Photo/Illutration Prime Minister Fumio Kishida addresses a May 20 session of a council working on making his pet project of new capitalism a reality. (Koichi Ueda)

The government will soon require large companies to disclose systemic gender wage disparities that have given Japan the worst record among Group of Seven nations.

Prime Minister Fumio Kishida announced the policy decision to further the role of women in the workplace at a May 20 meeting of a council working to turn his pet project of new capitalism into reality.

Kishida indicated that work would proceed so the new system is in place this summer.

It would cover around 18,000 companies with more than 300 employees. In addition to disclosing the difference on remuneration between female and male workers, firms will be obligated to disclose the wage disparity between their regular and irregular employees.

The information will be made available through the websites of each company or through a special database set up by the labor ministry. The intent is to allow job seekers to confirm wage disparity levels at companies in which they are interested.

Companies that disregard this obligation or egregiously fail to heed directives issued by regional labor bureaus will be shamed by having their names publicly disclosed.

Under the current system to promote female participation in the workplace, companies are obligated to choose at least two items from a wide-ranging list, such as their ratio of female employees, and disclose that data.

The wage disparity item will be included in the list but made mandatory for companies with more than 300 employees.

A labor ministry council will discuss the details, and ministerial directives will be revised to reflect the change.

The government is also considering obligating listed companies to include the wage disparity figure in their annual financial statements. That would require a revision to the Cabinet Office directive, and the change could be in effect from 2023.

Government documents show that the median wage of female employees in Japan is 22.5 percent lower than the median wage of male employees, the worst figure among G-7 nations.

Some G-7 nations already have rules for disclosing gender wage disparity.

Experts attribute the situation in Japan to a range of labor practices.

They cite the fact that a larger percentage of women hold down irregular jobs, which offer lower pay rates than those for workers in regular positions.

Another factor stems from the fact that many women tend to leave the workplace to marry or raise families, depriving them of the opportunity to acquire the seniority that is a key factor in determining wages at Japanese companies.

The small number of female executives who command high salaries also contributes to the large wage disparity.

But major companies are beginning to rethink the disparity issue because the degree to which women are allowed to advance at a company is now something that many investors look at when making decisions about where to place their money.

(Hiroki Hashimoto and Chihaya Inagaki contributed to this article.)

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