One of the core aspects of Japanese Prime Minister Shinzo Abe’s Abenomics has been “womenomics,” which aims to put more women into the labor force in the hopes of increasing Japan’s growth potential.
Since Abe took the helm as prime minister in 2012, Japan’s female labor force participation rate has ticked up, climbing nearly 5 percentage points for those in the 25-54 age bracket over the past 5 years.
The basic thinking behind this strategy is that more women working means an increase in potential output and improvement in women’s income, which, theoretically, means that they will be able to spend more as consumers. (Not to mention the potential social benefits associated with greater financial independence.)
To illustrate how this push has played out, David Rosenberg, chief economist and strategist at Gluskin Sheff, recently shared a chart showing the total female participation rate and the 25-54 year old female participation rate. As you can see below, both rates have climbed since Abe took office.
“This may be one of the most bullish, and underappreciated, charts on the planet right now,” Rosenberg said in a note to clients. “[W]e are talking about the boom in the female participation rate in Japan here.”
“Bringing these individuals off the sidelines has underpinned a revival in aggregate income and helped buoy domestic demand,” he continued. “To give you an idea of just how important this has been, consider that had the 25-54 year old female participation rate held at 2011’s level of 71.5%, this segment of the labor force would have fallen by 601,000 workers instead of rising by 530,000…that’s a big swing! This delta of 1.13 million employees equates to roughly $44 billion in GDP (using per capita figures of $38,894 from the World Bank).”
Japan is generally seen as a country with an unfavorable demographic trend, given its large, aging population. Prime age women entering the workforce could, theoretically, help offset some of the looming pain.
Rosenberg is not alone in singling out Japan’s female workers. Other analysts have also argued that the growing female participation rate in Japan is a positive, and underrated, sign of life in the country’s economy.
“They were doomed demographically” but “the amazing thing is in the last year or so, they brought a ton of women into the workforce,” Jeff Kleintop, chief investment strategist at Charles Schwab, told Business Insider last year.
“That’s a silver lining that is technically part of Abenomics’ plans, but didn’t expect that to be the most effective part of what they’re doing,” he added. “They expected it to be monetary policy or some of the spending programs, but that may actually be something that can really help them through all this.”
That being said, although adding more women into the workforce is a smart idea economically, its implementation hasn’t been exactly perfect.
A recent survey by the Nippon Omni-Management Association of 400 women on the managerial track in government and business found that most saw little progress in women’s advancement in the workforce about one year and a half after legislation was put in place to support these efforts. 53.5% of respondents said they saw no change.
Having to put careers on hold to have and raise children was cited as a “hindrance” to professional life by many respondents in their 30s and younger, according to the survey.