Japan Set to Make Companies Disclose Gender Pay Gap This Year

Japan will likely require companies to disclose the wage gap between male and female workers from this summer as part of Prime Minister Fumio Kishida’s New Capitalism plans.

The requirement is set out in proposals released Tuesday by a key government panel tasked with fleshing out Kishida’s vision. The plan is likely to be approved by the cabinet in early June.

The proposals point out how Japan trails other advanced nations in achieving gender pay equality, and also calls for wages to be raised across the country.

Kishida seeks higher wages for both men and women to help form a virtuous cycle of higher incomes that power consumption and growth in a feedback loop. With inflation already at its strongest since 2008 excluding tax years, the need to ensure firms raise wages enough to keep up with rising prices is also growing.

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By forcing companies to disclose gender pay gaps, the government could help pay keep up with prices or outpace them, provided it results in women’s compensation being raised instead of men’s wages being cut.

The rule will apply from this summer to businesses with more than 300 employees, regardless of whether they’re listed. Disclosure will be required whenever the firm’s fiscal year closes, meaning companies will likely start to report from around the summer. The bulk of firms will report next spring as the financial years of many large firms in Japan end in March.  

Japanese women earn 77.5% of what men do, far below the Organization for Economic Cooperation and Development average of 88.4%. Calls by the government for more women to hold corporate and political leadership roles have largely sputtered.

Employers won’t have to say how much their workers earn, only the difference between men and women. Firms with 101 to 300 workers will also be considered for mandatory disclosure in the future, once the policy gets rolling.

Businesses that say there is a valid reason for differences in wages will be asked to give an explanation on their website or through other means. –Bloomberg