Perspectives from Around the World 056

Japanese Low Fertility and the Low Labor Force Participation of Married Women: The Role of Rigid Labor Markets and Workplace Norms

Reischauer Institute Professor of Sociology and Department Chair, Department of Sociology, Harvard University

For Mary C. BRINTON's full bio,

The Japanese birth rate has been stubbornly low for several decades, remaining well below the population replacement level of 2.1 children per woman (Atoh 2001; Jones et al. 2009). As many scholars and policymakers have noted, this portends significant problems for Japanese society and economy in the coming years. Rapid population aging is already translating into a hollowing-out of rural communities, a shortage of care workers for the elderly, and fears that the pension system will run into grave fiscal problems due to Japan's inverted age structure and the shortage of prime-age workers in the labor force.

While the low birth rate continues to be a source of much concern for Japanese government policymakers, a second issue—the low international ranking of Japan with respect to gender equality—has been not only a source of concern but also a source of considerable embarrassment over the past several years. In 2006, gender inequality was greater in Japan than in about 2/3 of the 111 countries ranked by the World Economic Forum. Even with over 30 countries added to the rankings by 2014, Japan's relative position had barely changed. Looking only at the 48 countries that are high-income (as measured by GDP), Japan ranked 6th from the bottom in 2014, surpassing only South Korea and the highly gender-unequal countries of the Middle East. While Japan ranks high in terms of health equality between men and women, it ranks particularly low on women's political empowerment and women's economic participation and opportunity. It also has the lowest percentage of women on the boards of listed companies (World Economic Forum 2014).

The administration of Prime Minister Abe has sought to develop policies to alter the twin phenomena of the low birth rate and low female labor force participation (Macnaughton 2015). Raising the birth rate will, in the long run, produce more young people who can contribute to the economy. In the short run, encouraging the greater labor force participation of married women will bring much-needed human capital into the present labor market and according to many analysts, would boost economic growth and GDP (Ono and Rebick 2003; Matsui 2014).

But despite the positive anticipated outcomes of having more Japanese births as well as more married women in the labor force, policy reforms have produced little effect to date. Around 60 percent of Japanese married women leave the labor force by the time they have their first child, a figure that has barely changed for the past 30 years (National Institute of Population and Social Security Research 2011). This quit rate is unusually high by international standards. Moreover, it does not appear to necessarily result in more births; many Japanese married couples stop at one birth. What is the solution, and why are Prime Minister Abe's reforms having so little effect? In my view, much of the problem is to be found in the persistent rigidities in Japan's labor market and in work norms that continue to render it nearly impossible for full-time dual-earner couples to have more than one child at most. These labor market rigidities and norms also contribute to a related problem: the increasing reluctance of young Japanese to marry and start families at all. In the following, I will deal first with labor market structure and then with the related issue of workplace norms.

Obstacles Created by Labor Market Rigidities

It is clear that during Japan's high-economic growth period, the system of hiring large numbers of young men into full-time entry-level jobs, providing firm-based skill training to them, and fostering within-firm competition for promotion was a highly effective set of mechanisms for producing a productive labor force (Honda 2004; Yashiro 2011). Firms could adjust their labor supply to fit new technologies and alterations in labor demand in two ways: through providing on-going skill training to their existing "core" male labor force, and through having a "buffer" of young and middle-aged female workers who did not have job security and could be encouraged to quit when firms' financial conditions demanded a somewhat leaner labor force. These two mechanisms ensured that firms would have a small but skilled labor force as well as a set of peripheral workers who constituted the support staff for these employees. Japanese income tax laws and welfare-state provisions were symbiotic with the employment system, guaranteeing a robust set of benefits for male breadwinners who had succeeded in the competition to enter and remain in large firms (Osawa 2002; Schoppa 2006; Yashiro 2011).

The pressures on this system starting in the 1990s began to expose the extent to which it is ill-adapted to unstable economic growth and also to young women's rising human capital due to their increased entrance into higher education. Young mothers who quit their firm to focus on childrearing for several years face extreme difficulty finding a full-time job that takes full advantage of the education and years of human capital formation they experienced prior to marriage and childbirth. This is partly due to the low rate of chūto saiyō (mid-career hiring) in the Japanese labor market. The tendency for firms to rigidly persist in the "mass hiring" of young graduates, a system that characterized the high-economic growth period (Honda 2004) means that many high-human capital women as well as men in their mid-thirties onward are unable to switch firms. For women, the implications are obvious: the opportunity to further develop one's skills and abilities after having left the labor force to concentrate on childrearing is severely curtailed (Boling 2015). For men, the implications are perhaps less obvious but are nonetheless serious: once they enter a full-time job in a "good" firm after leaving school, they have little opportunity to choose a career path that differs from what their manager decides for them. Nor do they have much opportunity to make decisions about their work hours or place of work. The dearth of mid-career chances to move to another firm means that male employees have very little control or "voice" in shaping the work norms in their company; because their economic fate is so closely tied to their current firm, they have little power to negotiate the terms of their employment. One could perhaps say that this is the nature of capitalism in the 21st century. But that is not necessarily the case for high-human capital workers in all countries. What is significant about Japan compared to many other economies is the striking absence of negotiating power on the part of highly skilled employees. This can be traced to the fact that the external labor market remains very weakly developed.

Obstacles Created by Workplace Norms

The persistence of low rates of interfirm mobility in Japan compared to a number of other postindustrial countries can be linked to a second aspect of the Japanese labor market that also exerts a negative effect on working women and a negative effect on the birth rate: workplace norms. These norms include long, sometimes unlimited work hours and, in the case of large firms, possible transfers to branch offices in other parts of the country—transfers that cannot be refused without the risk of relegating oneself to a career dead end. It is well-known that work hours in Japan exceed those of many other countries and generally require a considerable amount of "face time" in the office. Working hours that regularly run past 6 PM or later have obvious implications for family life that Japanese policymakers seem reluctant to recognize. Children must be picked up from childcare centers and brought home at the end of the day, and in Japan, this is not a responsibility easily delegated to babysitters. How can this be accomplished if both parents are in full-time career-track jobs with long and unpredictable work hours? In the absence of nearby relatives, it is either the mother or the father who must pick up the child. Most often the mother either leaves the labor force entirely because of the near-impossibility of balancing full-time work and childrearing, or switches to low-level part-time work. In either case, firms lose the advantages they would gain from continuing to employ high-human capital women in "core" jobs (Brinton and Mun 2015). Moreover, women's departure from the labor force reinforces the Japanese norm of the "ideal worker" whose work hours and job content are largely controlled by their employer. This continues to make it very difficult for men who wish to participate more actively in family life to be able to do so.

Prime Minister Abe's administration has vowed to shorten and eventually eliminate the waiting list for high-quality childcare facilities. As laudable a goal as this may be, how does it resolve the contradiction between children's needs to spend time with family and the norm of work hours that extend into the evening for one or both parents? This is not a problem solved with increased funding of public childcare. It is a problem that can most likely only be addressed by changes in Japanese firms' inflexible work norms. Similarly, the ability of labor to move more freely across firms would allow workers to find situations that better fit their own preferences for work-life balance. What is needed are not piecemeal reforms such as increasing the supply of childcare spaces, offering ever-longer childcare leaves, or establishing unrealistic quotas for women in management. More women will "shine" and more babies will be born only when concerted efforts are made to increase opportunities for high-skilled men and women to move across firms, and when old-style workplace norms are replaced with 21st-century norms that are better-suited to capturing the gains from women's as well as men's human capital.

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October 15, 2015