The number of corporate bankruptcies in Japan hit a 10-year-high in the first half of 2024, marking the 3rd consecutive year of increase for the period, as labor shortages and inflation took their toll, a credit research company said Friday.
The failures, involving debts of at least 10 million yen ($62,200), rose 22.0 percent year-on-year to 4,931 cases in the six months, according to Tokyo Shoko Research.
"There will be more companies unable to keep up with price rises from the ongoing weak yen, even if they pass on higher costs" to customers, a Tokyo Shoko Research official said, noting the possibility of surpassing more than 10,000 cases over a year.
Those caused by labor shortages increased by 2.2 times to 145 cases, hitting the highest for the period since the survey began in 2013.
Bankruptcies triggered by rising prices increased by 23.4 percent to 374 cases, while an additional 327 bankruptcies involved companies struggling to repay government-provided interest-free loans issued during the COVID-19 pandemic.
By industry, the construction sector recorded the second-largest number of bankruptcy cases at 947, an increase of 20.6 percent, due to stricter overtime work regulations implemented on April 1 and rising prices for construction materials.
The total liabilities left by bankrupt companies in the January to June period amounted to 721.04 billion yen, a decrease of 22.8 percent, with the research company attributing the figure to fewer large-scale bankruptcies.
The Nikkei and Topix stock indexes briefly hit all-time highs on Friday, driven by expectations that the continued depreciation of the yen would boost profits for major manufacturing industries. However, bankruptcies revealed that small companies with fewer than 10 employees accounted for 88.4 percent of the total cases.
Bankruptcies surged to 8,169 in the January-June period of 2009 in the aftermath of the global financial crisis but had been declining since then, even during the coronavirus pandemic, thanks to sufficient public financial aid.
In June alone, bankruptcies increased 6.49 percent from a year earlier to 820 cases, with liabilities falling 27.20 percent to 109.88 billion yen, marking the 4th consecutive month of decrease.
© KYODO
16 Comments
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TokyoLiving
Kishi Kun, instead of doing geopolitical tourist in the name of good old US, better focus in your own country first and do something about in order to help your country problems..
JDoe
Companies and small businesses can't pay the skyrocketing elctric & gas prices.
Everything in general costs 20-40% more than just two to three years ago.
It has nothing to do with a labor shortage.
And the whole the LDP does absolutely nothing to promote or implement renewable energy solutions.
dan
Useless Kishida enjoying his trips around the world ! Fix your own country first !!!
bass4funk
That won't help Japan in the long term, but putting more people back to work would raise the retirement age, and put more women to work, anyone who can and if they want should be able to work full or part-time, that would cut down on the need for importing more foreign workers, pay people a livable wage and be more flexible with off time. It is just another idea that could help get Japan out of this financial mess, but as you said, the LDP consists of stagnant politicians who are too busy cashing in a check and not giving a fig about the country.
Geeter Mckluskie
Amid poor management more like it
Jonathan Prin
Zombie companies. A company is normally able to pass new costs if its customer market is sane.
Demography meltdown is reduci'g customer base so logically less companies needed, especially small ones.
My sister in law small company of bakery is doing good. Know your market and manage well.
kurisupisu
Today had a full service restaurant experience and chat with the largely foreign restaurant staff.
They were friendly although busy, everyone was working extremely well.
Sure prices are up but there are still millions of Japanese workers out there.
When I read Kyodo articles about the reason for Japan’s economic woes they never ever critique the feckless LDP in charge of this moribund economy.
ian
From the article
ian
Obviously companies can't operate properly/normally if they're short on labor.
One measure govt did to address was tweaking the foreign worker law I wonder how that will go
Geeter Mckluskie
Part of managing a company is understanding the labour market and forecasting accordingly
kurisupisu
The majority of jobs in Japan pay around 1000 yen an hour for mindless repetition.
I doubt many here have ever worked on an assembly line.
There is no labor shortage; it’s the soul destroying work that is the problem.
TokyoOldMan
Should stop requiring “Native Japanese” Language skills , even in Foreign multi-nationals
dbsaiya
Japan has faced three major problems and the LDP has never really seriously addressed any of these; declining population, natural disasters, and energy independence. Instead, they were always self-conscious and concentrated on running around the world trying to be the big player on the world stage, concentrated on the GDP and stock prices and continued mindless public works projects instead of real infrastructure changes. Politics became a family business and they learned how to dole out small bits of candy to the constituents just to keep them happy so they could buy their votes. Over 95% of Japanese companies are SMEs and in this article it states that small businesses accounted for 88.4% of the bankruptcies. Abenomics trickle down didn't work, but it sure made the upper tier happy.
Sanjinosebleed
Pay a decent wage and pay overtime and there will be no labour shortage! If a company can't survive unless it requires minimal wages and maximum unpaid OT then it should fail!
Sanjinosebleed
And yet the Japanese are still voting for the LDP...go figure!
Geeter Mckluskie
OK, but for labour jobs. For any white collar job, at minimum people should be able to read and write at a grade 5 elementary school level.