An aging population and falling birth rates are damaging the retirement prospects of Japanese women
Whilst a record 71% of women in Japan are now employed, a combination of factors such as an aging population, falling birth rates, and archaic gender dynamics are damaging women’s prospects for a comfortable retirement. In general, people in the country live longer than most countries and birth rates are at their lowest since records began. As a result, Japan’s workforce population is expected to decline by 40% by 2055. In addition, the nation’s gender pay gap is one of the widest among advanced economies. According to figures from the Organisation for Economic Co-operation and Development (OECD), Japanese women make only 73% as much as men.
A recent government report has also revealed that the country’s demographic crisis is also damaging to retired couples who are living longer as they need an additional US$185,000 in case of shortfalls in the public pension system. IZA World of Labor author Laura Hospido has looked at how couples’ joint retirement decisions are formed. In her article, she notes that: “[A]s more and more women join the labor force, the typical family approaching retirement in a developed country is now a dual-earner family. Thus, retirement has become a decision that depends not only on the situation and conditions facing an individual but also on the specific situation of an individual’s spouse.”
“Women typically have a less continuous work history than men do, resulting in lower retirement pensions, an effect that is exacerbated by women’s longer life expectancies than men,” Hospido adds. In addition, a separate study has confirmed that women would run out of money 20 years before they die. Whilst Japanese men usually see their compensation rise until they reach the age of 60, women’s average compensation stays approximately the same from their late 20s to their 60s, due to pauses in employment whilst having children, or part-time rather than full-time work.
“It’s not easy to save for retirement as a part-time worker. Single mothers need to make at least 3 million yen annually, or about US$27,600—numbers you can’t hit 'if you work part-time',” says Yanfei Zhou, a researcher at the Japan Institute for Labour Policy and Training, and author of a book titled Japan’s Married Stay-at-Home Mothers in Poverty.
Read Laura Hospido’s article Pension reform and couples’ joint retirement decisions.