Society Japan's female labour participation rate rising

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Did you know that Japan's female labour participation rate surpassed that of the U.S. in 2015?

Japan's economy has recently made headlines due to inflation's return, worker wage gains, and the Bank of Japan's first interest rate increase in 17 years. However, a longer-running trend that may intrigue American policymakers is the steady rise in female employment. Over the years, working-age Japanese women have increasingly entered the labour market. This trend has intensified recently, driven by a tight labour market that compels companies to attract new employees. The surge in female participation is partly a result of deliberate efforts. Since around 2013, the Japanese government has worked to create female-friendly public policies and corporate culture. They aimed to tap into a new talent pool as Japan's ageing and shrinking labour market posed challenges.

Even economists like Adam Posen, who advised on the "womenomics" policies, were surprised by the sheer number of Japanese women now choosing to work. Initially estimating around 800,000 new female workers at that time, the actual figure was closer to three million, although many were part-time employees. Economists often grapple with predicting the impact of policy changes, and Japan's experience underscores the importance of considering societal shifts and evolving norms in workforce dynamics.

The nation's changing attitudes toward family also played a role in freeing up women for work. The average age of people marrying for the first time has been steadily rising, and fertility rates are at record lows. "Delaying marriage, delaying childbearing years, not getting married at all — that's the big societal backdrop," said Paul Sheard, an economist who has long been focused on the nation. But there have been limits. There is still a tax penalty for second earners in the country, and the quality of jobs women hold is not great. They are often lower paid and for limited hours. Women are also largely absent from leadership ranks in Japanese companies. Kathy Matsui, the former vice chair of Goldman Sachs Group's Japan unit and the woman who spearheaded womenomics as an idea, has said the effort needs continued work. Still, Japan's experience could explain what lies ahead in the United States. Fertility and marriage rates are also down in America, for instance, which could create space for working rates among young and middle-aged women to keep rising in the near term. However, it does plant the seeds for a smaller population and economy. Remote or hybrid work arrangements could also make working easier for caretakers. Experts have said that some of the more family-friendly policies that Japan has used could be a model for the United States.

Japan’s Labor Market Has a Lesson for the Fed: Women Can Surprise You

Japan’s improved labor force participation for women is a reminder not to assume that job market limits are clear and finite.

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