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Business Trends

Labor shortage drives more bankruptcies in Japan

Lack of workers and rising costs increasingly cited in business failures in 2018

Trucking companies, as well as food service companies and nursing care providers, have been hit hard by Japan's labor shortage. (Photo by Wataru Ito)

TOKYO -- More Japanese companies went under for lack of personnel last year, reflecting the growing toll of the country's ongoing labor crunch on businesses that fail to secure or keep workers.

Tokyo Shoko Research counted 362 such bankruptcies during the year through November 2018, up more than 20% on the year. The total has already surpassed the full-year 2015 figure of 340, the highest since the research firm began tracking this data in 2013.

The number of companies that had to shut their doors because they lacked enough employees to handle the necessary work jumped 66% to 53, while another 24 -- a 71% rise -- increased compensation to hold on to existing staff but could not bear the higher costs. A total of 261 companies went out of business because the head fell ill or retired without a successor, up 13%.

The problem is particularly severe in the service sector, including such areas as the restaurant industry, nursing homes and care providers for the elderly, and trucking companies.

The Japanese economy's slow but steady recovery has lifted the ratio of job openings to applicants to its highest level since 1974. Workers are gravitating to industries that offer better working conditions, such as higher pay and lighter workloads.

The total number of bankruptcies between January and November declined 1.2% on the year to 7,613. The full-year figure likely fell for a 10th straight year, thanks to an improving economy and fundraising help from financial institutions. But bankruptcies probably rose for the first time in a decade in the service sector and for a third consecutive year in retail.

It would not be surprising if the total number of bankruptcies started growing again in 2019, driven by a rise in failures due to personnel shortfalls, a Tokyo Shoko Research official said.

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