan of determining an employee’s promotion and pay based on seniority or length of service is a major obstacle to women taking up leadership roles.

With many companies still valuing long working hours, women tend to lag behind their male colleagues in terms of promotions or other career progression if they take time off for childrearing.

“Keidanren’s numerical target on female executives is extremely significant. It’s as if a big mountain has moved,” said Michiko Tadamatsu, founder of the Japan chapter of The 30 Percent Club and senior manager at Deloitte Tohmatsu Consulting LLC.

“It will likely have a big impact given that Keidanren is made up of major listed companies. We will fully support its initiative,” Tadamatsu said. “With more investors looking at corporate value in terms of environment, social and governance criteria, there is a great momentum to boost the number of female executives.”

Headed by Shiseido Co. President Masahiko Uotani, The 30 Percent Club also includes Daiwa Securities Group Inc. Chairman Takashi Hibino, Hitachi President Toshiaki Higashihara and other top executives among its 60 members.

The entity set up in May 2019 organizes meetings among presidents and chairpersons of leading companies regardless of sector to share successful examples and best practices concerning increasing the number of female executives.

“As increasing the number of women in managerial posts often requires structural changes in companies, it is important that heads of companies take part in the meetings and ensure that the changes will be executed effectively,” Tadamatsu said.

“The government also needs to be more proactive in setting goals and supporting the private sector,” she added.

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