Wide gaps persist around pay, leadership representation of Japanese women

Female employees in Japan aren't getting paid and represented enough in leadership positions compared to men, according to a new study.

In an analysis of disclosed human capital data from Japan-listed companies, WTW found that women are only earning 67.04% of what men earn.

Women also only account for 13.11% of board member and officers' roles, and just 9.47% of managerial roles on average, revealed the analysis, which was also carried out with Symphony Financial Partners and Xebral.

Pay disparity in Japan

The report again raises to attention the long-standing gender pay gap that is rife in Japan. In 2022, the East Asian nation had a within-job pay discrepancy between men and women at 26%. This is the highest gap found in the study that analysed data from 15 countries.

The analysis released by WTW gave a glimpse of the gap in terms of employment status. It found that full-time female staff only earn 71.64% of what their male counterparts get, while part-time staff receive a smaller 69.65% of what men earn.

By industry, the report found that pay disparity is widest in air transportation, where women only earn 48.40% of what men get. It is the narrowest in information and communications, where women earn 74.23% of what men receive.

Lack of representation of women

Meanwhile, the analysis also discovered that women only account for 13.11% of board member and officers' roles, and only 9.47% of managerial roles.

"Larger companies by market capitalisation are more likely to appoint female board members and officers but lag smaller companies when it comes to appointing women in managerial roles," WTW said in a media release.

By industry, the oil and coal products industry had the highest representation for women at the board and officer level at 19.34%. The warehousing and harbour transportation services had the least with 9.35%.

At the managerial level, the air transportation industry had the highest representation for women at 27.83%. The construction sector had the lowest proportion with 2.52%.

Addressing the problems of gender pay gaps

The report found that there was no correlation between the gender pay gap and the proportion of women in managerial roles. This suggests that "initiatives aimed at increasing the proportion of female executives in the medium- to long-term may not necessarily lead to improvements in the gender pay gap."

WTW recommended taking "consistent, long-term efforts" such as setting up frameworks for career development, enhancing benefits that support flexibility, and raising visibility of women leaders to inspire others.

In June 2023, Japan also mandated organisations disclose human capital data in their annual securities reports.

"We welcome the new adoption of human capital disclosures in Japan, amidst the global trend towards non-financial information disclosures," said Shunichi Shiozawa, chief analyst at Symphony Financial Partners. "We are confident that this disclosure is a good start for companies to communicate their efforts to a wide range of shareholders."

However, disclosing gender diversity indicators is only one step in advancing gender equality, according to Takaaki Kushige, Senior Director and Japan Practice Leader, Executive Compensation & Board Advisory, WTW.

"To engage talented women and provide useful information to investors, companies must go beyond mere numerical disclosures at the corporate level," Kushige said. "They must also convey supplemental information about the current state of gender diversity and provide detailed actions that demonstrate commitment to improving their corporate culture."