Bankruptcies among Japanese construction companies reached a 10-year high in 2024 sparked by rising material and labour costs, according to a report by Tokyo Shoko Research (TSR).
Last year, 1,924 companies went bankrupt, up 13.6% from the previous year and the highest number since 2015.
TSR said it was the third consecutive year that the total exceeded the previous year.
Small companies with debts of between 10 million and 50 million yen – $6,400 to $32,000 – were hit hardest, with 1,083 bankruptcies, up 15.9% from the previous year.
They accounted for around 56% of the total.
At the other end of the scale, the number of bankruptcies with debts of 1 billion yen or more – $6.4m and up – more than doubled to 21, up from nine in 2023.
TSR said that indicates “that the construction industry’s difficulties are spreading”.
Subcontractors who can’t pass higher costs down the supply chain, such as those who provide services like scaffolding, earthworks, and concrete work, saw the number of bankruptcies rise 16% to 736 in 2024.
Cap on overtime
As well as rising inflation, Japan faces an acute labour shortage, made worse by its ageing population.
Against this backdrop, construction was hit in April last year by a law restricting the amount of overtime workers can do to 720 hours a year, about 14 hours a week.
The number of bankruptcies related to labour shortages grew to 180 in 2024, up just over 40% from 128 the previous year, TSR said.
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