Japan faces a unprecedented challenge. On the one hand, the labor shortage has forced companies to rethink their labor policies if they want to take advantage of the economic boom period what the future poses to them. On the other hand, its low birth rate collides head-on with the problem of labor shortage, since they would have to do without (at least temporarily) the female half of their workforce. Quite a dilemma.
The complicated demographic situation has forced Japanese companies to consider a measure unprecedented in the last two decades: equalizing salaries between men and women.
Two birds with one stone. While diversity, equity and inclusion (DEI) policies have been reversed or limited in the US, Japan has chosen to take the opposite path and equalize salaries between men and women to attract female talent and encourage their professional careers.
In addition to the practical point of view of attracting a skilled workforce that is in short supply, this change also responds to other economic reasons. Japan is hoarding a good part of the investments with environmental, social and governance (ESG) criteria that are leaving the US after Trump’s arrival at the White House. For both reasons, Japanese financial firms such as the insurer Nippon Life Insurance or the bank MUFG have eliminated administrative professional categories Mostly occupied by womenin which between 39% and 50% of a male salary was earned.
Two decades of wage discrimination. For the past twenty years, Japanese women have been paid less than men for doing the same job. According to data from the Ministry of HealthLabor and Social Welfare of 2026, on average women earned only 75.8% of men’s salaries in 2024. In prefectures like Tochigi, the gap is even greater, with women barely seeing the 70% of male salary. To put it in context, the wage gap between men and women in OECD countries was located around 11%, while data from 2023 suggest that in Japan this gap had grown from 21.3% to 22%.
This discrimination has deep roots in the Japanese labor system. Traditionally, companies offered men lifelong jobs with promotions and pay increases tied to their seniority. Women, upon becoming mothers, were pushed into temporary or part-time jobs, with lower incomes and few opportunities for advancement. This phenomenon, known as the “L-curve,” reflects the sharp drop in participation and women’s salaries after motherhood, making it difficult for them to return to positions of responsibility in companies.
Without labor. Japan suffers from a severe labor shortage. a study of the Recruit Works Institute, estimates a shortage of 11 million workers in 2040. The aging of the population and the decrease in the birth rate have reduced the available workforce, and forecasts suggest that the labor supply will decrease from 65.87 million workers in 2022 to 57.67 million in 2040, making it essential harness female potential to maintain productivity and economic growth.
This has forced Japanese companies to reconsider your labor policies to attract more women, offering them the same salary as men to encourage their return to the labor market after motherhood, and resume their professional careers, also offering equality in promotions and rewards for seniority.
More than salary: family conciliation. Women have a very marked role in Japanese culture with respect to child care. The official studies They point out that equalizing salaries is not enough to attract and retain female workers. Japanese companies have begun to offer work conciliation measuresas reduced hours and teleworking optionsso that women can take care of their children without giving up your professional career.
In cities like Tokyo, shorter work days have been implemented and the four day work week for its employees, with the aim of encouraging births and facilitating family conciliation. Salary equalization can favor the adoption of these measures in other regions of the country, allowing more women to access stable jobs without sacrificing their family life.
A version of this article was published in April 2025.
Image | Unsplash (EMANUELE Ricciardi)
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