Japan's small businesses face unprecedented strain as corporate bankruptcies reach a 12-year high, casting doubt on Prime Minister Sanae Takaichi's economic strategy. New data reveals 5,172 corporate failures between April-September 2025 – the fourth consecutive annual increase – with 70% involving firms holding under ¥100 million in liabilities.
Small Businesses Bear Brunt of Economic Shift
Tokyo Shoko Research reports labor shortages drove 202 companies to collapse this year, the highest recorded since tracking began. Rising wages and operational costs are disproportionately impacting micro-enterprises, with analysts coining the term 'Takaichi-cost' to describe policy-related financial pressures.
Structural Challenges Emerge
While PM Takaichi's administration emphasizes fiscal restructuring, critics argue the current approach fails to address systemic issues. 'This isn't cyclical – it's structural,' noted economist Haruto Yamamoto. 'Without addressing labor mobility and digital transformation, even temporary relief measures will prove insufficient.'
The crisis coincides with Japan's push to boost productivity through AI adoption, though implementation remains uneven across sectors. Observers warn the bankruptcy wave could impact regional employment stability ahead of key municipal elections in early 2026.
