Japanese Banks Lower Loan Interest Rates if Gender Wage Gap Narrows

Japan's major bank, Mitsubishi UFJ Bank, has decided to offer preferential loan interest rates to companies that reduce the gender wage gap, according to a report by Nihon Keizai Shimbun (Nikkei) on the 23rd.

According to the report, Mitsubishi UFJ Bank will lend 8 billion yen (approximately 70 billion KRW) over three years to the travel company JTB, with the condition of lowering the loan interest rate if the gender wage gap is reduced.

As of last year, the wages of female employees at JTB were about 61% of those of male employees. The preferential condition is to raise this to 62% in 2024 and 66% in 2026. However, specific details such as the exact reduction in loan interest rates have not been disclosed.

Nikkei reported that "this is the first time Mitsubishi UFJ Bank has offered preferential interest rates based on the gender wage gap," adding that "it is a rare case even among major banks." It further noted that the background to this is the Japanese government's mandate in the 2023 fiscal year requiring large companies to disclose human capital-related information, including the gender wage gap, in their securities reports.

Until now, Japanese banks have actively used ESG (Environmental, Social, and Governance) management indicators, such as carbon emission reductions, as criteria for preferential loan interest rates for companies. Going forward, cases like this one, where social and corporate integration indicators such as reducing the wage gap are used as conditions for preferential loan interest rates, are expected to increase. Mitsubishi UFJ Financial Group plans to invest 100 trillion yen in environmental and social sectors from 2019 to 2030.

According to the Organisation for Economic Co-operation and Development (OECD), Japan's gender wage gap stands at 21.3%, nearly double the member country average of 11.9%. The proportion of women in managerial positions was only 12.9%.

Meanwhile, Japan's Ministry of Health, Labour and Welfare announced on the same day that the average real monthly wage per worker at companies with five or more employees decreased by 2.2% in the 2023 fiscal year (April 2023 to March 2024) compared to the previous year. Although the total cash earnings increased due to corporate wage hikes, real wages fell for the second consecutive year as they did not keep pace with inflation. The decline in real wages was the largest since 2014, when it dropped by 2.9% due to the consumption tax rate increase. The Ministry stated, "Wage increases are continuing, but inflation rates exceed them."