Gender Pay Gap Fails to Narrow After Japan Forces Disclosure

Two years after Japan made it mandatory for its companies to disclose their gender pay gap, there’s little progress toward equality, with the highest-paying firms showing some of the biggest disparities.

Of Japan’s 100 largest companies by market cap, 70 had disclosed two years’ worth of data that could be analyzed by Bloomberg as of Aug. 15. Only one of them saw a more than 5 percentage point improvement in its gender pay gap.

The government introduced the requirement to reveal pay gaps in 2022, in an effort to support female economic empowerment and entice more women into the workforce as the population shrinks. The data suggest that disclosure alone isn’t enough to change the status quo, and shifts the focus onto other efforts to improve the situation.

On average, a full-time female employee in Japan earns about 21% less than her male equivalent, compared with a 14% gap in the UK and less than 6% in Denmark, according to 2022 data from the OECD.

At factory automation equipment maker Keyence Corp., female employees’ salaries were 41.5% of their male counterparts’ as of March 2024. That was slightly worse than the previous year, at a firm known for often coming near the top of Japan’s average salary rankings. Bloomberg reached out to Keyence for comment, but hasn’t received a response.

In Japan, gender-based roles have remained more entrenched than elsewhere, and the number of female managers has remained stubbornly low. Some 40 years after the enactment of a law requiring equal treatment of the genders in employment, only 15.5% of board member positions are occupied by women, according to data from the OECD. That lags far behind 40.9% in the UK and 31.3% in the US.

Youko Ootsu, a labor ministry senior officer in the bureau for equal employment, said that the fact that women are paid less in Japan could make the country less attractive to the overseas workers it needs.

Some Japanese firms have sought to explain why their pay gaps persist. For instance, factory automation equipment maker Fanuc Corp. attributed it to the fact that many of their female employees are contract workers, adding that they have a low number of senior female managers.

Yoko Yajima, a principal researcher specializing in diversity at Mitsubishi UFJ Research and Consulting, said that shorter working hours have likely contributed to gender pay gaps. Women tend to shoulder most of the housework and child rearing burden, forcing them to cut back on working hours.

Many firms also haven’t established how to fairly appraise those working shorter hours, and how to assign work effectively, she said. In many cases, companies give easier, less impactful tasks to those on shorter working hours, Yajima added.

Some companies have begun to address these problems. Online marketplace operator Mercari Inc. found it had a 7% gap that couldn’t be explained by differences in job levels and seniority. Further analysis found that the gap was a result of salary levels that employees had carried over from their previous jobs.

The company made pay adjustments in August last year aimed at bringing the gap down to 2.5%. When deciding new hires’ pay levels, they now avoid making salary history a reference point.

Household products maker Kao Corp. is also offering more flexibility for employees who return from parental leave early, and beginning unconscious bias training from this year.

On the government side, a project team that collaborates across ministries is requesting industries with wide pay gaps to submit plans on how to improve the situation by the end of the year. The number of firms that are required to disclose their gender pay gap is also set to rise.

Naoko Tochibayashi, Japan Communications Lead at the World Economic Forum wrote in a report last year that while women’s labor participation rate has risen in Japan, more needs to be done.

“Bringing women into the labour market is not enough to solve the problem,” Tochibayashi said. “Proactive, conscious actions are needed to shift mindset and close the gender wage gap for good.”