Women’s Empowerment and Its Economic Impact

Part 1: Using Diversified Human Resources for an Added Competitive Edge

Consulting Fellow, RIETI

The Council for Gender Equality estimated in 2012 that promoting employment for women could put 3.42 million full-time moms in labor market and increase the nation's total compensation of employees by approximately seven trillion yen.

The government has traditionally viewed the issue of women's employment from the perspectives of welfare policy, human rights, and corporate social responsibility (CSR). In contrast, the Shinzo Abe administration perceives it as part of its economic revitalization policy and business strategy for boosting corporate vitality. Through promoting women's employment, the current government is highlighting the need for corporate management to secure a wide range of human resources with diverse values and develop a working environment that facilitates their capabilities.

Every year, the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange jointly award the Nadeshiko Brand designation to listed companies that are exceptional in encouraging women's success in the workplace. The program is aimed at attracting investments to such companies as a way of supporting their initiatives for women's empowerment.

The promotion of women's employment has the following benefits: (1) securing workforce amidst the dwindling of the working population, (2) allowing companies to find great talents from a pool of job seekers greater than the traditional group of "Japanese men who would accept workplace transfer and overtime" for optimum worker placement, and (3) utilizing human resources with diverse experiences and values to boost competitiveness.

At the same time, greater women's workplace participation has its disadvantages. For companies that invariably employ people of similar values, have them work for long hours, and offer a uniform promotional path to those who joined around the same time, accepting workers of different values and time constraints could create internal friction and added cost for coordination. They may have to set up toilet facilities and locker rooms for women, or develop a human resource labor management and evaluation system for accommodating diversified working styles, e.g., shorter working hours and tele-working system.

There are two ways of discussing the economic impact of women's empowerment. One is a macroeconomic approach of examining the relationship between the gross domestic product (GDP) and the female labor participation rate, and the other is a microeconomic approach of comparing companies' profitability/productivity with their female employment ratio. Article 4 gives findings from the macroeconomic study, and Article 5 details the results of research using corporate data.

>> Original text in Japanese

* Translated by RIETI.

August 22, 2016 Nihon Keizai Shimbun

September 29, 2016

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