Tokyo in 2003 set a goal of 30 percent, with current Prime Minister Shinzo Abe repeatedly saying increasing the number of women in senior jobs both in the private and public sectors was key to his "Abenomics" growth blitz.
But on Thursday, the government's gender equality bureau slashed the target ratio to just seven percent by 2021, from just 3.5 percent now.
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"It doesn't mean that we gave up the goal of 30 percent... but the new target reflects the most ambitious figure at this point," Cabinet Office official Yosuke Konno told AFP on Friday.
Most economists agree that the country badly needs to increase the role of women in government and the private sector to foster economic growth as the population rapidly ages.
However, a lack of childcare facilities, poor career support and deeply entrenched sexism are blamed for keeping women at home.
Abe has been trying for three years to end deflation, kickstart growth and revitalise the world's third-largest economy through a policy mix of massive central bank monetary easing, government spending and structural reforms.
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The slashed target for senior positions in government is the latest setback for efforts to boost the role of women in society.
The government said in September that not a single Japanese company applied for a subsidy programme aimed at promoting more women to senior jobs.
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