TOKYO, Nov 24 (News On Japan) - A deepening labor shortage is increasingly weighing on the Japanese economy, forcing businesses to shorten operating hours or scale back services and generating massive lost opportunities that are estimated to reach 16 trillion yen in fiscal 2024.
According to an analysis by Nikkei and Tokyo Shoko Research, the number of companies facing heightened bankruptcy risk due to labor shortages will reach roughly 13,500 in fiscal 2024, underscoring growing concerns about business sustainability.
Corporate bankruptcy figures highlight the trend. In October, there were 965 bankruptcies, a 6% increase from the same month a year earlier, with labor shortages contributing to the rise. A joint estimate by Nikkei and the Japan Research Institute calculates that labor shortages are causing annual lost opportunities of 16 trillion yen.
One example is the popular ramen chain Takeya in Tokyo. Known for its pork bone, bonito, and mackerel-based soup, the shop has been frequently featured in magazines and once operated five locations in the capital. However, unable to secure enough workers, it has since closed three stores and now runs only two. Even so, both locations fill up daily during lunchtime, demonstrating strong demand. Yet the store is struggling.
The manager says, “I’ve never experienced anything this difficult. Even if we say it’s just one hour of dishwashing a day, nobody applies.” Long working hours common in the restaurant industry and limits on wages have made hiring extremely challenging. Attempts to recruit store managers also failed. Last year, the company raised its hourly pay to the highest level it could sustain—200 yen above the local market rate—but still received no applications. As a result, the manager handles both soup preparation, which takes five hours, and daily operations, forcing the shop to move its closing time from 9 p.m. to 7 p.m. Soaring ingredient costs add further strain. The manager warns that if the situation continues, closure may be unavoidable.
Data from Tokyo Shoko Research confirms the trend. According to analyst Horie, labor-shortage-related business failures have doubled compared to a year earlier. Nikkei and the firm estimate that the number of “pre-bankruptcy” companies—those whose financial and operational indicators show elevated risk even if they remain in the black—will reach approximately 13,500 in fiscal 2024.
In Karuizawa, Nagano Prefecture, the influx of tourists has magnified labor shortages. A hotel that has operated for more than 40 years is unable to provide dinner service because of insufficient kitchen and hall staff, leaving half of its 20 guest groups with lodging only. The hotel says restaurant revenue is down by 30–40%. While it needs around 40 employees to operate properly, it has fewer than 30. Competition for workers among local hotels has intensified, with some larger groups offering higher pay to lure staff away.
To cope, the hotel has reassigned bridal department employees to restaurant service, even though they have no prior experience. Many feel nervous about carrying plates or answering guests’ wine-related questions. Because Japanese staff are difficult to secure, the hotel has hired two foreign employees and is considering hiring more.
Nikkei editorial writer Matsui, who has long covered employment and wage issues, notes that lost opportunities linked to labor shortages have reached 16 trillion yen in 2024, four times the level recorded in 2019 before the pandemic. Pre-bankruptcy companies now account for 2.5% of all 540,000 firms nationwide. In fiscal 2014, roughly 8,000 firms fell into this category, and one-quarter of them later halted operations entirely, through bankruptcy, closure, or prolonged inactivity.
Industry breakdowns show that the highest ratios of pre-bankruptcy firms are found in information and communication equipment manufacturers, electronic component producers, and construction-related sectors. Although the ratio is not high for restaurants and hotels, many such businesses posted lower sales during the pandemic and recovered afterward, meaning the criteria used to identify risk place them temporarily outside the category. Analysts warn that bankruptcies in these sectors may rise going forward.
In industries like hospitality, labor shortages can quickly lead to a decline in service quality—such as delayed cleaning—which in turn results in fewer customers and reduced revenue, making hiring even more difficult and creating a vicious cycle. Government subsidies during the pandemic helped some firms survive, but many are now facing pressure as conditions normalize.
Labor-shortage bankruptcies reached 300 cases in fiscal 2024, a 60% increase from the previous year, with more than 200 cases already recorded in the first half alone. The total is likely to surpass previous records. The debate is now shifting to how “pre-bankruptcy” firms differ from so-called “zombie companies,” which continue operating despite insolvency, and what measures can be taken to address the growing crisis.
Source: テレ東BIZ
