Japan: Gender pay gap disclosure requirement introduced

Employer Action Code: Act

The Ministry of Health, Labour and Welfare (MHLW) has revised the Act on Promotion of Women's Participation and Advancement in the Workplace (APWPAW), most notably introducing an annual gender pay gap disclosure requirement for large employers (as defined by the act). The change is the latest in a series of attempts by the government to encourage women to enter and remain in the workplace. Among OECD economies, Japan has one of the largest pay gaps between men and women at 22% (OECD data). The amendments came into force with their publication on July 8, 2022.

Key details

• Companies with 301 or more employees are required to disclose the differences in pay between men and women annually within three months following the end of their financial year. Smaller employers are exempt from the pay gap reporting requirement, but it might be extended to companies with 101 or more workers in the future.
• The pay gap analysis must present differences in annual average wages by gender for the total employee population as well as for specific groups of employees, notably those on full-time indefinite contracts (i.e., “regular employees”) as well as those on part-time and fixed-term contracts (“non-regular employees”).
• The pay gap analysis results must be included in companies’ annual gender-based “general employer action plans,” which are mandated by the APWPAW for companies with over 100 employees (prior to April 1, 2022, mandatory only for companies with over 300 employees). Action plans should contain specific objectives and measures to improve gender equality in the workplace over a predefined period as well as analyses on the activities of female employees and the workplace issues they face. Action plans must be shared and made accessible to the general public, and submitted to prefectural labor bureaus for review.

Employer implications

It is worth noting that the changes to the APWPAW occurred in tandem with changes to the Child and Family Care Leave Law (CFCLL) approved earlier this year as part of a series of measures intended to encourage new mothers to remain in the workforce. According to the government’s Gender Equality Bureau, the percentage of female employees who leave the workforce after giving birth is declining, but still around half of all female employees quit working after giving birth, giving Japan one of the lowest maternal employment rates among OECD member states. Foreign multinationals are often perceived as providing female employees with better opportunities for advancement and better work/life balance, a perception they often use to attract staff. Publication of action plans and gender pay gap analysis results will test that proposition but also provide opportunities for all companies to demonstrate how they compare with their peers on pay and support for female employees.