Written by: Miyuki Kashima | Head of Japanese equity investment, BNY Mellon Asset Management Japan
The stars are aligned for Womenomics in Japan. After two decades of stagnation, Japan has now seen Abenomics deliver visible results and an improved growth outlook with 15 consecutive quarters of year on year nominal GDP growth. The country’s labour shortage coupled with strong political support and growing public acceptance of the need for change, has made this a very interesting time for Womenomics in Japan.
Japan has typically ranked very low in the gender gap survey, in which last year it ranked 111 out of 144 countries where only 3.5% of board directors and less than 10% of Members of Parliament are women. However, this means that there is huge scope for improvement and three years ago for the first time in history Japan saw a serious top down initiative to encourage women to enter the workforce. Since then, the government has set ambitious targets and new laws have gone into effect aimed at creating an environment for more women to join the workforce and women themselves are beginning to think that this is an opportunity they should perhaps be making use of.
There are visible changes in the increasing number of female workers in Japan. Since the financial crisis and particularly since 2013, the number of female workers employed has far surpassed the levels it reached in 2007 while the number of male workers had not yet reached that pre-crisis level. Interestingly, in early 2016 women’s workforce participation in Japan went above that of the United States. Additionally, a good future indicator of the increasing number of women in the workforce is that 87.3% of female university students looking for employment in March 2017 were hired, surpassing the 83% of hired male candidates, as Japanese companies look for their future leaders.
In our views there are three types of companies in Japan which we believe benefit from Womenomics. Firstly, there is opportunity to invest in firms which have products and services targeting women and are likely to benefit from women having more money, such as quality cosmetics firms. Research shows that women in Japan spend more of what they earn than men do1, which is not only positive for the economy but also for companies such as retailers and manufacturers of these types of certain products. Secondly, we see opportunity in companies that benefit indirectly from women’s empowerment, such as childcare services or security services. Japan is a very safe place with only 2—3% of homes having security systems, however with both parents working it is likely that there could be an increase in security system spending. Finally, international research2 has shown that firms with more women directors perform better in terms of profitability and also share price. There is opportunity within companies who either have women in high positions or firms that are about to change and that have top management who are involved and serious in hiring more women in senior positions.
In Japan, once rules are set in place the transition always seems to go quite smoothly and firms are complying with the targets and laws that have been recently established. This is a type of movement which can’t happen overnight but I do believe that everything is starting to move in the right direction. Supported by strong political stability, support and a positive growth outlook Japan is at an inflection point in terms of Womenomics.
1 2014 National Consumption Survey, Ministry of Internal Affairs and Communications
Head of Japanese Equity Investment, BNY Mellon Asset Management Limited
With over 25 years of Japanese equity investment experience, Kashima joined BNY Mellon in April 2013 from ING Mutual Funds. In her role at BNY Mellon, she leads the Tokyo-based team and is ultimately responsible for all of its investment strategies. She has extensive experience in managing funds, both retail and institutional, for Japanese and overseas clients.