Arab News Japan

TOKYO: The impact of labor shortages on business is becoming more serious and causing a record number of bankruptcies, according to a report by financial research company Teikoku Databank.

Construction and logistics companies have been particularly affected by labor problems.

According to Teikoku Databank, there were 182 “labor shortage bankruptcies” between January and June this year due to reasons such as employee resignations, difficulty in recruiting and rising labor costs. This pace is significantly higher than the previous record for an entire year (2023) when there were 110 in the same period.

The number of bankruptcies due to labor shortages among small businesses with fewer than 10 employees was 143, compared to 84 in the same period last year.

The construction industry had 53 bankruptcies and the logistics industry had 27 bankruptcies – both of which were the highest ever recorded in the first half of the year – due to a labor shortage that in part has been caused by the application of upper limits since April on overtime work for driving and construction work.

Although the number of people in employment is increasing and the labor shortage is showing signs of easing, the concern over labor shortages remains at a high level.

According to the Ministry of Health, Labor and Welfare’s Labor Force Survey conducted in May of this year, the number of employed persons reached 67.66 million, exceeding the same month in the previous year for the 22nd consecutive month.

However, the number of people looking to change jobs or make other changes has exceeded 10 million, breaking a record high, and the fluidity of the labor market is accelerating. For small businesses with few employees, if employees resign, the damage is great.

Bankruptcies in the logistics industry due to labor shortages nearly doubled compared to the same period last year, raising concerns about the impact on the entire value chain.

Three months have passed since the upper limit of overtime work was tightened. In the construction and logistics industries, the number of bankruptcies due to labor shortages has already increased significantly. If the situation of being unable to increase manpower and improving work efficiency continues for a long time, it will inevitably have a negative effect on businesses.

In particular, the logistics industry, where the upper limit of overtime work for truck drivers was revised, saw 27 bankruptcies due to labor shortages, almost double the number from the same period last year (15 cases).