Mercer Japan Analyzes Company Results from the Ministry of Health, Labor and Welfare’s Database on Promotion of Women’s Participation and Advancement in the Workplace 

 

29 Aug 2023

More than a year has passed since the Act on Promotion of Women’s Participation and Advancement in the Workplace was revised on July 8, 2022, making gender pay gap a mandatory item for disclosure for companies with 301 or more full-time employees. As the first wave of companies is making their disclosure available for public viewing, what could we deduce about the overall state of Japanese companies? Are there any trends that we could observe at this initial stage?

In this press release, Mercer Japan presents the results of its analysis based on the Ministry of Health, Labor and Welfare’s database as of July 6, 2023.

As of July 6, 2023, there were 5,520 companies with 301 or more full-time employees that have disclosed gender pay gap information in the Ministry of Health, Labor and Welfare’s database. We have tabulated the gender pay gap for full-time employees by industry sector and size brackets. Averaged across all companies in the data sample, full-time women employees’ pay is only 74% that of men. 

In terms of industry sectors, welfare, education and healthcare industries have the narrowest pay gaps, while banking and insurance have the widest. Although different companies within the same industry may have different circumstances and different measures in place to address the gender pay gap, this ranking may be a reminder of the persistent influence of gender imbalance in labor that has become established in present-day Japanese social norms.

In terms of size, the smaller the size of the company, the narrower the difference between men’s and women’s pay tends to be. While there are various possible reasons for this trend, it should be noted that the published data includes relatively smaller foreign-owned Japanese subsidiaries, which could narrow the pay gap for smaller companies given that local firms are lagging behind their overseas counterparts in promoting women’s activities.

The Ministry of Health, Labor and Welfare’s database allows companies to add explanatory comments to their published gender pay gap data. Several companies mentioned a delay in promoting women managers as a cause of the pay gap. To explore whether actively promoting women in the workplace could help in resolving the gender pay gap, we plot the two variables (1) gender pay gap on the vertical axis, and (2) “ease of promoting women managers” on the horizontal axis by industry sector, measuring the correlation of the two. 

※Definition of “Ease of Promoting Women Managers” Variable

The proportion of women managers as obtained from each company’s disclosure in the public database is divided by the overall proportion of women employees, in order to correct for differences in employee distribution in individual companies. 

For example, two companies X and Y each with 10% women managers might seem equivalent, but if Company X has 50% women employees, a woman in Company X only has 10% ÷ 50% = 20% likelihood for promotion, whereas if Company Y has 10% women employees, men and women have equal opportunities for promotion within Company Y.

From this graph, we can make a few observations.

Overall, in industries where men and women are equally likely to be promoted to managerial positions, the gender pay gap tends to be small. On the other hand, for the average company with a gender pay gap of 74%, women are only 0.35 times as likely to be promoted to management positions compared to men, indicating some room for improvement.

While there is some variation, non-manufacturing/service firms tend to promote women managers more easily and have a narrower pay gap as compared to manufacturing firms. Considering that each industry may have specific circumstances, such as the composition of career track/generalist track and sales/clerical positions, and the difficulty of recruiting women for technical positions, we can say that there is room for improvement for promoting women in the manufacturing industry. 

In this press release, we utilized the results for companies that have already submitted their gender pay gap disclosures in the Ministry of Health, Labor and Welfare’s public database, summarizing this data by industry sector and size. In addition, our correlation analysis suggests that corporate DEI initiatives to advance women managers’ promotion have a positive impact on resolving gender pay gap. We hope that this information could guide Japanese companies in reconsidering their approach towards DEI and promotion of women’s participation and advancement, and by extension, their human resource strategies.

 

About Mercer

Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s approximately 25,000 employees are based in 43 countries and the firm operates in 130 countries. Mercer is a business of Marsh McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with more than 85,000 colleagues and annual revenue of over $20 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit mercer.com. Follow Mercer on LinkedIn and Twitter.

 

About Marsh McLennan

Marsh McLennan (NYSE: MMC) is the world’s leading professional services firm in the areas of risk, strategy and people. The Company’s more than 85,000 colleagues advise clients in 130 countries. With annual revenue of over $20 billion, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment through four market-leading businesses. Marsh provides data-driven risk advisory services and insurance solutions to commercial and consumer clients. Guy Carpenter develops advanced risk, reinsurance and capital strategies that help clients grow profitably and pursue emerging opportunities. Mercer delivers advice and technology-driven solutions that help organizations redefine the world of work, reshape retirement and investment outcomes, and unlock health and wellbeing for a changing workforce. Oliver Wyman serves as a critical strategic, economic and brand advisor to private sector and governmental clients. For more information, visit marshmclennan.com, or follow us on LinkedIn and Twitter.

 

Contact

Eri Amano
Senior Marketing Communications Manager
Mercer Japan
Tel: +81 (0)70 7548 7209
Email: pr.japan@mercer.com