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GS Japan Vice Chair on womenomics, the upcoming election and Japan's 'delicate balance' between the U.S. and China

Goldman Sachs Japan Vice Chair Kathy Matsui joins the On the Move panel to give a progress report on womenomics and gender policy under the new administration in Japan.

Video Transcript

ADAM SHAPIRO: In the 1990s, there was a hit song, Annie Lennox and Aretha Franklin. The song was "Sisters Are Doing It for Themselves." I bring that up because the push to have equality in the workplace, especially for women and men, is a global push. And there are some issues going on, not only in the United States, but also in Asia. And there are lessons for us in the United States.

So to talk about this, we want to bring into this stream the woman who coined the phrase "womenomics." And that would be Kathy Matsui. She is Goldman Sachs Japan vice chair. And she's joining us right now on the telephone from California. Thank you for being here. The reason we invited you in is, one, there was this New York Times article not too long ago that in Japan, of all places, women have made great strides, but still are lagging in the push for equality, especially in the workplace. What can you tell us about the lessons of that for us here in the United States?

KATHY MATSUI: Sure, and thank you for having me. First off, I think that, you know, Japan, historically, has had a very, let's say, specified gender role stereotypes. So for the longest time, you know, the traditional family structure, the male worked outside the home, earned all of the income. The women stayed at home, minded the household and children.

But we've seen over the last several years, with the shrinkage of the population, with the aging of the population, the really uber-tightness of Japan's labor market has meant that there are a lot more opportunities opening up for Japanese women. So, for instance, as we've seen in recent history, Japan used to have one of the lowest female labor participation rates in the G7. Today, it's actually among the highest, around 72%. That exceeds the United States's 67% and the average for the EU at 63%.

So I think one lesson is that, obviously, you know, maybe it's not completely parallel-- a parallel cannot be drawn with the United States and Japan. But if you open up the job market to these women who are extraordinarily educated, and talented, and have a lot of skills, then I think you can increase and hopefully maximize their potential going forward.

Now, having said that, we know that more than half the Japanese women are working outside the home or not working full-time jobs but rather part-time roles. So we still have a long ways to go in the country with respect to women in leadership positions. That's where Japan still frankly falls behind the rest of the developed world. But at least we're moving in the right direction with respect to numbers.

AKIKO FUJITA: Kathy, it's Akiko here. It's great to talk to you again. You know, you have put forward this research at Goldman that there's potential here for 10% growth with more women in the workforce. And the numbers you just highlighted for female labor participation rates certainly point to success on that front. But when you look overall in Japan, we haven't seen significant meaningful, or we could say, sustainable growth. And I'm wondering, how much growth can you really get from more female labor participation when the demographic shift is just so dramatic?

KATHY MATSUI: Sure. So we've never argued that increasing female labor participation in and of itself is going to resolve Japan's demographic crisis. You know, look, within 35 years, Japan's labor force population, the total labor force population, is going to shrink by a massive 40%. And so even if you maxed out all the women and had them all working full time, it's not going to fill that gap, right? So there needs to be more progress made in immigration moves, in bringing in foreign labor that are essentially willing to do jobs the Japanese are no longer willing to do themselves. But I do think that, given how the population, as I said earlier, is very well educated, has a lot of skills, that they're are not tapping into half the workforce, is very like running a marathon, you know, on one leg.

So like I said, there is still a lot of progress, a lot of work cut out for Japan. But at least this concept of tapping into the other half the population is no longer in that realm of human rights and equality, which is, of course important, but I think is now front and center of economic growth and a key to corporate performance, which was, frankly, never the case even sort of 8 to 10 years ago. So I think that's what changed the conversation. That context shift is really we've got minds focused in Japan on the critical importance of diverse [INAUDIBLE].

JULIE HYMAN: And Kathy, it's Julie here. For nations that don't have the same sort of aging demographic problems as do Japan, do you think that, in those places, womenomics would be able to have a larger macro economic impact in terms of juicing growth to some extent. And I would also ask, in many nations, one would think it's going to have to be accompanied by some pretty dramatic structural change in terms of support for things like child care, for example, in many countries.

KATHY MATSUI: Sure. So, clearly, a country like Japan is at a distinct disadvantage when it comes to the demographic trends, like I just pointed out. So I think for other economies, which are perhaps not as far along in that demographic curve, there is, frankly, more time and more ability to map out. So what needs to be done? Whether it's government policy, tax reform, sort macro-related issues, to, what can companies, employers do to help encourage and promote more female labor participation.

But I think you put your finger on one of the very issues that, in fact, Japan is leading the developed world on, which is child care. You know, did you know that Japan's parental leave benefit system definitely better than the United States, much better than most European economies, insofar as both the mother and the father received one year of parental leave? And their pre-leave pay is equivalent to roughly 60% to 80% of what they were getting before they went on that leave.

So I think in terms of the generosity of the-- and these are federal benefits-- are quite generous. Now, of course, every mother takes maternity leave in Japan. There's still not enough fathers to take paternity leave. So we have a lot more work to do on the father's front. But at least insofar as the provision of benefits goes, Japan is actually way ahead of most developed economies on that score.

And again, this has not always been the case. It took a lot of pressure, internal, within the government, to put that pressure on the government to make those changes.

AKIKO FUJITA: And Kathy, really quickly, if I can bring that conversation to geopolitics here and US-Japan relations given that we are really more than a month out from the US election. I am curious how you think this new government in Japan, under this Suga administration, is watching the political discourse that is playing out in the US. Japan, of course, the closest ally to the US, has often been sort of this mediator on issues like China and North Korea. How do you think they're watching what's playing out here in the US in the run up to the election?

KATHY MATSUI: So at the end of the day, Japan regards its alliance with the United States as the most important bilateral relationship geopolitically, economically, in the world. And so, of course, it is watching the run up to the election very, very closely. The tensions that have emerged in recent years between the United States and China, of course, make Japan nervous, given that the US is a big trade partner, but equally, China is just as large a bilateral trade partner for Japan.

So the more pressure, or let's say, the more protectionism applied to China from the United States doesn't just necessarily hurt China, but it also hurts China's other trade partners, which includes Japan. So Japan has to play this very delicate balancing act. On the one hand, it needs to maintain that very tight security alliance with the United States. On the other hand, it also needs to ensure that its economic ties with one of the most important trading partners it has, called China, is also kept in sort of friendly terms as well. Clearly not an easy balancing act to pursue and maintain. But I think both parties are very front and center for the new Suga administration.