The Failed Promise of Workplace Equality in Japan: A View from the Trenches

Society Economy Work

The COVID-19 pandemic has thrown into high relief the Japanese government’s failure to close yawning disparities in the treatment of men and women in the workforce.

Shutō Wakana

Professor of economics at Rikkyō University, specializing in labor relations and women’s labor. Born in 1973. Earned her Ph.D from Japan Women’s University. Works include Butsuryū kiki wa owaranai (The Distribution Crisis Will Not End) and Gurōbaruka no naka no rōshi kankei (Globalization and Labor Relations).

Former Prime Minister Abe Shinzō made women’s active participation in the labor force one of the planks of his growth strategy. But despite a short-term surge in the number of female managers, overall conditions have improved little for Japanese working women, most of whom labor in low-paying part-time or temporary jobs. Indeed, the COVID-19 pandemic has erased many of the labor gains women have made, even while highlighting their role as “essential workers.” In a recent interview, economist Shutō Wakana stressed the need for aggressive government action to improve women’s working conditions in the post-pandemic era, citing critical shortages in the healthcare and childcare industries.

Ambiguous Impact of Abenomics

Early in his second term as prime minister, Abe announced his government’s commitment to building a “society where women shine.” In September 2015, the Diet passed the Act on Promotion of Women’s Participation and Advancement in the Workplace, which requires businesses with more than 300 employees to draw up action plans to improve gender equality, including quantitative targets for increasing the share of management positions held by women. So, how much progress did women actually make toward workplace equality during Abe’s record-breaking seven years and eight months in office?

“I think there’s a positive side to the fact that the law has forced businesses to set concrete targets and develop policies to meet those targets,” says Professor Shutō. “The downside has been that the number of women classified as managers has taken on disproportionate importance as an indicator of equal participation in the labor force.”

As Shutō points out, only a limited number of people of either gender can rise to the top rungs in a company, noting that steady advancement up the corporate ladder is no longer a given for university-educated men. “In the twenty-first century, the real issue is whether employees have an opportunity to grow and play a more meaningful role in the workplace, whether they’re classified as management or not.”

Shutō does not deny the importance of putting more women in responsible positions. The problem, she says, is that, “with the upper echelons receiving so much attention, the struggles of ordinary working women have been overlooked.”

Recognizing Women’s Contribution

In calling for “women’s active participation,” the Abe government implied that women had not previously been active participants in the labor force. “That gives the wrong impression,” Shutō says. “For years women have been filling the jobs that keep our society running. In fact, they make up a large share of the ‘essential workers’ that we’ve been hearing about since the COVID-19 pandemic hit. The biggest problem is that society doesn’t place sufficient value on their contribution.”

Essential workers are people directly involved in the provision of basic services needed to keep society functioning on a daily basis, such as healthcare, food service, agriculture, and public transportation. While others were being urged to stay home to stem the spread of the coronavirus, these essential workers—including the employees of supermarkets, convenience stores, and cleaning services, not to mention the staff of hospitals, nursing facilities, and daycare centers—were generally required to stay on the job.

A large portion of the women in these industries are “nonregular employees,” that is, part-time, dispatched, temporary, or fixed-term workers. In general, this status means lower pay, fewer benefits, and far less job security.

In 2019, nonregular female employees accounted for almost one-fourth of the labor force in the wholesale and retail trade and over one-third of all workers in the medical, healthcare, and welfare industry (excluding executives), according to the government’s Labor Force Survey. What these industries have in common, says Shutō, is a serious labor shortage.

“In Tokyo, the shortage of nurses and qualified childcare workers has become so serious that some nursing homes and daycare centers have been forced to close down. Hospitals are facing a similar crunch, as is the distribution sector. The pandemic has shone a harsh light on our failure to provide adequately for the workers on whom society depends. The reason these industries can’t secure the human resources they need is that the wages are not commensurate with the hours and the mental and physical demands.”

To a large extent, the government’s strategy for filling such jobs focuses on foreign labor. Many low-paying jobs are already filled by foreigners working in Japan under short-term student or training visas. Moreover, in April 2019, Japan launched a new Specified Skills visa program for foreign workers in 14 industries suffering from labor shortages, including nursing care and agriculture.

“There’s this facile idea that they can get an endless supply of cheap labor from overseas without addressing the basic causes of the labor shortage. That might ease the crisis in some cases, but only at the cost of maintaining low wages and poor working conditions. Before they resort to importing foreign labor, they should be stepping up their efforts to hire Japanese women. In the areas of childcare and nursing care, the top priority should be improving the workplace environment and terms of employment so that people will want those jobs. Yes, that will increase costs. But the answer is for society as a whole to shoulder the burden of these essential services instead of counting on underpaid workers to provide them at cut-rate prices.”

Defending the Rights of Nonregular Workers

During Abe’s seven-plus years in office, the number of women employed in Japan grew by about 3 million. But more than half of those new jobs were nonregular. According to the government’s labor statistics, 56% of female workers were employed in nonregular jobs in 2019. Of those, 83% were making less than ¥1.9 million a year, while 44% made less than ¥1 million.

The growing pay-and-benefits gap between regular and nonregular employees has emerged as a major social issue in Japan in recent years, as companies have filled more and more spots with dispatched and contract workers.

“In the 1970s and 1980s, the increase in nonregular employment was driven by married women who were joining the labor force as part-timers while retaining their status as dependent spouses,” explains Shutō. “It was in the 1990s, after the bubble economy burst and economic stagnation set in, that we began to see a big increase in the number of nonregular employees working full-time, especially under contract with staffing agencies. Many of these nonregulars are university graduates performing high-level jobs in place of regular employees. They often work long hours to support themselves and their households.”

Nonetheless, nonregular status typically means lower pay and far less generous benefits, not to mention job insecurity. “Members of this group are constantly facing the threat of unemployment, which can plunge them into poverty overnight,” says Shutō. “These are the people who suffer most from the gap between regular and nonregular employment.”

The Abe government passed several pieces of legislation purporting to address such inequities. An amended law on management of part-time and fixed-term employees (Act on Improvement of Personnel Management and Conversion of Employment Status for Part-Time Workers and Fixed-Term Workers) came into effect in April 2020 for large companies. (Smaller companies have until April 2021 to comply). The amended law prohibits “unreasonable” disparities between the treatment of regular employees on the one hand and part-time and fixed-term workers on the other, while taking into account differences in duties and responsibilities.

It remains to be seen how such provisions will be interpreted and implemented, but Shutō calls attention to three decisions handed down by the Supreme Court this past October. In two of those cases, the court ruled that the failure of the employers (Osaka Medical College and Metro Commerce, which operates subway kiosks) to provide bonuses and severance pay to its nonregular employees (part-timers and contract workers, respectively) did not constitute an “unreasonable” disparity with their treatment of regular employees. However, in the third case, the court sided with nonregular Japan Post workers who had sued to be granted allowances and paid leave on a par with regular employees.

“From these rulings, I get the feeling that it’s going to be difficult to close the gap with regard to monetary compensation in the form of base pay, bonuses, and severance pay, regardless of what the law says. On the other hand, they offer hope for progress toward equality with regard to non-wage compensation, such as employee benefits, allowances, and paid vacations. Of course, other cases are being heard in lower courts around the country, and it’s possible that as more rulings come down, we’ll begin to see some progress toward equal pay as well. But I’m not optimistic,” says Shutō.

Locked into Low-Paying Jobs

One of the reasons so many Japanese women work as nonregular employees is that Japan’s tax and social security systems make part-time work a more financially attractive choice for most married women. Those who make less than a designated ceiling are exempt from income tax and can be claimed by their husbands as a dependent spouse, earning their household a substantial tax deduction. Transitioning to full-time work would not only incur higher taxes but also oblige the woman to pay her own health insurance and pension premiums. As a result, many women deliberately limit their hours.

Even so, with men’s wages stagnating, an increasing percentage of Japanese households rely on the wife’s supplementary earnings to make ends meet. For single mothers, whose numbers are on the rise, nonregular employment (whether part-time or full-time) is often the sole source of income. The loss of these jobs as a consequence of the COVID-19 pandemic has caused widespread financial distress.

The Employment Adjustment Subsidy program instituted by the government in response to the pandemic applies to dispatched as well as regular employees. “During the recession of 2008, thousands of nonregular workers were just cut loose, and it fueled a lot of public criticism. At least this time, companies in the services industries seem to have made some use of the Employment Adjustment Subsidy to avoid laying off nonregular workers. This is something new. Still, as the recession continues, it becomes increasingly difficult to keep those workers employed.”

In fact, as of October 2020, nonregular employment had fallen for eight straight months—continuing its decline even as regular employment recovered—according to the government’s Labor Force Survey. July saw a loss of 1.3 million nonregular jobs, the largest such decline on record, with women accounting for 62% of those put out of work.

“There’s been some progress, legislatively speaking, toward closing the gap with regard to pay and benefits,” says Shutō. “But the job-security gap is a big problem that has yet to be addressed. Eventually, we need to ask ourselves whether it really makes sense, even from a business standpoint, for a firm to keep on a newly hired regular employee while firing a woman who has been working there part-time for 20 years.”

Daycare Pipe Dreams

Despite an influx of women into the labor force, many of the Abe cabinet goals for the advancement of women remained unmet. After initially calling for 30% of corporate and political leadership positions to be filled by women by 2020, the government revised its timetable to “as early as possible before 2030.” Meanwhile many urban mothers hoping to enter the labor force face long daycare waiting lists, despite the Abe government’s commitment to eliminate such waits by the end of fiscal 2020.

Prime Minister Suga Yoshihide, who took over from Abe last September, has renewed the government’s pledge to eliminate daycare waiting lists, part of a multi-pronged policy aimed at stemming the decline in Japan’s birthrate. But Shutō is skeptical about the government’s approach.

“The biggest reason for the lack of daycare vacancies is labor shortages,” she says. “There have been cases where they actually built a new daycare center and then were unable to open it for lack of staff. There are plenty of people out there who are qualified, but they don’t want to go into daycare. Unless we can offer them a better working environment, this is going to be a difficult problem to solve. I’m not opposed to privately operated daycare in principle, but the trend toward deregulation has contributed to the decline in pay levels for childcare workers.”

Shutō takes issue with the position that market forces decide what a given job is worth. “Policies can also play a major role in determining the treatment of employees. Obvious examples are the minimum wage and statutory limits on working hours,” she notes. The fact that women continue to earn low wages despite worsening labor shortages in the industries where they work demonstrates that the market is not functioning as it should. “We need to make these jobs sufficiently rewarding,” insists Shutō. “It’s time we had a conversation about the policies needed to secure the labor our society depends on. That should be a key component of our efforts to promote the advancement of women.”

Post-Pandemic Outlook

The pandemic has set back efforts to close the gap between regular and nonregular employees and promote women’s advancement. At the same time, it has had the effect of hastening progress toward one of the key goals of Abe’s work-style reform, widespread adoption of telework. While telecommuting might seem like an ideal solution for women seeking to juggle job demands with domestic duties, Shutō wonders if women really stand to benefit.

“The COVID-19 crisis has revealed how deeply entrenched the traditional division of household labor is in Japan,” she says. “When schools and daycare centers closed in the early months of the pandemic, many women found it impossible to keep working with the kids home all the time, regardless of whether they were commuting or teleworking. That was one more factor driving down women’s participation in the labor force.”

What about the post-pandemic era?

“Once the worst is over, and the economy is back on track, hiring for nonregular jobs will doubtless pick up again, and a lot of women will go back to work,” she says. “I’ll certainly be watching to see how the courts interpret the concept of ‘unreasonable disparity.’ And I hope the outcome is an overall improvement in conditions for nonregular workers. But I’m frankly doubtful that we’ll see much progress toward closing the gender gap without decisive policy measures to improve compensation and labor conditions for society’s essential workers.”

(Originally published in Japanese. Interview and text by Itakura Kimie of Banner photo: A childcare worker disinfects the lunch table at Mitsukyo Tanpopo Nursery in Asahi Ward, Yokohama in June 2020. © Kyōdō.)

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