Sat, Jan 18, 2020 - Page 9 News List

Japanese women facing
a future of poverty

Dire pension calculations that said women would run out of money 20 years before they died caused such an outcry that the government quickly rejected the paper, saying it needlessly worried people

By Marika Katanuma  /  Bloomberg

Illustration: Angela Chen

At first glance, things seem to be getting better for Japanese women.

In an economy that has historically lagged other developed nations when it comes to female workforce participation, a record 71 percent are now employed, an 11 percentage point leap over a decade ago.

The Japanese government boasts one of the most generous parental leave laws in the world, and has created a “limited full-time worker” category aimed primarily at mothers looking to balance job and family, while one of the most important needs for working families — daytime childcare — is slowly being expanded.

However, even with these advantages, Japanese women — whether single or married, full-time or part-time — face a difficult financial future.

A confluence of factors that include an aging population, a falling birthrate and anachronistic gender dynamics are conspiring to damage their prospects for a comfortable retirement.

International University of Health and Welfare professor Seiichi Inagaki said that the poverty rate for older Japanese women is to more than double over the next 40 years to 25 percent. For single, elderly women, he estimated that the poverty rate could reach 50 percent.

In Japan, people live longer than almost anywhere else and the birthrate is at its lowest level since records began. As a result, the nation’s working-age population is projected to have declined by 40 percent in 2055.

With entitlement costs skyrocketing, the Japanese government has responded by scaling back benefits, while proposing to raise the retirement age.

Some responded by moving money out of low-interest bank accounts and into tax-qualified, defined-contribution pension accounts, hoping investment gains might soften the blow, but such a strategy requires savings and women are less likely to have any.

Japan’s gender pay gap is one of the widest among advanced economies. Japanese women make only 73 percent that of men, according to the Organisation for Economic Co-operation and Development (OECD).

Japan’s demographic crisis is making matters worse: Retired couples who are living longer need an additional US$185,000 to survive projected shortfalls in the public pension system, a government report said.

A separate study did the math for Japanese women: They would run out of money 20 years before they die.

The dire pension calculations published by the Japanese Financial Services Agency in June last year caused such an outcry that the government quickly rejected the paper, saying it needlessly worried people, but economists said that the report was correct: Japan’s pension system is ranked 31st out of 37 nations due in part to underfunding, according to the Melbourne Mercer Global Pension Index.

Hitotsubashi University Institute of Economic Research professor Takashi Oshio said that private pensions and market-based retirement investments are now much more important than they once were.

Japan Women’s University professor Machiko Osawa was more blunt: The days of being “totally dependent on a public pension” are over.

However, there are additional obstacles for Japanese women.

Although 3.5 million have entered the workforce since Japanese Prime Minister Shinzo Abe took office in 2012, two-thirds are working part-time.

Japanese men generally see their compensation rise until they reach 60. For women, average compensation stays largely the same from their late 20s to their 60s, mainly due to pauses in employment tied to having children or part-time, rather than full-time, work.

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