Japan Grappling with Impacts of Talent Shortage

Organisations are addressing the labour shortfall by intensifying recruitment and extending retirement ages, according to research from Reuters.

By Maggie Mancini

Two-thirds of Japanese companies are experiencing a significant business impact from a persistent shortage of workers, according to a recent survey from Reuters. This comes as the country’s population continues to shrink and age. These labour shortages, particularly among non-manufacturers and small organisations, are reaching historic levels, according to the government.  

Two-thirds (66%) of respondents indicate that labour shortfalls were affecting their business, while 32% believe the impact is not serious. Bankruptcies caused by labour shortages in 2024 surged 32% from a year earlier to 342 cases, and nearly a third of respondents believe the shortage is worsening, with just 4% reporting improvements. 

When asked about specific measures to address the labour shortage, 69% say they are intensifying recruitment activities while 59% are extending retirement ages and re-hiring retired employees.  

The report finds that Japanese organisations are focussing on capital investment (69%) and selected wage hikes (63%) in 2025.