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In this episode of our series Rethinking Asia, we interviewed Kathy Matsui, vice chair of Goldman Sachs Japan. She is a prominent advocate for women in the workforce, serves as a policy commentator for Japan’s Cabinet Office and has served on multiple Japanese government committees aimed at promoting gender diversity.

Kathy guided us through the combination of factors that have led to the current gap between the high skill and education levels of Japanese women and, in many cases, their absence from full-time work. She explained how changes in Japanese government policies and society are addressing this disconnect, and why empowering women is only part of the solution to Japan’s demographic crisis. Some of our main takeaways from our conversation with Kathy include:

• Various factors led to this gap between high skill and low participation: insufficient “infrastructure,” such as daycare, prevented many Japanese women from returning to work after giving birth; unaccommodating employer policies have discouraged women’s attempts to re-enter the workforce; and societal preferences have long favored women who opt to stay at home.
• Government efforts to improve daycare options and a marginal increase in temporary work visas have helped reverse the trend. However, improving female labor participation is just one prong of a coherent strategy that will be required to tackle a broader demographic challenge and labor shortage.
• Gender diversity targets are smart long term goals in the private sector. Gender quotas should be considered in the public sphere, at least temporarily, to ensure public policy decision-making processes accurately reflect the population.

The views expressed are not necessarily those of the Federal Reserve Bank of San Francisco or of the Federal Reserve System.