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Teikoku Databank defined bankruptcies (including sole proprietorships, debt of at least 10 million yen, and legal liquidation) caused mainly by a deterioration in earnings due to a shortage of employees as “labor shortage bankruptcies,” and compiled and analyzed bankruptcies that occurred between January and December 2019.

The 4 main survey results are as follows.

・ There were 185 cases of labor shortage bankruptcies between January and December 2019, an increase of 20.9% from the previous year. Record high for the fourth consecutive year and continuing upward trend.
・ Looking at the number of cases by industry, “services” accounts for 54 cases, the largest number, followed by “construction” (49 cases), these 2 industries comprising more than half of the total.
・ In the 7 years since the start of the survey, “road freight transportation” was the highest with 74 cases. Of these, 28 were in 2019 (+21.7% YoY). Failure to secure truck drivers led to deterioration in financial position and increasing number of bankruptcies.
・ By size of liabilities, 101 small bankruptcies (up 11.0% from the previous year, accounting for 54.6% of the total) were “under 100 million yen.”

There were 185 cases of labor shortage bankruptcies in January to December 2019 (+20.9% YoY, 32,688 million yen in total liabilities) due to factors such as the deterioration in earnings due to the difficulty of employee retention and recruitment.

Although the growth rate shrank from the previous year (up 44.3%), it marked a record high for the fourth consecutive year and continues to move upward.

In addition to construction and road freight transportation, services such as welfare services for the elderly, customized software development, and beauty salon accounted for the largest share in the industry.

Bankruptcies were conspicuous among small enterprises that were struggling to retain or secure specialists, such as architects, truck drivers, nursing care staff, IT technicians, hairdressers and beauty therapists.

From April this year, the Act on Reform of Working Conditions will be applied to SMEs after a 1-year grace period.

In the construction and transportation industries, where there is a strong sense of labor shortage, there is a 5-year moratorium on restrictions on overtime work, which may further widen the gap with companies whose working conditions and workplace environments are improving.

With the aging of the population and the retirement of veteran employees advancing, there are concerns about a further labor shortage, particularly among small enterprises that find it difficult to secure employees on favorable terms.

Source: Survey of Trends in “Labor Shortage Bankruptcies” (January to December 2019) by Teikoku Databank

Original Text: https://ampmedia.jp/2020/01/09/teikoku/