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Is Womenomics Working?


When Kathy Matsui first published research on "Womenomics," exploring the economic outcomes of women in the workforce, Japan had one of the lowest female participation rates in the developed world. Now, 20 years later, Japan's female participation rate is 71%, which tops the US and Europe. In this episode, Kathy Matsui joins us in the studio to discuss the progress that has been made over the next two decades and where challenges remain. "I believe Womenomics is working in Japan's context," Matsui says, though she notes that it remains "a work in progress" with significant room to improve the nation's gender leadership and pay gap.

This podcast was recorded on April 23, 2019.

All price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published or reproduced, in whole or in part. The information contained in this podcast does not constitute research or a recommendation from any Goldman Sachs entity to the listener. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefor (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed. The views expressed in this podcast are not necessarily those of Goldman Sachs, and Goldman Sachs is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs to that listener, nor to constitute such person a client of any Goldman Sachs entity.

Copyright 2019 Goldman Sachs & Co. LLC. All rights reserved.

This is an unofficial transcript meant for reference. Accuracy is not guaranteed.
This is exchanges Goldman Sachs. What we discussed developments currently shaping markets industries in the global economy, objects Global had of corporate communication shared the firm back Ninety ninety nine Goldman Sachs Cathy met to publish a report on what she called women Onyx, which is all about. Japan's economy could be boosted by greater female labour participation rates. Twenty years later, Cathy and her team are out with new research, women Annex five point: oh they're, calling it on the problem, it's been made over the past two decades what challenges remain for this absurd we're staying damage. Cathy and our New York studio answer this court and is women objects working Kathy? only serves as vice chair of Goldman Sachs. Japan could have macro research in Asia in Chief Japan, equity strategies that flood of titles. Cathy welcomes the programme. Thank you for allowing me to do
talk about women are it's a phrase you coined back and ninety ninety nine, when you first published on this topic, what does it mean to you for me, women, comics, is really very simple. It is the concept of maximizing your human capital, tension and in Japan's case, a country that is really leading the world in terms of aging endemic fake headwinds. I thought to myself years ago. That where then painting a very gloomy doomsday scenario for Japan's future economic prospects that if they could actually maximize or at least increase to some degree, the active participation of women, we could see boost to japanese economic growth potential long term before we get a little deeper, let's put some numbers on this one, two three, within our listeners should know by the time they finished. This episode water, three numbers that should stick in our minds:
point number one is that Japan's workforce population is going to shrink by forty percent by twenty fifty. five, so in most of our lifetimes that population is dramatically going to get smaller dear point now to enter Stanley. Japan used to have one of the lowest female participation rates in the developed world. It is, seventy one percent, which tops the United States and Europe's female participation ratio, which a lot of people don't realize data point number three is: if hypothetically Japan could close its gender employment gap and on top of that we make an assumption that job These women work longer hours, in other words, most of the jobs. A japanese women are employed in our part time rather than full time, but if we encourage these women to work more full time, not quite mad
the males we could add another percent and so all totalled? We believe that closing the gender gap in Japan could lift Japan's gdp by as much as fifteen percent. Backing up again to twenty years ago. How did you first decide to do this research in what would the results that you found twenty years ago, Twenty years ago, I had been a japanese equity strategist for nearly a decade. I had given birth to my son, my first child three years prior and one was returning back to work. I noticed that a lot of my japanese mommy friends were, returning to their occupations or careers in the same ratio the same rate I found that quite odd, given that Japan desperately needed as many people as possible over the society to work and to be active. Yet these women were working so
I was, and still am, the only female equity strategist in Japan. I figure anonymous letter and I have ever you're, not my japanese competitors or right about this topic, so I thought hey it. server. What if scenario? But, let's see if we could put some brings together and hypothetically assess what the economic potential lift could be if more women would work and draw out some kind of investment conclusions will, if more win our working than pursue, there's more income, more income means more spending. More spending needs more profits for those company that received that consumption and the by lifting the economy for everybody, not just for women, so that was Genesis of the idea behind woman comics lay on a little bit more detail. The economic in business rationale behind women comics, so the
a rational is quite straightforward, very simply put if you think about it for any economy in the world. There really only three drivers of growth, that is labour capital and productivity. if your Liverpool is shrinking like Japan's is and the other two factors are static than presumably economic growth is going to fall and, more importantly, living standards for future population will also fall. So if you could increase the number of people that are active. We working outside the home, earning an income than presumably over time. That is going to add to economic growth potential. On the This site, it's also pretty simple. If you look at first, Numerous studies globally and we looked the same phenomenon inside Japan's corporate sector, those companies, that tend to have more diverse, for example, manager their populations, board directorate, cantation, tend to exist higher levels of our we hire live.
Loss of revenue growth, in other words, their business performance, is better and its to say that women are better than men, it is to say that when you have, Such a population like Japan does? It is important, especially if you're trying to innovation, and be creative. You need different perspectives. You need cognitive diversity. Entry the decision making processes in order to improve bottom line performance see you mentioned that Japan's labour participation rate for women is now higher than the United States. So I've seen it in some progress made. Since you first started looking at this topic twenty years ago, one of the factors that increase the productivity rate. The participation of japanese women in the economy talk a little bit about government policy, absolutely first off it. Is very interesting that when they current job me Government led by Prime Minister Abbaye, came to power, a little over six years ago. He declared
economics, is women comics, which was rather shocking for the japanese government to even mention this topic of gender diversity, but it was really with the aim of increasing participation in Japan, workforce and so on. Start you do was, for example, said some goals and targets for the nation, so, for instance, His goal was to increase the participation of women who tended to drop out of the workforce after having their first child But she was very high over sixty percent and that's I'll come down by about half one of reasons that's come down is because the government realise that the capacity for day care, for instance, was very limited, so they set out national goals to augment and expand the capacity of day care. It is still not perfect. They're still kids on waiting lists for public daycare in Japan, but they made considerable progress.
Their important policy step that they made, which are there was extremely important, was to boost transparency. The old days, not even oldies. Ten years ago, if you looked at annual port of a typical japanese bluechip company, you could not find any data related to gender, how many women verses men, how many women managers versus men none of that existed but start to those sixteen, the prime ministers office said down this edict saying that all javanese companies with three More employees must disclose gender statistics and also set forth gender goals, and action to reach those goals. So I think this increase trust parents see really the Pandora's box so to speak and revealed for the world. Some of these ratios are really low and we have a lot of work to do and there's nothing like shame and embarrassment to motivate changes in human behavior. So I think that combination of some government policies and increased chance currency and, of course, the acute labour shortages
that Japan some recipe, of course economic necessity, really propelled those numbers to the levels we see today immigration I mean in the May developed countries. Immigration provides a source not just of labour growth rate, but also it sometimes vice labour force for child care and the light. Has there been any changes in the way Japan, which is historically been tough on him? nation or restrictive on immigration. Any changes there, I would say Japan has pursued a rather stealth immigration policy. What I mean by that is, if you look at the statistics, may people are realised this, but in the years two thousand sixteen seventeen relic to the size of Japan's workforce population, the net, the inflow of foreign workers, actually exceeded that of Germany and was quite close to that of America and what I mean by stealth is that they're coming in kind of non traditional routes, for instance foreign students studying in Japan, you can work up to
how hours a week and part time jobs. The sector the categories, technical trainees, so people coming, for example, from South EAST Asia to work and construction sites in Japan. They can get these technical trainee visas, but that is clear. enough, so the government, most recently in fact, last year, pass legislation to allow up to arouse three hundred fifty thousand foreign work to work in designated sectors in Japan, ranging caregiving to construction hospitality because clearly not a japanese people. Don't want to do those kinds of jobs, and so the government has no choice but to welcome for workers space. So it's not. Let's opened the floodgates it's, not millions of people just yet, but there gradually being forced to deregulate the areas of foreign employment. Education, sometimes is a key determinant of people success in the workforce, beyond where the educational challenges facing women comics in Japan,
There is one quite challenging area that Japan really needs to work on, which is simply put. If you look at the level of academic ability. The tonnage of women who hold the university degrees, it is actually higher than that of men. Despite that statistic, however, Japan has the dubious distinction of having the lowest ratio of feeling researchers and scientists in the OECD, so there something going on and girls advance in their educational careers and when they choose which areas they want to specialise in, even though they may be pretty good at math and science, when they're in elementary a middle school, something happens in high school and university level where they opt out of those fields, even though it could be actually quite good. I wrote a little bit in my research. I think there's something in not
the water or the air, but with parents and society and general stereotypes and the media girl? don't see that many scientists sore astronauts were female and therefore they never think or believe that they themselves could become one of those roles. And so it's not any one thing in terms of the educational topic, but I think there's a that society needs to do to correct those stereotypes. And say, look if you're young girl that loves math. You too can be an astronaut and really push that much harder than I think the society currently is to act, as is clearly not an issue of lack of ability. It's really what is shaping or influence in their decisions academically further down there, see you taken women on X beyond Japan and looks a lot of other developed economies what other developed economies have experienced, similar levels of women participating in the labour force and where
seen some backsliding? If we across Asia. A country that has very similar challenges to Japan would be, for example, Korea. I have visited. Korea has spoken with the gender minister there and if you listen to a presentation on gender diversity in Korea. If you just replace the word Korea with Japan, it's almost identical, but I think it also has to do with workplace challenges, workplace practices, for example, very long working hours, evaluation based on time and seniority as opposed to performance in output. So what parallels there, which interestingly, Korea, is now working quite hard to change its work practices as well. We ve seen some interesting developments and I think that Japan could learn from best practices globally, for instance the government Japan. Most recently passed legislation to mandate equal pay for equal work, part time work. used to account for only fifteen percent of all employees in Japan. That is shut up to forty percent.
Clearly a lot of those workers are doing the same type of job content as their full time. Work appears, but simply not paid the same, so to run To find this imbalance, the government is proposing legislation and its basically copying of the Netherlands, I believe of the nineteen ninety so that something that I think Japan could learn from another best practice example that I like to use is the UK it's over the right to ask for flexible work. This was legislation that was passed, it was originally intended just for kind of working parents, and then they brought that out to everybody, and I think that something in Japan that it still quite ridge, in very traditional in terms of people, should be at work full time in the office with their colleagues. For this workday, as opposed to working telecommuting, etc. So I think there are a lot of great best practice. Examples in the rest of the world that Japan can learn some great lessons from take some cues from to formulate its own set of gender friendly policies. Have you
the issue of maternity leave and gets a lot of focus partly in scandinavian countries. Words are not mandatory, but accepted by a lot of companies and countries have some fun paternity leave, but the take up rate are pretty love, yes, Absolutely so Japan has in law few years, develop one the most generous parental leave benefits in the world, mothers and fathers each get one year of parental leave and the first six months, two thirds of their pay is actually covered, so the women in Japan offers the mothers most of them. Take that leave the problem. As you cited. Is the men don't take or tend not to take as much leave. So I think there is an issue where companies can really play a big role. The employers can play a big role in terms of targets encouraging men to really participate more. Clearly in the household japanese fathers who have chill
I intend to spend less than an hour and a half a day. Others is half that of Eu Us, and european fathers at home, with care and household chores. So if you ve got to parents and the mother is trying to deal with that, her career, that's obviously quite a lot to do. so encouraging more fathers, of course, in Japan to take more protection. Leave to build. That empathy, importantly, I think, is crucial. Some people thought that women Alex would work and at some level it it's worked in Japan and MASH increase the labour participation rate of women. Then birth rates would fall out of you looked at that research and what we found two decades. I have encountered multiple occasions. This comment that oh, this is a great idea. But in reality, if more javanese, woman and a working outside the home, it is going to lead to a declining birth rate, heard that sir
often that I said: ok, I'm an analysed. Let's look at this empirically and we looked at international comparison data we looked at female participation rates in the workforce. Verses fertility rates and what we found is quite interesting, which is innocent. Negatively correlated. In fact, those two things are positively correlated rather world. In other words, countries like Scandinavia: they tend to have a bow say: OECD average Females working in their societies, but they also have higher than oecd average fertility rates and then Question I encountered in Japan was well. That may be true outsider Japan, but certainly not true insight, Japan, so is it ok, look at the data inside Japan for the forty seven states or the prefecture, and LO and behold, the correlation was also positive. In other words, those states or prefectural, with more women working handed to have more babies in those states? So my point kind of raising this topic of, I call them the
comics myths? Is we can't really move forward in any society, one word or based on this, we have to establish what are the facts, and once we establish those facts there we go Scots and debate and try to move forward so looking at them That's what you think governments corporate in societies should do now only twenty years into work, as you step look at what are the immediate challenges in Japan, contacts, it's pretty clear that while we have cited that more women are working than ever before, that's fantastic but, like I also said earlier, a lot of those jobs or more part time, rather than a full time which means that Japan is still far behind the rest of the developed world when it comes to females represents patient in leadership positions in managerial roles. And so I think there is still a lot of work to do. For example, in parliament
Japan, Japan's ratio of females in parliament in the lower house, the more important house is barely ten percent that is lower than saudi Arabian Libya, so I've action The kitten my recent research, perhaps we can think about temper. hurry quotas, gender quotas in parliament. I know I'll get a lot of back without comment, but I think that is something that is so important that the policy making level to have a body that determining policies and laws that affect the entire society not be determined by legislature? That is! Ninety percent one gender, I think so ITALY. Japan has the largest gender pay gap in the g7, largely because of the part time work racial being so high for women and part time work being less well competent, basically, half if you take the average So I know this is a very controversial subject in any economy, but perhaps mandating or requiring increase transparency around the gender pay.
closures and information, because I think that will shine a light in terms of again. Lot of men work part time as well, but just really that gap between part time and full time elsewhere. The third area of improvement for Japan would be greater flexibility in the labour market. Overall, we have We call labour market dualism in Japan, you either work part time or full time and there's nothing between which basic means you end up with a very rigid labour market. There's lots of movement or mobility between those two sets of labour contracts, and I think it's very tough, Employers is very tough on employees and again with the demographic headwinds Japan is facing. It must create a more flexible market for labour and talents There is more fluidity over the long term. You first came to this topic. as an equity researching in you continue to be an equity research analyse what are the invest, implications today of women Alex woman on
is not just a Japan investment theme, but a secular investment theme globally, because if we examine statistics of women working everywhere in the world, including emerging markets, we are noticing that guy your gender diversity does lead to better performance at the bottom line level, and so I think that for example, we ve looked at company is in Japan's context that benefit from the increase incomes that women are earning so If more women are working. For example, they would probably want to outsource many services. Would it be day care or elder care e commerce sooner save time, shopping, leisure, theories- and we created originally a woman Alex Basket kind of on that theme, but the side is what I alluded to earlier, which is looking at companies that have more balanced. Gender representation inside their organizations and looking at their performance, and we just created a new Japan.
see, leaders basket, which looks at metric, such as gender, represent nation and management in boards looking at work, environment, flux, bill anti based on publicly available information for the companies in Japan, and we also showed that this basket tended to outperform, for example, the broader japanese stock market by nine percent of the last couple of years and its not just in Japan we see similar studies done globally. That also shows, as is the case at the end of them very optimistic about the gender diversity agenda moving forward, especially in Japan, because of two things. One is the really explosive growth of e S, g investing We all know that that has been a very, very exciting and dynamic area investment, because asset managers around the world are looking at steam and diversity dovetails direct into the Essen energy of the EU, S g, but secondly, We are observing quite distinct shifts in ad.
Heads of young millennial, males, not just in Japan, I think globally, whereby generation, is much more concerned and values, work, life, flexibility, many young men want to have as much. Flexibility as their spouses and which is a little bit different. There will we observe, ten or twenty years ago, this movement to try to advance gender diversity is no longer this minor battle of women trying to for their own rights or whatever. But it's really all society trying to move forward to create a much more balanced work and lifestyle environment. beyond increasing women's participation in the labour force. What other solutions can Japan of the country's tap to unlock productivity gains as they face these demographic challenges besides leaning on the population and demographics? Clearly, I think there is huge scope and potential for leaning on technology and
automation and a I ultimately population similar to Japan that are challenged with shrinking work forces in aging, workforce populations that there to have to replace human tasked with machines and computers, as I live in Japan and I travel around the world many countries, for example here in United States. When we talk about oh eight, he's going to replace you know half of our jobs and the next several decades and there's a bit fear in kind of surrounding that topic. When I go back Japan, and we have discussions around this very same topic. Theirs. absolutely no hesitation whatsoever. There is no fear because they need it. They need a right, the probation, shrinking, so rapid lights. Ok, we need to use robots and a I like yesterday. You know we have to move much more quickly said: there's not dissimilar sort allergic. Action or fear surrounding the guy.
of a I and all of these technologies. So I think Japan is really trying to full on embrace these areas because No, that is the ultimate key to boosting productivity, and many other countries will be facing those challenges just a little further down the road. Absolutely so what Governments done under our new CEO, David Salmon, is put a bit more emphasis on investing in women and they ve set aside five million dollars to invest specifically. Women led businesses and seed fun, manage where women are still woefully unrepresented. I know you're involved. That process is at the core. The thing that will make a big difference or do we need to do much more. It's a huge initiative and if you think about the overall environment for venture capital and investing in women, own businesses or funds. We know the suggests ex are pretty bad, a lot of women who are very,
successful in their businesses still have a hard time scaling their enterprises to the next level for lack of acts. to sufficient capital? So I think what the firm is doing is not only the two but itself pioneering in the way that I think it serving as a magnet and really shining a spotlight on this issue that is so desperately needed in the economy today, and I am hopeful that this is not just focused primarily in the United States, were already seeing some investments globally that we started this initiative spread globally, because American The only place where this is an issue. It's an issue the world over so and very, very excited about this, long and fastening career here comment talk a little bit about your own experience. When it comes to these kinds of issues bouncing your work and family, also what you're excited about. Looking forward
One. The reasons I join Goldman and I didn't join a japanese bank was, I did an internship with the japanese bank before I joined the industry. I wore the typical japanese female bank uniform, I sat with men and women, but when lunchtime ring around, I went to with the women. The men went to lecture themselves is very segregated and, of course, very good and very conservative than I thought is someplace that I could really a satisfying career in the time. The who is looking at the answer was no, but I liked fight and I loved economics. I love just learning more, but the japanese economy. It was a tumultuous time if you recall back in ninety ninety when I entered my career because a japanese acid bubble had just burst, so things were really structurally very challenged. I've been fortune. having worked at Goldman Sachs for now twenty five years, really
focused on equity strategy, but I've had wonderful opportunities, as a female strategies are being the only japanese female strategies because Michael remember me because I, maybe stick out, I've been doing it for such a long time and I've knowledge Non topics like women now makes, but have also looked at, for example, pension under funding. Again. These are too that I know my japanese competitors would never write about because I'm calling out companies funding ensuring that some countries are actually not very healthy, so I have been fortunate working in a position in a role that allow Allow me to express my views. My perform is measured very objectively because our clients rate us- and I think that has been really crucial for my career. You know it's been a very transparent clear for me, been able to write about talk about whatever I feel like, but have also been working in a context of Japan, which is
been undergoing still undergoing enormous structural challenges and that's a great environment as an Alice. I think if I'd been working in a thirty or bull market, my crib and gone so far, but it's been quite the opposite, as we all know in Japan for the last three decades, and I think, as an analyse, that's been an ideal environment to build ones career for. We conclude, let's recap, their question: the episode in under a minute answer. Please is women? Onyx working I believe woman annexes working in Japan's context simply put if we look at the percentage of women that were working twenty years ago was fifty six percent. Today. Seventy one percent higher than the: U S and Europe, however still a work in progress, we still need to improve general limitation in leadership, we need improved parents, see we still alive of areas to go in society correcting unconscious biases, but we think ship is sailing in the right direction and entire population, if we all work together, will reach that goal right. Well, Cathy, thank you
for joining me today. Thank you. That concludes this episode of Exchange, the Goldman Sachs thanks for listening We hope you join us again next time this spot gasters recorded on April twenty third, two thousand nineteen, all price references and market forecasts correspond to the date of this recording. This podcast should not be copied, distributed, published or reproduced in whole or in part. The information contained in this package does not constitute research or recommendation from any Goldman Sachs Entity to the listener. Neither Goldman Sachs nor any of its affiliates makes any represent.
or warranty as to the accuracy or completeness of the statements or any information contained in this podcast, and any liability, therefore, including in respect of direct indirect or consequential loss or damage, is expressly disclaimed. The views expressed in this podcast, or not necessarily those of Goldman Sachs and Goldman Sachs, is not providing any financial, economic, legal, accounting or tax advice or recommendations in this podcast. In addition, the receipt of this podcast by any listener is not to be taken as constituting the giving of investment advice by Goldman Sachs too. That listener, nor to constitute such person a client of any Goldman Sachs Entity.
Transcript generated on 2021-09-19.