The number of corporate bankruptcies in Japan in 2023 hit an eight-year high, a survey by Tokyo Shoko Research showed Monday.
Business failures rose in all 10 surveyed sectors for the first time in 31 years, due to rising prices, deepening labor shortages and the full-fledged start of repayments of relief loans extended to help companies weather the COVID-19 crisis.
Corporate bankruptcies with liabilities of at least ¥10 million increased 35.2% from the previous year to 8,690, the highest figure since 2015, when the annual total stood at 8,812.
Total liabilities left by failed companies grew 3.1% to ¥2.4 trillion, the highest since 2017, when the total reached ¥3.7 trillion.
Bankruptcies stemming from price rises, such as higher materials prices, more than doubled to 645. Those affected by labor shortages came to 158, the highest since Tokyo Shoko Research began recording such data in 2013.
Business failures resulting from soaring labor costs were 8.4 times higher, at 59.
“It’s time to consider whether companies should raise wages beyond their financial capacity,” Tokyo Shoko Research said.
The number of bankruptcies related to the COVID-19 crisis numbered 3,127, up 36.4%. More companies terminated their business, especially in the services sector, because their performance did not recover.
Failures of companies that used a COVID-19 relief program providing virtually interest-free, unsecured loans were 1.4 times higher, at 631.
“Repayments of such loans provided by private financial institutions will peak in April 2024,” Tokyo Shoko Research said. “The number of bankruptcies could exceed 10,000.”
In December alone, the number of corporate bankruptcies rose 33.7% from a year before to 810, up for the 21st straight month.