Womenomics: Japan’s new growth bazooka?

Leslie Shaffer | Writer for
New employees of Japan Airlines line up at a welcoming ceremony in Tokyo on April 1, 2014
Yuriko Nakao | Bloomberg | Getty Images

Japan's drive to increase its female labor force participation, dubbed "womenomics," won't just boost economic growth, it also offers significant investment potential, Goldman Sachs said.

"Japan can no longer afford not to leverage half its population," Goldman said in a note Tuesday, noting the country's total population will shrink 30 percent by 2060, with the elderly accounting for 40 percent of the population.

Indeed, Japan's demographic makeup has become so skewed toward an older population that the 21.3 million registered pet dogs and cats outnumbers the 16.5 million children under the age of 15, Goldman noted, citing data from Japan's Pet Food Association.

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"As a result of a shrinking and greying workforce, acute labor shortages, and a recovering economy, a growing number of policymakers and citizens are finally becoming convinced that gender diversity in the workplace is no longer an option; rather, it is an imperative," it said.

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More women have already entered Japan's workforce, with the participation rate at a record high of 62.5 percent in 2013, up from 60 percent in 2010, it noted.

If women's participation rate rose to match men's 80.6 percent, Japan's gross domestic product (GDP) could rise by as much as 12.5 percent, Goldman estimates.

That's likely because higher incomes for women are more likely to translate into more spending. Goldman noted that women control the majority of purchasing decisions globally and within Japan, they account for around 63 percent of consumer purchases.

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"Womenomics will remain a powerful secular investment theme," it said. Sectors it believes will benefit from greater employment of women include e-commerce, travel, prepared food suppliers and restaurants, beauty and apparel products and childcare and eldercare providers.

Over the last six years, its basket of womenomics plays has outperformed the Topix index by over 150 percent, Goldman said.

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The bank also noted that companies with better track records of encouraging women's success in the workplace tended to outperform the index as well.

Within Japan, companies ranking in the highest quartile on female manager ratios boasted three-year average return on equity (ROE) above 10 percent, while firms in the lowest quartile had low or negative average ROEs, Goldman noted, citing Toyo Keizai data for 765 listed companies.

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To be sure, change in Japan's workplaces is coming slowly.

"The most important thing is that women (entering the workforce) would be at a higher level, in higher valued-added positions," said Martin Schulz, senior economist at Fujitsu Research Institute. "What we have seen so far is that the labor market is getting much tighter, which helps female employment, but it's at the lower end," he said.

"What would be needed for the higher numbers of GDP growth would be higher positions in management and business services and so on. I haven't seen so far a major jump in these numbers," Schulz said. "The problem is that the positions women would like to have -- in management and international positions -- these positions haven't really been created over the last few years."

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1