Japan labor shortage bankruptcies hit record high

Labor shortage-related bankruptcies in Japan reached a record high of 240 cases in the first half of fiscal year 2026, according to Tokyo Shoko Research. More than half of these failures were attributed to rising labor costs.

Restaurants are particularly struggling to secure staff while managing the financial burden of wage increases. In areas like Kawaguchi, Saitama, businesses face difficulty competing with Tokyo's higher minimum wage. There are also concerns that potential consumption tax cuts on groceries could widen the tax gap between food products and dining out, further discouraging restaurant patronage.

During a recent Diet session, opposition leaders from the Democratic Party for the People and the Constitutional Democratic Party of Japan pressed the government for support measures. Prime Minister Takaichi stated that the government would work to create environments conducive to wage increases, such as supporting labor-saving technologies like self-checkout registers, though specific additional measures for small businesses have yet to be finalized.