Bankruptcy in Japan Reaches 5,346 Cases, 90 Percent of Companies Have Fewer Than 10 Employees

Illustration of the atmosphere of a cafe. Restaurants and food retailers in Japan were hit when consumers reduced spending and business costs continued to rise. Photo: Pexels

JAKARTA - The number of corporate bankruptcies in Japan has reached 5,000 cases in the first half of 2026. The figure is the highest in 12 years, as the yen weakens, inflation puts pressure on costs, and labor shortages increasingly burden businesses.

Kyodo News, quoted Wednesday, July 8, reported that the number of bankruptcies of companies with debts of at least 10 million yen or about 62,000 US dollars rose 7.1 percent compared to the same period last year to 5,346 cases.

The data comes from a survey by Tokyo Shoko Research released Wednesday. The credit research company said the weakening of the yen also accelerated inflation and pressured the financial conditions of business actors, especially small and medium-sized businesses.

The pressure does not stop at prices. Japan is also facing a prolonged labor shortage. This makes business costs more difficult.

A Tokyo Shoko Research official warned that the bankruptcy rate could increase from autumn.

"The pace of bankruptcies may increase starting in the fall," said the research firm's official.

The scale of bankrupt companies is an important record. Companies with less than 10 employees account for 90 percent of total bankruptcies. Meanwhile, companies with debts of less than 100 million yen account for almost 80 percent.

Bankruptcy associated with rising prices rose 27.6 percent to 439 cases. Bankruptcy related to labor shortages also increased 37.7 percent to 237 cases.

Of that number, cases due to a surge in labor costs rose sharply to 120 cases. The figure is 2.4 times higher than the same period last year.

Stress is visible in many sectors. Insolvencies increased in eight of 10 industrial sectors. The service sector recorded the highest number with 1,819 cases, up 7.2 percent. The construction sector followed with 1,026 cases.

Tokyo Shoko Research said restaurants and food retailers were hit as consumers reduced spending. At the same time, more and more businesses reached the limit of their ability to raise prices to buyers.

Insolvencies increased in almost all regions of Japan. Of the nine regions, only Tohoku in the northeast did not record an increase.

Hokuriku in central Japan recorded the highest spike of 37.3 percent. Hokkaido in the north followed with a 17.1 percent increase.

Tokyo Shoko Research also said the situation in the Middle East is beginning to affect the cash flow of small and medium-sized businesses. Cash flow is the money that comes in and out of daily business activities.

In June alone, the number of bankruptcies rose 20.4 percent compared to the previous year to 1,021 cases. The monthly figure exceeded 1,000 for the first time in 25 months.