News about Japan: Abe is trying to unlock the untapped potential of the Japanese women workforce

The two most important policies in Abenomics’ “third arrow” — structural reform — are increasing labor mobility and keeping more women in the labor force so that they can help raise Japan’s GDP. These two issues are linked at the hip, and the economic potential that could be unlocked is vast. We are talking here about Abe Shinzo, the prime minister of Japan.

Amazingly the biggest reason is that Japan’s female population still remains largely untapped as a source of economic growth. According to a Goldman Sachs study, if Japan could increase its employment rate to match its male employment rate of 80 percent, its workforce could potentially expand by 8.2 million people, boosting GDP by as much as 14 percent.

Yet without enough feasible options to manage both child care and work responsibilities, many women will continue to opt out of the labor force just when they are hitting stride — a loss Japan cannot afford when its population is shrinking.

To his credit, Prime Minister Shinzo Abe highlighted women as a “central key” to Japan’s productivity when unveiling his growth strategy. Abe called for the creation of more child-care centers, the elimination of waiting lists, and even asked companies to voluntarily extend maternity leave from the current 18 months up to a maximum of three years. There is even discussion about tax deductibility for child care and domestic help costs.

These would all be steps in the right direction. If more Japanese women can get their careers back on track after giving birth, they will not only help slow long-term demographic shrinkage, but they will also boost GDP while increasing future tax revenues and easing Japan’s fiscal dilemma. At the same time, their peers will also gain confidence that they too can have children and return to work, thereby creating a virtuous cycle.

In Japan’s case, the impact of this shift, and of better work-life balance in general, would be massive. Accordingly, no stone should be left unturned in the search for effective measures.

But one doesn’t have to think very far “out of the box” to find policies that can be easily implemented. The use of foreign “domestic helpers” is an obvious case in point.

In Hong Kong and Singapore, it is common for families to hire a foreign domestic helper to look after the children, as well as to assist with housework. This is doubly advantageous in freeing up women to seek employment because they are also able to off-load some of their domestic work

Unfortunately, this practice is almost unheard of in Japan, and in fact is not even legally possible for Japanese citizens or permanent residents. Why? Because Japan’s antiquated immigration regulations only permit foreigners with a certain visa status (such as “diplomat” or “investor/business manager”) to “sponsor” foreign domestic helpers.

By simply relaxing irrational immigration laws like these, the Abe administration could easily give Japanese women an entirely new option for child-care support, instead of having to endlessly wait for day-care positions to open up. M

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oreover, this is one option that would not cost the Japanese government a single yen in subsidies. Quite the contrary, it would increase tax revenues and GDP, because domestic helpers and working women both pay taxes, and usually consume more than a single housewife.

In many ways helpers are more supportive of a working woman’s needs than child-care centers. For example, the operating hours of many day-care centers are inconvenient for women with full-time jobs, but a helper’s hours can be tailored to the needs of the family.

Aside from child care, foreign domestic workers are necessary to fill the severe shortage of nurses and other elderly caregivers that Japan’s aging society faces. This supply-demand gap is already large today, and inevitably will grow larger as the society ages further and the long-term increase in the number of single-child families takes its toll. (Actually, this particular gap isn’t just about women. Many male single children will also end up having to take care of their aging parents, thus creating even more demand for foreign domestic workers.)

It is high time for Japan to tackle these issues proactively, on both a cultural and national policy level. Keeping women in the labor force is no longer just a “women’s issue,” but rather an issue of the highest national urgency. With luck, the sense of that urgency will not be lost after the Upper House election this July, when Abe plans to turn his attention to constitutional reform.