David McNeill discusses demography with Kathy Matsui
Seventy percent of Japanese woman quit work when they have their first child and only 65% of college-educated women here are employed. Not only is that a waste, it makes no economic sense, says Kathy Matsui, co-head of Asia macro-research at Goldman Sachs. A mother of two and one of Japan’s top equity strategists, Matsui says higher female employment would boost, not lower, fertility rates – not to mention raise the nation’s GDP and help Japan solve its “train wreck” demographic crisis. She calls her philosophy “Womenomics” the title of her groundbreaking 1999 report advocating more investment in the neglected half of the workforce.
Has anything changed in the 11 years since you wrote that report?
Some institutions have now started to take this issue more seriously, so they have programmes to promote gender diversity. Some companies are desperate to go global. But I recruit a lot in China and India, and I can assure you they’re very uninterested in Japanese companies because there’s no clear path to the head office. They’re looking for fair evaluation, market-based pay and equality, and Japanese companies don’t offer that for the most part. The more forward-thinking Japanese companies have made some progress in looking at their HR practices.
A lot of obstacles are in the mind, so just educating takes a long time. You have to educate society about the money, time and resources invested in training a woman to the level where she is when she has a baby. Assessing that sunk cost against hiring a woman fresh out of school is just cost-benefit analysis. If you do the math and don’t put any emotion into it, it’s pretty clear. Society and those companies have just wasted a huge amount of money and time.
Which will come first in Japan: mass immigration or the mass feminisation of the workforce?
Well, if you talk to people in the government, the more palatable of the two rather undesirable options is enabling more women to work. But of course that kick-starts a chain of events. OK, I’m a Japanese woman who has just given birth: who will take care of my child or help me with my household chores while I work? If you look at Germany and other countries, they didn’t have this big campaign for immigration. It was inevitable because they didn’t have the human resources. There are massive shortages already today in nursing and a lot of industries here. Am I expecting the government to open up the floodgates [just yet]? No, but I think it will come.
You’ve discussed this with senior Japanese policymakers then?
Yes, and I have been frankly less than impressed with [even] female politicians here. They’re more sympathetic to the idea [than men], and to be fair they’re struggling in a dog-eat-dog world. But there are just not enough of them. And this issue doesn’t figure very high on the policy agenda, even on that of female politicians.
Yes, the recognition is there – they’ve tried to increase the number of daycare facilities for example [insufficient childcare and nursing-care support is still one of the main reasons behind low female employment in Japan]. But it has never risen to the priority that is required. This country is a slow-moving train-wreck when it comes to demographics. It’s central to everything: growth, productivity, competitiveness, pensions, and how we’re going to pay for entitlements. Yet they dance around the issues and say, “shikata ga nai” (it can’t be helped).
So how do we fix the problem?
I used to be totally averse to quotas, but at the end of the day when you’re so extreme in your lack of diversity as a nation, which Japan is, I think it’s not a bad idea to experiment with quotas in public jobs and leadership positions. We should start in the Diet, and with what is right for Japan – 30% sounds like a right kind of stretch target to aim for. You can do it as long as you have a consensus: why is this good for Japan in the long run? I mean, look at the situation today: six prime ministers in six years – are we going to get any worse than this? We need more different voices of opinion that more fairly represent the population at large.
OK, so we change the public sector and government, and larger companies are coming on side. What about the smaller companies where most people work?
Smaller companies, unfortunately, have to be more mandated. The equality law is not really enforced. There are a lot of frightening cases: women who work even in larger companies who were promised the same seat when they return from having a baby and it was taken away from them, or they were denied a promotion. And they go to court, but the process takes forever and they get tired and give up. How will that change? I think it has to come from the top down.
You point out that men in Japan typically spend just one-third the time doing household chores compared to their American, German or Swedish counterparts – one reason women are not marrying and having children. But Japanese men work extremely long hours, right?
Yes, so you obviously need to start from the source, which is: are they productive for the 18 hours they’re out of the house? They’re not. But are they paid for being productive? No. So that’s why, to not just improve diversity, but also raise the entire productivity of this whole nation, you can’t pay people by seniority.
You have to introduce merit-based, objective compensation systems because this is going to impact not just this problem, but also our ability to attract talent, including foreign talent. Do the men have to clock up all these hours? You just have to think of a more 21st-century way of working that is not so arcane and old-fashioned.
You don’t like the term feminist?
I’m not looking to be called any kind of feminist advocate. All I’m looking for is equal opportunity. I’m not out there doing rallies or strikes. I’m a macro-analyst, and look at things very objectively with information and data. I speak with global investors 300 to 400 times a year, and inevitably in discussions about Japan the topic of demographics, the fiscal debt and all the obvious challenges come up.
So rather than repeat the same depressing mantra, I thought, why don’t we try to come up with a partial solution by creating opportunities for half the population? Realistically speaking, we’re not getting to fifty-fifty anytime soon. All I’m advocating is moving the needle.