Risk of talent shortages and rising labor costs

「According to Teikoku Databank’s “2024 Trends in ‘Employee-Resignation-Type’ Bankruptcies,” of the 342 labor-shortage bankruptcies in 2024, 87 were “employee-resignation-type” bankruptcies directly or indirectly caused by resignations of employees or management executives, the highest number since 2013, when comparable data became available. As workers’ demands for higher wages increase, smaller companies with limited earnings capacity find it difficult to improve compensation, increasing the likelihood that bankruptcies caused by talent outflows will rise in 2025. Efforts to save labor and improve efficiency to address labor shortages are urgently needed.」

「The group seeks to selectively recruit high-quality talent by offering fully remote work. However, if changes in the future labor market make it difficult to recruit as planned for positions involved in business operations, including front-office and cast roles, or if recruitment costs or personnel expenses increase, the group’s business and results could be affected.」

「In the overseas business, global inflation and higher wages made recruitment difficult and prevented expansion from progressing as planned, resulting in continued spending and the decision to close the Dubai branch and consider restructuring services in Germany.」

「According to a Tokyo Shoko Research survey, 158 companies went bankrupt due to labor shortages in 2023, up 154.8% year on year and 2.5 times the previous year. This exceeded the previous record of 156 in 2019 and was the highest number since the survey began in 2013. Approximately 70% cited higher personnel costs or difficulty recruiting, with the minimum-wage increase implemented in October 2023 having a significant impact. Bankruptcies caused by higher personnel costs increased 8.4 times year on year. Chronic labor shortages are making new recruitment difficult, while wage increases to prevent resignations are essential, increasing the difficulty of securing talent and making labor shortages a major management challenge for companies of all sizes.」

「According to a survey by Tokyo Shoko Research on “bankruptcies related to labor shortages,” 144 companies went bankrupt due to labor shortages from January through November 2023, up 132.2% year on year, the second-highest level since 2013 and approaching the record pace seen in 2019. Approximately 80% cited higher personnel costs or difficulty recruiting as factors, and the minimum-wage increase implemented in October 2023 had a significant impact. In addition to the difficulty of new recruitment caused by chronic labor shortages, wage increases to prevent resignations have become essential, making it increasingly difficult to secure talent and turning labor shortages into a major management challenge for companies of all sizes.」

「If changes in the future labor market make it difficult to recruit as planned for positions involved in business operations, including front-office and cast roles, or if recruitment costs or personnel expenses increase, our business and results could be affected.」