TOKYO, July 26, 2023 – Women employed in Japanese-listed corporations earn an average of 67.04%[1] of what their male counterparts earn, a significant gap in contrast to other OECD nations[2]. This is according to a new study jointly conducted by leading global advisory, broking and solutions company WTW (NASDAQ: WTW), Symphony Financial Partners and Xebral, the first-ever analysis of workplace gender diversity indicators conducted since mandatory disclosures took effect in Japan.
The pay disparity is slightly wider for part-time employees, with women earning 69.65% of what men earn, compared to 71.64% among those employed in full-time positions. Across industries[3], the disparity between men and women is widest in air transportation (women earn 48.40% that of men), banking (51.92%), and fisheries, agriculture and forestry (56.81%); and narrowest in information and communications (women earn 74.23% that of men); securities and commodities futures (73.90%), and iron and steel (72.16%).
The analysis also reveals a lack of female representation within leadership positions in Japan-listed companies. At present, women account for 13.11% of board member and officers’ roles, and just 9.47% of managerial roles[4] on average. 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[5].
While companies can easily improve gender representation at the board and officer level by appointing external parties to these positions, they will need to undertake consistent, long-term efforts to improve representation at the managerial level. These can include establishing clear, transparent frameworks for career development; enhancing benefits that support work-life flexibility; and raising the visibility of women leaders to inspire female colleagues.
The level of female representation in managerial roles varies widely across industries. The three industries with the highest proportion of women in managerial roles include air transportation (27.83%), services (20.97%) and insurance (18.06%); whilst the three industries with the lowest proportion of women in these positions include construction (2.52%), mining (3.50%), and transportation equipment (3.55%).
Differences in female representation are narrower at the board and officer level. The three industries with the highest proportion of women are oil and coal products (19.34%), insurance (17.49%), and pharmaceuticals (17.46%); whilst the three industries where women are least represented at the board and officer level are warehousing and harbour transportation services (9.35%), iron and steel (9.73%), and construction (11.19%).
The study also found no correlation between gender pay gap and the proportion of women in managerial roles, suggesting 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.
Takaaki Kushige, Senior Director and Japan Practice Leader, Executive Compensation & Board Advisory, WTW, said: "Disclosing gender diversity indicators can help companies to assess sustainable value creation and in turn advance gender equality. However, to engage talented women and provide useful information to investors, companies must go beyond mere numerical disclosures at the corporate level. 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. The extent to which these efforts are managed globally can become a leading indicator of global management excellence.”
Shunichi Shiozawa, Chief Analyst at Symphony Financial Partners, commented: "We welcome the new adoption of human capital disclosures in Japan, amidst the global trend towards non-financial information disclosures. We believe that actively promoting the hiring of women and enhancing human capital is essential for long-term corporate value improvement, given the societal backdrop of a shrinking labour population in Japan. We are confident that this disclosure is a good start for companies to communicate their efforts to a wide range of shareholders."
Yoko Seki, Sustainability Researcher at Xebral, added: "Our company is committed to integrating and visualising corporate disclosures broadly. We recognise that the recent human capital disclosures present a unique challenge, as the actual shape of the target companies only emerges after integrating and analysing data from various perspectives. In this release, our platform, which converts and accumulates all of each company's disclosure information into comparable information, has been utilised to achieve quick analysis and reporting."
This study analysed close to 2,800 Japan-listed companies, of which 1,998 companies disclosed human capital data in their annual securities reports in June 2023. This includes companies with fiscal years ending in December that had voluntarily disclosed their data ahead of time. It focuses on indicators deemed integral to promoting gender diversity in the workplace, including gender pay gap and the ratio of women in leadership roles.
This study marks the first analysis on the state of workplace gender diversity and equality in Japan since mandatory disclosures of human capital metrics took effect.
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