IMF chief Christine Lagarde on Friday backed Tokyo's efforts to power the Japanese economy by boosting its female workforce, but she called for even more action, including loosening strict immigration rules.
The comments came at a three-day gathering on women in the labour market, hosted by Japanese Prime Minister Shinzo Abe, who has pledged to hike the small number of women in the country's corporate and political ranks.
"The global economy is not making use of great potential that is available. And that needs to change, not just for women's sake, but for economies' sake," Lagarde, head of the International Monetary Fund, said in a keynote speech at the Tokyo meeting.
"What about Japan? Here, we have shown through our study that gradually raising the female labour force to the average level of the G7 could raise income per capita by four percent -- permanently.
"To target something even higher, which is the level of Northern Europe, then that would give an additional four percent on the top," she added.
Abe is calling for women to occupy 30 percent of senior positions by 2020, an ambitious jump from the current 11 percent, one of the lowest among wealthy nations.
The Japanese leader -- who swept to power in late 2012 on a ticket to kickstart the long-tepid economy -- recently reshuffled his cabinet with more than a quarter of the posts filled by women.
The move followed growing calls for Japan to make better use of its highly-educated but underemployed women as a rapidly ageing population strains the public purse.
Dozens of Japan's biggest firms -- including Toyota, Panasonic and All Nippon Airways -- recently announced targets for boosting the number of executive women.
But the task is a daunting one in a country where sexist attitudes are still prevalent and men dominate politics and business.
- Immigration option -
Abe's feminist credentials were tarnished this summer when a member of his ruling Liberal Democratic Party (LDP) admitted he hurled sexist taunts at a Tokyo assemblywoman during a council debate on motherhood.
On Friday, Abe acknowledged Japan's deeply entrenched gender roles, saying that "the most difficult part may be transforming this division of roles based on gender, something that is firmly ingrained within us".
Abe's wife Akie, US ambassador to Japan Caroline Kennedy, and Cherie Blair, wife of former British prime minister Tony Blair, also attended the conference.
Lagarde -- who is embroiled in a graft scandal dating back to when she was a French finance minister -- said she backed Abe's targets for women in senior positions, despite having doubts about such quotas earlier in her career.
"I thought women should be included on their merits and on their basis of the performance -- but I changed my mind," she said.
"I very strongly and very firmly believe that quotas or targets, however we want to call them,... are a necessity."
Long working hours, boozy after-work sessions with the boss, and not enough childcare facilities are also among the reasons why many working Japanese women opt to stay at home or give up hopes of promotion after having children.
Luring women back into the workforce will only come with key reforms including better childcare options and care services for elderly parents, observers said.
"While women can save Japan, they need help from other structural reforms," Lagarde said.
"One option is skilled immigrants. Everybody would get the jobs they need. Everybody would get the care they need. And Japan could shape its own demographic destiny."
Tokyo has moved little on loosening strict rules for foreign workers despite years of calls to crack open Japan's borders to more immigrants.