In 2024, corporate bankruptcies in Japan surpassed 10,000 for the first time in 11 years, driven by escalating labor shortages and rising costs of imported materials due to the depreciation of the yen, according to a survey by a credit research company released on Tuesday.
Small and medium-sized enterprises (SMEs) were particularly affected, facing additional financial strain from the expiration of special tax deferral measures that had been implemented during the COVID-19 pandemic, as reported by Tokyo Shoko Research.
The total number of bankruptcies climbed by 15.1% compared to the previous year, reaching 10,006, marking the third consecutive year of increases. Among these, 10,004 were SMEs, with total liabilities amounting to 2.34 trillion yen (approximately US$14.9 billion), a slight decrease of 2.4% from 2023.
In the summer of 2024, the yen fell to its lowest value against the U.S. dollar in 37 years, driving up import costs for businesses. Additionally, a worsening labor shortage—exacerbated by Japan’s aging population and new stringent overtime regulations—put further pressure on sectors such as construction and services.
The services industry, including restaurants, recorded the highest number of bankruptcies at 3,329, a 13.2% increase, marking the first time since 1990 that bankruptcies in this sector exceeded 3,000. Notably, a report revealed that last year saw a record number of ramen noodle shop operators go out of business in Japan.
The construction sector was also heavily impacted by the new work-hour reforms, with bankruptcies rising to 1,924 cases, an increase of 13.6%. Bankruptcies linked to labor shortages surged to a record 289 cases, up from 159, while those due to the inability to find successors for businesses reached 462—another record.
Additionally, bankruptcies attributed to financial burdens from social security costs and taxes nearly doubled to 176 cases, up from 92.
While some companies have managed to avoid bankruptcy through loan refinancing, Tokyo Shoko Research cautioned that they may continue to face challenges if they are unable to revitalize their operations.
