Recently, the relevant survey data show that the number of bankruptcy of Japanese enterprises has recently hit a record high. Analysis suggests that the weak yen caused by rising prices and labor shortages that have persisted for years are the main reasons. In order to cope with the ever-increasing labor shortage situation, all walks of life in Japan are grasping the response.

　　Record number of bankruptcies of Japanese companies

　　Japan's private research organization Imperial Data Bank Corporation recently released data show that in July the number of bankruptcy enterprises in Japan reached 920, an increase of 291 over the same period last year, nearly 11 years the data for the first time in July more than 900. Among them, the service sector had the highest number of corporate bankruptcies at 240, followed by 191 in the construction sector and 182 in the retail sector.

　　In addition, data from the Tokyo Chamber of Commerce and Industry Survey also showed that the number of corporate bankruptcies in Japan in the first half of this year hit the highest level in 10 years, the third consecutive year of growth. Among them, the bankruptcy cases with debts of more than 10 million yen (about 62,200 U.S. dollars) increased by 22.0% year-on-year to 4,931 cases.

　　The number of bankruptcies in Japan had surged to more than 8,000 in 2009 after the 2008 financial crisis, but since then the number of bankruptcies has been declining even after the Shinkansen epidemic due to factors such as the government's provision of sufficient public financial assistance.

　　Analysis suggests that the main reasons for the renewed increase in the number of corporate bankruptcies include severe labor shortages and rising raw material costs due to the continued weakness of the yen.

　　The yen has continued to weaken in recent years as a result of the Bank of Japan's ultra-loose monetary policy that has been in place for many years. The yen's depreciation has had a direct impact on Japan's price increases, leading to higher costs of imported goods and raw materials, which in turn pushed up domestic prices. in July, the yen against the dollar once fell below 160 yen per US dollar, hitting a new low in 34 years, and then recovered due to the Bank of Japan's unexpected interest rate hike, but is still located at lower levels.

　　Even if higher costs are passed on to customers, more companies will not be able to cope with the upward pressure on prices brought about by the continued weakness of the yen, and it is expected that more than 10,000 companies could go bankrupt this year, said an official at the Tokyo-based commerce and industry research firm.

　　Continuing Labor Shortage

　　In recent years, the accelerating process of childlessness and aging has led to a decline in Japan's population. The phenomenon of declining birth rate and aging at the same time is known as the “demographic cliff” in economics, a direct consequence of the labor shortage.

　　According to statistics released by the Ministry of Internal Affairs and Communications, as of January 1, 2024, excluding foreigners residing in Japan, the total population of Japan will be approximately 121.56 million, a decrease of 860,000 from the previous year, and the largest drop since 1968 when statistics were first compiled, for the fifteenth consecutive year.

　　At the same time, the elderly population continues to increase, Japan's elderly population over 65 years old 35.712 million, accounting for 29.4%; the working population continues to decline in serious problems, the working population between 15 and 64 years old is 71.741 million, accounting for 59%, and the population under 14 years old accounted for 11.4%, also hit a record low.

　　Many industries in Japan are adversely affected by labor shortages, with transportation, construction, nursing, agriculture, and automobile maintenance facing the most severe situations. Taking the transportation system as an example, some public transportation systems have had to make corresponding adjustments, such as buses to shorten operating routes and railroads to add more unmanned stations.

　　A recent survey by the Nomura Research Institute shows that the number of truck drivers in Japan is expected to fall short of meeting the country's logistics needs by fiscal year 2030 due to factors such as an aging population. The study's data predicts that Japan's road freight volume will be 1.4 billion tons in FY2030, which ends in March 2031, down slightly from 1.43 billion tons in FY2020, while the number of truck drivers is expected to plummet from 660,000 to 480,000, a 36% shortage.

　　Various Sectors Strengthen Response to Labor Shortage

　　To cope with labor shortages, various sectors in Japan have been taking active action in recent years.

　　The Japanese government has been advocating in recent years that enterprises provide employment opportunities for people who are willing to work until the age of 70 by continuing to hire, delaying retirement, and transferring to other enterprises for re-employment, etc., and passed a relevant law in April 2021.

　　According to recent Japanese media reports, Meiji Yasuda Life Insurance Company plans to extend the retirement age of its employees from the current 65 to 70 from fiscal year 2027. This will make it the latest large financial institution to retire in Japan. employees aged 65 and over will have the option of working shorter hours each working day or three days a week. It is then expected that about 10,000 of the company's employees, excluding salespeople, will fulfill the conditions for retirement at 70 years of age.

　　Kyodo News reported that most Japanese companies currently set the retirement age for employees at 60, but will allow employees to work until age 65 by rehiring them, only to have their salaries drastically reduced during the rehiring period.

　　Some Japanese companies are also trying to cope with labor shortages by applying new technologies such as artificial intelligence. Relying on manual labor to manage goods is labor intensive, and vending machines are everywhere in Japan. According to the website of the Japan Broadcasting Association, Japan's Kirin Beverage Company plans to introduce an artificial intelligence system to manage its 80,000 vending machines, such as checking the goods in the vending machines, analyzing their sales, and calculating the optimal routes for delivering goods to the vending machines. This system is expected to reduce labor hours by 10%.

　　In addition, a survey by Kyodo News showed that 86% of local governments in Japan believe that there is a shortage of local labor and the need to introduce more foreign labor. On June 14 this year, the Japanese Diet passed a new employment management system for foreigners, namely the “Yukari Joroh” system, which refers to the permission to work after receiving education and training.

　　Some analysts believe that previously unemployed women began to work, the elderly continue to work and other measures to a certain extent to make Japan's labor market gap has been replenished, but the shortage of manpower in areas such as civil engineering and construction is still very serious. The “adult labor” rule will make it easier for foreign workers to enter industries where the shortage is most acute.

　　However, it has been pointed out that although the Japanese government's attitude and stance toward immigration is changing, it still does not have a clear immigration policy, but only policies and systems for residency status. Japan lacks a comprehensive response to the increased demand for Japanese language training and cultural adaptation for foreigners, as well as to the challenges faced by foreigners' children in terms of education in Japan, social security for the elderly, and rental services.