First Half Sees Most Japanese Corporate Bankruptcies in 11 Years... Nearly 90% Are Small Businesses

Main Causes: High Inflation and Labor Shortages

According to reports from local media such as the Asahi Shimbun on July 9, the number of corporate bankruptcies in Japan during the first half of this year reached the highest level in 11 years.

According to data compiled by Tokyo Shoko Research, a corporate credit research firm, the number of bankruptcies (with liabilities of at least 10 million yen) in the first half of 2025 (January to June) was 4,990, an increase of 1.2% compared to the same period last year. This marks the fourth consecutive year of increase for the first half of the year, reaching the highest figure since 2014, when there were 5,073 cases.

By company size, small and medium-sized enterprises with fewer than 10 employees accounted for 89.8% of all bankruptcies. By industry, the service and other sectors had the highest number with 1,697 cases, followed by construction with 969 cases, manufacturing with 583 cases, and wholesale with 554 cases.

EPA Yonhap News

The newspaper reported that this year's increase in bankruptcies is largely due to the pressure of higher raw material costs caused by high inflation, as well as rising labor costs resulting from labor shortages. Bankruptcies attributed to high inflation totaled 343 cases, exceeding 300 cases for the third consecutive year. Bankruptcies attributed to labor shortages also reached 172 cases, the highest number since the survey began in 2013.

Tokyo Shoko Research analyzed that "as the wage gap with large corporations widens, it is becoming increasingly difficult for small and medium-sized enterprises to secure workers," and added, "the vicious cycle of losing orders due to labor shortages is hindering performance recovery."