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Bloomberg

At first glance, things seem to be getting better for Japanese women.
In an economy that has historically lagged behind other developed nations when it comes to female workforce participation, a record 71 per cent are now employed – an 11 point leap from a decade ago.
The Japanese government boasts one of the most generous parental leave laws in the world and recently created a “limited full-time worker” category aimed primarily at mothers looking to balance job and family. And one of the most important needs for working families – child day care – is slowly being expanded.
But even with these advantages, Japanese women – whether single or married, full-time or part-time – face a difficult financial future. A convergence of factors that include an ageing population, falling birth rates and anachronistic gender dynamics are conspiring to damage their prospects for a comfortable retirement.

According to Seiichi Inagaki, a professor at Japan’s International University of Health and Welfare, the poverty rate for older Japanese women will more than double over the next 40 years, to 25 per cent. For single, elderly women, he estimated, the poverty rate could reach 50 per cent.
In Japan, people live longer than almost anywhere else and birth rates are at their lowest since records began. As a result, the nation’s working-age population is projected to have declined by 40 per cent come 2055.

With entitlement costs skyrocketing, the government has responded by scaling back benefits, while proposing to raise the retirement age. Some Japanese have responded by moving money out of low-interest bank accounts and into retirement savings plans, hoping investment gains might soften the blow. But such a strategy requires savings, and women in Japan are less likely to have any.
Japan’s gender pay gap is one of the widest among advanced economies. According to the Organisation for Economic Cooperation and Development (OECD), Japanese women make only 73 per cent as much as men. Japan’s demographic crisis is making matters worse: retired couples who are living longer need an additional US$185,000 to survive projected shortfalls in the public pension system, according to a recent government report.
A separate study did the maths for Japanese women: they will run out of money 20 years before they die.

There are additional obstacles for Japanese women. Although 3.5 million of them have entered the workforce since Japanese Prime Minister Shinzo Abe took office in 2012, two-thirds are working only part-time.
Japanese men generally see their compensation rise until they reach 60. For women, average compensation stays largely the same from their late 20s to their 60s, a fact attributable to pauses in employment tied to having children or part-time, rather than full-time, work. Since the mid-2000s, part-time employment rates have fallen for women in more than half the countries that make up the OECD. But in Japan, the trend is reversed, with part-time work among women rising in the past 15 years.
One of Abe’s stated goals is to encourage more women to keep working after giving birth, part of his so-called Womenomics initiative. But according to a recent government study, almost 40 per cent of women who had full-time jobs when they became pregnant subsequently switched to part-time work or left the workforce.

Machiko Nakajima’s employment trajectory is typical of this state of affairs. Nakajima, who used to work full-time at a tourism company, left her position at the age of 31 when she became pregnant.
“I had no desire to work while taking care of my kid,” she says. Instead, Nakajima spent a decade raising two children before returning to work. Now 46, the mother of two works as a part-time receptionist at a Tokyo tennis centre. Though her husband, who also is 46, has a full-time job, Nakajima says she fears for her future, given the faltering pension system.
“It makes me wonder how I’m going to live the rest of my life,” she says. “It’s not easy to save for retirement as a part-time worker.”

According to government data, the monthly cost of living for a Japanese household with more than two people is 287,315 yen (US$2,650). Some 15.7 per cent of Japanese households live below the poverty line, which is about US$937 per month.
More than 40 per cent of part-time working women earn 1 million yen or less a year, according to Japan’s Internal Affairs and Communications Ministry.
The lack of benefits, job security and opportunity for advancement – hallmarks of full-time employment in Japan – make such women financially vulnerable, particularly if they don’t have a partner to share expenses with.
Marriage doesn’t last forever. Women used to rely on their husbands for financial support, but now there’s the danger of unemployment, and more men are in jobs where their pay doesn’t rise
Machiko Osawa, a professor at Japan Women’s University
Yanfei Zhou, a researcher at the Japan Institute for Labour Policy and Training, and author of a book on the subject, Japan’s Married Stay-at-Home Mothers in Poverty, contends there’s a gap of 200 million yen in lifetime income between women who work full-time and women who switch from full-time to part-time at the age of 40.
“It’s not easy to save for retirement as a part-time worker,” she says. Single mothers need to make at least 3 million yen annually, or about US$27,600 – numbers you can’t hit “if you work part-time”.
Japan has historically created incentives for married women to limit their employment to non-career track jobs; lower pay means they (and their husbands) can take advantage of spousal deduction benefits. For example, the government gives a 380,000 yen tax deduction to a male worker if his wife earns less than about 1.5 million yen per year.

The private sector does it, too. Many companies give employees a spousal allowance as long as their partner earns less than a certain amount. Some 84 per cent of private companies in Japan offer workers about 17,282 yen per month as long as their spouse earns less than a certain amount annually – usually 1.5 million yen, though the ceiling is lower for most companies.
Yumiko Fujino, who works as an administrative assistant, should have been happy when the government raised the minimum wage. But she wasn’t: for her husband to keep receiving spousal benefits, she had to cut back on her hours.
These limits are known among married women in Japan as the “wall”. Unless a wife is making enough money on a part-time basis to afford income taxes and forgo spousal benefits, it doesn’t make sense to work additional hours. But to work those kind of hours means less time for kids, which is usually the point of working part-time in the first place.

Women who qualify for the spousal benefit, Fujino says, “think less about retirement security and more about the current cost of living”.
Abe’s government is considering changes that would require more part-time workers to contribute to the pension programme and mandate that smaller companies participate as well. Takero Doi, professor of economics at Keio University, says the expansion would be a small step toward giving women a financial incentive to work more.
Machiko Osawa, a professor at Japan Women’s University, says social security should be based around individuals, not households. “Marriage doesn’t last forever,” she says. “Women used to rely on their husbands for financial support, but now there’s the danger of unemployment, and more men are in jobs where their pay doesn’t rise. It’s not easy to save for retirement as a part-time worker.”

However, one of the biggest reforms proposed by Abe, “limited full-time worker” status, doesn’t always work as advertised. “Limited full-time” employees often face the same workload they would if they were full-time.
Junko Murata, 43, a mother of two, says juggling both work and taking care of her children proved too difficult, so she eventually returned to a part-time job.
While an increasing number of companies have been giving women the opportunity to work more flexible hours after they return from maternity leave, some women complain of being marginalised, with few opportunities for career growth and advancement.
Women in Japan fight for right to retain their identity
A government survey released last year offered a bleak outlook. It showed no improvement in gender equality in the workplace, with some 28.4 per cent of women saying they are treated equally at work, up only 0.2 percentage points since 2016.
Yasuko Kato, 42, returned to work as a part-time accountant three years ago, but said there’s been little change in her responsibilities.
Because she drops off and picks up her kids, she works from 9am to 4.30pm. “I have no extra time at work,” she says. But because of a chronic staff shortage, she doesn’t get any help from full-time employees. As a result, Kato says, “it’s difficult to raise my hand for a new role”.


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Factors including an ageing population and falling birth rates are damaging the retirement prospects of women in Japan
One professor estimates the poverty rate for single, elderly women could reach 50 per cent in 40 years



Factors including an ageing population and falling birth rates are damaging the retirement prospects of women in Japan, with one study suggesting that Japanese women will, as a whole, run out of money 20 years before they die.


Japan

Career paths