Korea’s ‘Womenomics’

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Korea’s ‘Womenomics’

Japanese Prime Minister Shinzo Abe says he wants to put more women to work, to help make up for the country’s shrinking population. His Liberal Democratic Party seems to have other ideas. Of the 1,093 people who ran for office in recent snap elections, a mere 169 were women. Once the votes were counted, the lower house was 91 percent male.

That ratio falls a long way short of Abe’s goal for corporate Japan: to have women in 30 percent of leadership roles in all sectors by 2020. Such ambitious targets are laudable. Studies routinely show diversity at companies and in politics increases innovation and economic growth. The problem is that thus far, Abe’s policies have been too incremental and unimaginative to have much impact.

The prime minister might want to study neighboring South Korea, where President Park Geun-hye looks to be pioneering a smarter path. In her latest budget, Park has earmarked much of next year’s 5.5 percent increase in public expenditures to encourage companies to offer more flexible schedules - key for working mothers - and to subsidize the prohibitive cost of child care. For kids aged 3 to 5, day care will now be free.

Park has set some ambitious goals of her own, including raising the number of women in the work force to 62 percent by 2017, from the current 56 percent. While she could go further - say, by setting quotas for female managers - Moody’s, for one, is impressed. The ratings agency has described Park’s pro-women policies as “credit positive.” As analysts Shirin Mohammadi and Tom Byrne wrote in a recent report:

“More women workers will help increase the labor supply and boost Korea’s potential growth rate. This would offset Korea’s shrinking labor force, a consequence of its graying population, which constrains its long-term prospects. “

The private sector amply demonstrates the power of diversity, Bloomberg data show. Crunching the numbers, my Seoul-based colleague Esther Jang finds that the 24 Kospi 200 companies with at least one female board member outperform others in Korea by 22 percent. In Japan, the 180 companies in the Topix index that have a female board member (out of nearly 1,800) outperform by 33 percent. At Jack Ma’s Alibaba, one-third of 18 founding partners are women, as are nine of the company’s 30 top decision makers. The company, a finalist for this year’s Financial Times women-in-business award, recently pulled off history’s biggest initial public offering.

Park has cultivated female role models. In December 2013, she surprised Korea’s male-dominated business community by picking Kwon Seon-joo to helm the state-owned Industrial Bank of Korea, the country’s fourth-largest lender by assets. The country’s gender-equality minister at the time, Cho Yoon-sun - now senior presidential secretary for political affairs - pressured publicly traded companies to disclose their ratio of executives by gender to shame them into doing better.

Park herself has begun to call out companies that employ few women, as well as well as encourage more women to run for office in the most male-dominated voting districts. The government is also setting up a database of 100,000 skilled women in order to help improve their representation at senior levels in the public and private sectors.

Abe should be paying close attention to Park’s initiatives. Japan’s needs are just as great as Korea’s: While more women have joined the work force since he came to office two years ago, most remain stuck in low-end, often temporary jobs that pay 35 percent less than permanent, full-time positions and offer few benefits. Abe’s efforts to expand child care programs, encourage flexible working hours and train mothers seeking to reenter the work force have yet to change perceptions in male-dominated Japanese boardrooms. He failed even to pass a bill requiring large employers to publish plans to advance female employees, a first step toward any progress.

To Abe’s credit, he did name a record-equaling five women to his cabinet in a September reshuffle. Yet Abe didn’t stand by two of them after they were accused of oddly petty financing violations - the kind of scandals that would have tripped up few male cabinet members. Like Park in Korea, if he wants Japan’s corporate chieftains to abandon their old ways, he’s going to have to show the way.

*The author is a Bloomberg View columnist based in Tokyo and writes on economics, markets and politics throughout the Asia-Pacific region.

William Pesek
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