Japan Bankruptcies: Updated Oct. 15, 2025.

Japan bankruptcies hit 12-yr-high in 1st half of FY2025 amid labor scarcity

Article source: https://mainichi.jp/english/articles/20251008/p2g/00m/0bu/026000c

Ideas

While bankruptcies are common in a market economy its very unfortunate that most if not all bankruptcies in Japan are small businesses which is usually a family type business.

For a very long time, its quite possible that many of these businesses might have been considered zombie type companies or just barely surviving, as the the Japanese government and or the Bank of Japan with its low interest rates or near zero interest rates kept some or many of these companies from going out of business.

But over time, as interest rates have been inching up, material costs kept increasing, and then add in the labor shortages, many of the small businesses could no longer hold on and finally had to file for bankruptcy.

The article doesn't really explain much about the companies that went bankrupt but most likely many of them might have been family type businesses, which couldn't afford to increase wages for their workers, and or had very thin profits margins that material costs just eroded over time. And then add in the increase in interest rates as the Bank of Japan has increased the key rate several times over the past several years.

Some in business, or academia, or economist might see bankruptcies as a necessary part of the market economy as those that can innovate and keep customers happy survive and move on while those that don't eventually die out and then newer or better companies move into the marketplace and take the place of those that just could't make it.

Some might call it creative destruction as companies that can't make it leave and newer companies come in and create new synergies in the marketplace.

Yes, its not always the smaller companies that go bankrupt as even mid-size companies can die out and even the large name brand companies which might be characterized as too big to fail companies can die out too sometimes.

While very few large Japanese companies have gone bankrupt recently it was not uncommon back during the late 80's or 90's where many companies were on the brink of bankruptcy but the government and the banks propped up many companies from going under.

Japan is in a so-called labor shortage now, which is good for workers wanting to change jobs, if they can find a new job that pays them more or better working conditions.

But its not so good for many small and mid-size companies that have very thin profit margins and can't afford to increase wages to keep workers and or entice new workers to join their company as they can't pay the wages needed that new workers need or want.

Again, some might say this is just a normal mechanism of a market economy and an economy adjusting for maybe too many companies in the marketplace. 

That might be true but it doesn't discount the human suffering involved of a company having to close and people losing their jobs and having to look for a new job if they can find one.

The financial strength of many small companies might have been very weak as again, increased material costs ever since the pandemic have kept increasing, increased energy costs too since the pandemic and then, the past two years many companies have been increasing wages which has put a significant stress on many companies which haven't been able to increase wages which means they might have actually lost workers who then moved to companies that offered increased wages and maybe even better working conditions.

Some might say, right or wrong, that the Japanese economy is actually going through a period of the marketplace getting rid of companies that can't keep up and keeping companies that are financially strong which might actually make the Japanese economy better off in the future.

The weak Japanese yen is another reason for some of the bankruptcies and especially with domestic companies as import prices related to the weak Japanese yen have kept increasing material costs and energy costs which many small domestic companies haven't been able to overcome.

And yes, service type companies and especially restaurants have been hit especially hard as they have been hit hard as they have to pass-on their costs to their customers, or try too, but its become extremely challenging for the to keep increasing prices and losing customers.

The service sector normal has very thin profits margins as they are always challenged to keep prices low but its been impossible for many of them to do it and as they just can't keep absorbing their energy and material costs and have to pass-on their cost to their customers which means customers are going to think twice about buying from them  as customers or consumers have less and less disposable income to spend in the economy.

Once again, it's very unfortunate that any company has to go bankrupt as it's about people and not just a company on a piece of paper and it might involve families too which is very unfortunate.

But again, and finally some would say the Japanese economy is just going through the normal mechanism of a market economy as some companies thrive and go on and some that can't make it die out when gives room for new companies to enter the marketplace.

Have a nice day!

BOJ and Wage Trend: Updated Sept. 19, 2025.

BOJ to release wage trend data from 2027 in Tankan survey

Article source: https://mainichi.jp/english/articles/20250911/p2g/00m/0bu/046000c

Ideas

It seems there are already a lot of surveys related to all kinds of activities in Japan by almost every organization conceivable but I guess the Bank of Japan wants its own survey to feel most secure and reliable about the wage data.

It's possible, but not conceivable, that the surveys coming from the labor and company organizations could be slightly off or are padded to make the wage information look better than it really is. 

For example, as wages for small and mid-size companies are always a little suspect as they are less than large company salary increases they could be made to look better as way to show that that companies are increasing wages which a lot when reality it might not be that much of a wage increase.

Yes, not all companies cooperate in surveys as they might feel embarrassed with the wage increases they are giving their workers and or want or need to be secretive about their wages for competitive reasons.

At the same time it might not be easy to get some companies to cooperate as they might not have the resources needed to reply to a survey from an organization.

It's the small and mid-size companies that need to most help with wage increases and it would be in their best interest to cooperate so that government organizations can plan ways to help them, otherwise government and other organizations are in the dark about small and mid-size companies situations.

Data information is good and needed but will it influence companies to increase wages which is sorely needed in Japan to help the economy grow and combat continued inflation.

If other companies see that wages are increasing the might be less hesitant to increase wages for their employees too.

But at the same time, some or many small and mid-size companies just don't have the resources needed to match what other companies are doing.

And with there being a real labor shortage in Japan now some might want to increase wages to keep or get new employees but they just don't have the resources needed to do it.

The June survey and the December survey goals seem very good but what's to keep some companies from not giving the correct information as a way to look good in the eyes of the BOJ.

There is always a chance, as with any survey, that the survey participants will not fully comply with the survey and will make it look better for them.

Small firms are always having difficulty with keeping up with bigger ones and its not just in Japan its a global situation as the large companies, globally always have more resources than the smaller companies.

But maybe in Japan its even more pronounced as their is always a huge gap between the haves, the large companies, and the have nots, the small and mid-size companies due to a huge gap in resources.

The tariff situation is definitely going to affect Japanese companies, which ultimately will affect Japanese consumers but when will it really be seen. It could begin September or the 3rd quarter as the new tariff rates go into effect.

And then there is the Bank of Japan having to decide what do to as the US Federal Reserve just cut its rate, due the US economy slowing and job growth really slowing which means whenever the US reserve cuts or increases it rate central banks globally begin to look and decide if they will follow with a rate cut just not at this time.

And yes, inflation in Japan is above the 2 percent goal for inflation in Japan, which  is actually the goal of many central banks to keep inflation around 2 percent as they feel its a manageable level and shows an economy is moving enough for economic growth but not too much.

Have a nice day!

Japan Ideas: Updated Aug. 28, 2025

Firms believing Japan economy growing falls to 30% amid tariff woes

Article source:  https://mainichi.jp/english/articles/20250810/p2g/00m/0bu/026000c

Ideas
The Japanese economy never grows that much or that fast and now with the tariff situation it might grow even slower.

Japanese companies might have to re-set what they think is good economic growth and or communicate to their stockholders that earnings as before are not going to be the same.

And companies, if they are thinking of absorbing the tariff costs, can only do it for so long before their profit margins begin to suffer and they have to pass-on the tariff costs to the next in the supply chain.

Surveys are good and needed and important but they don't tell the whole story as companies are made up of people and people can change their minds as the business environment can change quickly sometimes.

It also must be remembered that companies who are doing good during the survey might think the economy is good while those companies that aren't doing good might think the economy is not doing so good.

The Japanese economy has been flat for a very long time with little or very little economic growth, as the past 30 years have shown.

Solid business performance is always needed and good but it might take Japanese companies to be more creative and even begin to innovate so that productivity is the real economic driver for Japanese economies.

Companies that rely on normal, business as usual business activities might be left behind in the new global trade situation that has been created.

It can no longer be business as usual for Japanese companies and they can't rely on old practices to keep them afloat as they need to find ways to innovate and allow innovation to be the the key economic driver for them.

Yes, the global economy is in a new-normal and Japanese companies will need to find ways to grow and even find ways to adapt and change to the new global economy.

Nothing stays the same in business or the real world and the sooner Japanese companies find ways to adapt, innovate, stay ahead of the curve the sooner they can get back to being titans of the global economy like they were many years ago.

At one time Japan had some of the largest companies in the world but somewhere along the way they lost their way and now only Toyota is listed as a top global company.

For a long time many Japanese companies were reluctant to increase prices and they felt their customers would not like it so they absorbed cost increases for many years.

But those days are long gone as company profit margins have shrank and stockholders are demanding a prescribed level of profits each quarter.

And yes, the labor shortage has forced companies to increase wages for existing employees and to get new employees to work for them in the future.

It has been suggested that for a long time Japanese companies were sitting on large sums of money and not really paying their employees the wages that were needed to help the Japanese economy grow.

So maybe now, finally, Japanese companies have decided that to grow the economy and grow their business are equally beneficial pursuits.

Again, while the wage increases are needed and good they can't make up for the number of years that companies gave either very low wage increases or no wage increases at all.

It all adds up with a synergy effect taking place after too many years of low wage increases and or no wage increases at all affecting the Japanese economy.

And again, that 5.25 percent wage increase might be considered good by some and maybe that is all some companies can do, but if companies had been giving reasonable wage increases all along maybe the 5.25 percent might have been adequate.

Real wages are very important for the Japanese consumer and of course Japanese workers as it indicates their purchasing power or how much they can really spend in the economy.

The Japanese economy has dug itself into a major hole and it's going to take time to dig its way out and there needs to be even more wage increases for all workers in Japan.

For example up to 70 percent of the Japanese workforce doesn't work for the large name-brand companies but small and mid-size companies that maybe can't afford to pay the same wage increases as the large companies do.

Which means the Japanese economy is kind of stuck with two realities, the haves, the large company workers and the have nots, the small and midsize workers what don't have the same wage increases as their large companies workers do which then means less disposable income left to spend in the Japanese economy, which then means less economic growth in the future.

Have a nice day!

Japan Companies and Wage Increases: Updated Aug. 21, 2025.

Major Japanese firms' monthly wage hike tops 5% for 2nd straight year.

Article source:  https://mainichi.jp/english/articles/20250806/p2g/00m/0bu/041000c

Ideas:

While its good that large company employees got a wage increase of more than 5 percent, it should be remembered that up to 70 percent of Japanese workers don't work for large Japanese companies but rather small and midsize companies, which usually don't have the resources needed to pay the same wage increase as large companies.

What this means is small and midsize workers in Japan might not have the same amount of disposable income to spend in the Japanese economy which of course might mean less economic growth.

Many companies are increasing wages as a way to keep needed workers and to lure needed workers to work for them. But the problem is, again, many small even mid-size companies just don't have the resources needed to attract workers as, yes, there is a definite labor shortage in Japan that is going to maybe cause some small Japanese companies to close.

Unfortunately, now with the US tariff situation Japanese export companies could be significantly affected which means as profits decrease and profit margins decrease small and mid-size Japanese exports companies are going to be the effects of the tariffs the most. Large Japanese companies that export might be able to absorb some or most of the tariffs.

It could be suspected or maybe even assumed that large Japanese companies, as reported in some articles years earlier, that large companies were hording cash and for a long time didn't give significant wage increases to their workers.

But many Japanese companies, especially publicly traded companies, are not obligated to take care of their shareholders first and not so much about companies workers who now might just be considered commodities to be easily laid-off when needed.

Non-manufacturing companies, which many are service-type companies, usually don't have large profit margins and can't afford to pay the same wage increases that manufacturing companies can pay.

While its good to focus on what large companies did with wage increases, but again, it must be remembered that 70 percent of Japanese workers don't work for large companies but small and mid-size companies.

Large companies, globally, in every country usually get all the news but most economies are made up of small and mid-size companies that employee more workers than large companies.

Large companies might drive some of an economy but they don't drive the majority of an economy which small and mid-size companies do when everything is added up.

And the spending in an economy by small and mid-size workers might be significantly more than what the 30 percent of large companies employees spend in an economy.

So its a mistake to ignore the small and midsize companies or their workers in an economy as not being very significant when if fact they might out-spend large company workers by 3 times.

Have a nice day!

`Wage Increases and Productivity: Updated July 28, 2024.

 

Calls for wage raises as Japan not achieving textbook productivity-led wage growth

Article source:  https://mainichi.jp/english/articles/20240722/p2a/00m/0bu/030000c

Ideas:

Economic textbook ideas are not always followed exactly in the real-world of life or business or society, as there are just too many variables interacting at the same time. Productivity might be improving in Japan, as everywhere, but that doesn't mean wages are going to increase or will increase in the future.

People, CEO's, decide on wages and as such even though productivity in a company might be increasing, that might just mean higher profits, but not an increase in wages, as unfortunately, the average Japanese worker, just like many countries, are just commodities and not real stakeholders in a company like it was in Japan decades ago, as Japan has adopted western style governing which put the shareholder at the center and company workers at the fringes.

Wage growth in Japan might be decades behind Germany and the US, as again mentioned, the early 2000's situation in Japan, when Toyota decided not to increase wages and then all companies did the same, and its been that way ever since until 2023.

And yes, as the article states, shareholders became more important than the Japanese worker, and even though productivity had increased, the emphasis now was on shareholder earnings and again the worker was not given wage increases and the idea was take care of the shareholder and not the worker.

It has been said, that many Japanese companies, especially the big name-brand companies are sitting on a lot of cash, that they could use to increase wages, but ever since the 2008 situation, they have been afraid to use the cash.

Maybe back then, in the 2000's and a little beyond, there was no labor shortage like today, and now companies have to increase wages to get new workers and to keep current workers, as workers now know they might have some bargaining power with regard to increased wages. Before workers had no bargaining power as there more than enough workers for companies and they could pay whatever wages they wanted.

For wages and productivity  to increase in sync all factors need to be lined up correctly, and that, again, is very hard to do. Just like the idea of decreasing inflation and increasing wages together, as there are just too many negative factors affecting the Japanese economy at this time, and its going to take some time for all the pieces of the puzzle to be arranged correctly for wages and productivity to be congruent again, if ever.

Most likely, companies are going to focus on increasing productivity as it helps increase profits which is good for the shareholder, and companies might, as in 2023 and 2024, increase wages, but not to the benefit of the worker, as such, but just to make sure there can avoid a labor shortage.

Today's labor talent, of young workers young college graduates are not the same kind of worker as their parents were and they want and need a different work experience. If companies don't adopt and change, to meet the needs of the 21st century worker, they will continue to have labor shortages, as young workers will easily quit and try to find a companies that meets their needs.

Its a losing proposition, these days, if companies expect young workers to change for the company, as they are not going to do it, as companies need to change from an old-style traditional company to a 21st century company that embraces the 21st century worker.

That doesn't mean the Hollywood style as seen related to tech companies but meeting the needs of the 21st century worker but still being productive and competitive in a global economy today.

Have a nice day and be safe!