Dec 23, 2014

    S. Korea shows the way on '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 per cent male.

    That ratio falls a long way short of Mr Abe's goal for corporate Japan: to have women in 30 per cent of leadership roles in all sectors by 2020. Such ambitious targets are laudable.

    Studies routinely show that diversity at companies and in politics increases innovation and economic growth. The problem is that, thus far, Mr Abe's policies have been too incremental and unimaginative to have much impact.

    The Prime Minister might want to study neighbouring South Korea, where President Park Geun Hye looks to be pioneering a smarter path.

    In her latest Budget, Ms Park has earmarked much of next year's 5.5 per cent increase in public expenditure to encourage companies to offer more flexible schedules - key for working mothers - and to subsidise the prohibitive cost of childcare. For kids aged three to five, day care will be free.

    Ms Park has set some ambitious goals of her own, including raising the number of women in the workforce to 62 per cent by 2017, from the current 56 per cent.

    While she could go further - say, by setting quotas for female managers - Moody's, for one, is impressed. The ratings agency has described Ms 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 labour supply and boost South Korea's potential growth rate. This would offset the country's shrinking labour force, a consequence of its greying population, which constrains its long-term prospects.

    The private sector amply demonstrates the power of diversity, Bloomberg data shows. 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 South Korea by 22 per cent.

    In Japan, the 180 companies in the Topix index that have a female board member (out of nearly 1,800) outperform by 33 per cent.

    At Jack Ma's Alibaba, one third of the 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.

    Ms Park has cultivated female role models. In December last year, she surprised South 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, Cho Yoon Sun, is pressuring publicly traded companies to disclose their ratio of executives by gender to shame them into doing better.

    Ms Park herself has begun to call out companies that employ few women, 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.

    Mr Abe should be paying close attention to Ms Park's initiatives. Japan's needs are just as great as South Korea's: While more women have joined the workforce since he came into office two years ago, most remain stuck in low-end, often temporary jobs that pay 35 per cent less than permanent, full-time positions, and offer few benefits.

    His efforts to expand childcare programmes, encourage flexible working hours and train mothers seeking to re-enter 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 towards any progress.

    To Mr Abe's credit, he did name a record-equalling five women to his Cabinet in a September reshuffle. Yet he did not 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 Ms Park in South Korea, if he wants Japan's corporate chieftains to abandon their old ways, he's going to have to show the way.