In the town of Ino, Japan, small business owners like Masato Shiota are grappling with severe labor shortages that threaten their operations. Shiota's papermaking company has implemented automation and discontinued unprofitable products, yet struggles to maintain production due to a lack of workers. This predicament is common among small enterprises across Japan, which provide 70% of the nation's jobs.
Japan anticipates a workforce deficit of 3.4 million by the end of the decade, intensifying challenges for small businesses. This year has seen a record number of bankruptcies attributed to labor shortages. Efforts to attract foreign workers are hampered by stringent immigration policies and a weakening yen, making Japan a less appealing destination for overseas labor.
Some officials view these bankruptcies as a natural "economic metabolism," yet the reality for small businesses is dire. Companies like Toyo Tokushi are hiring inexperienced graduates, while Kashiki Seishi relies on volunteer labor to sustain operations. These stopgap measures underscore the desperation of businesses striving to survive amid an aging population and shrinking labor pool.
Prime Minister Shigeru Ishiba's initiatives to rejuvenate rural economies and increase wages add another layer of complexity. While higher wages aim to attract workers, they also impose financial strains on small businesses already operating on thin margins. The balancing act between offering competitive salaries and maintaining profitability is becoming increasingly precarious.
The labor crisis in Japan's small towns reflects broader demographic trends, including a declining birthrate and rapidly aging society. Without effective solutions, such as embracing automation, revising immigration policies, or restructuring the labor market, small businesses may continue to face existential threats, potentially leading to widespread economic repercussions.
