A severe labor shortage has become the norm throughout Japanese society. In particular, in certain sectors—such as rural areas and the construction industry—difficulties in recruiting workers are having a direct impact on business operations, and the number of bankruptcies attributed to labor shortages continues to reach record highs.
Why does the shortage of full-time employees remain so high?
Based on the latest statistical data, we will examine the significant disparities between industries, the contrasting trends compared to non-regular employees, and the structural issues underlying business failures.
Two people doing the work of three… The Exhaustion of the Regional Construction Industry as Labor Shortages Become the Norm
“To be honest, I’m almost at my limit,” says Kenichi Sato (45, pseudonym), who works for a mid-sized construction company in a rural area.
As a mid-level site supervisor overseeing multiple construction sites, Mr. Sato’s face clearly shows signs of chronic fatigue.
"For the past few years, we've been short-staffed. In particular, the younger generation isn't sticking with the job of site supervisor."
"At our company, too, we had three young employees in their 20s who joined over the past two years, but they all quit within a year." The labor shortage in the construction industry is nothing new, but at Mr. Sato’s workplace, its impact is directly affecting on-site operations.
"This is a project that should normally be handled by three site supervisors (construction management engineers), but right now, it's just me and another veteran supervisor handling it."
During the day, I visit job sites, and once I return to the office in the evening, that’s when the real work of preparing paperwork begins: checking drawings, writing purchase orders, and preparing safety management reports.
All of these are essential for moving the construction project forward, but we simply don't have enough manpower.
"If this were just a temporary busy period, that would be one thing, but we’ve been facing a similar situation every month for over a year now." Under the Work-Style Reform-Related Laws, limits on overtime have been in effect in the construction industry since April 2024, but labor shortages are making it difficult to comply. "The company is posting job openings, too."
I've heard that they pay high listing fees not only to Hello Work but also to private job-search websites.
However, we hardly ever get any applications. Even when we do get the occasional application, there’s a huge gap between the candidate’s desired salary and what our company can offer.
"In the end, it’s a vicious cycle where we have no choice but to make do with the employees we currently have." According to the "General Employment Placement Status (Employment Security Statistics)" published by the Ministry of Health, Labor and Welfare, the effective job openings-to-applicants ratio for "construction structural workers" has consistently remained at a high level, significantly exceeding the average for all occupations.
For example, according to the most recent data (for September Reiwa 7), while the effective job openings-to-applicants ratio for all occupations is approximately 1.10, it stands at 7.85 for “construction structural work” occupations.
Depending on the job category, there is an unusual situation where nearly eight companies are competing for a single job seeker.
"At this rate, not only will we be unable to win new contracts, but it will also be difficult to maintain the quality of the projects we're currently working on."
Pushing workers too hard while racing against the construction deadline could lead to accidents. Although we say “safety first,” there is no leeway on-site to ensure safety. This...
"That's the scariest thing of all," Mr. Sato said in a low voice.
Shortage of Full-Time Employees Remains "Stubbornly High"; Bankruptcies Hit a Record High
According to a survey conducted in October 2025 by Teikoku Databank, Ltd. of 25,111 companies nationwide (10,427 valid responses),
The percentage of companies that feel they have a “shortage” of full-time employees reached 51.6**%.
It was revealed that the figure has exceeded half for the fourth consecutive October, and while it fell by only 0.1 percentage points from the same month last year (51.7%**), it remains at a high level.
On the other hand, the proportion of non-regular employees experiencing labor shortages stood at 28.3**%**, down 1.2 percentage points from the same month a year earlier.
This figure has fallen below 30 percent for October for the second consecutive year, showing a trend of improvement in contrast to that of regular employees.
Widening Gaps by Industry: Recruitment Challenges in Construction and IT. When examining the shortage of full-time employees by industry, the severity varies.
The highest percentage was recorded in the “construction industry,” reaching 70.2**%** (up 0.6 percentage points from the same month last year).
The survey (press release) highlights urgent concerns directly linked to lost business opportunities, such as “We are unable to secure contracts even when projects are available due to labor shortages” (civil engineering, Nara Prefecture).
Next was the “information services industry” at 67.7**%** (down 2.5 percentage points from the previous year). According to the survey (press release), as the use of AI and digital transformation (DX) progresses, “expectations regarding the skills required of IT engineers are rising.”
"It has become more difficult than before to match projects with IT engineers" (software development contractor, Tokyo)—this suggests a situation where companies are struggling with a mismatch between demand and skills.
In addition, in eight of the 51 industries surveyed—including “Transportation and Warehousing” (67.1**%)**, where driver shortages persist—more than 60 percent of companies reported a shortage of full-time employees.
Could Digital Transformation (DX) Be Alleviating the Shortage of Non-Regular Employees? “Restaurants” Show Significant Improvement. What lies behind the trend toward improvement in the labor shortage among non-regular employees?
By industry, the sector reporting the greatest shortage was “Ryokan and Hotels” (59.0**%)—which is affected by factors such as inbound tourism—but unlike the figures for full-time employees, the shortage rate fell below 60 percent across all 51 industries.
Of particular note are “restaurants” (53.4**%**). Although the shortage rate remains above 50%, it has fallen significantly—by 10.9 percentage points from the same month last year and by 28.6 percentage points from two years ago.
On this point, the survey analysis suggests that this is likely due to productivity gains resulting from the spread of digital transformation (DX) and gig work.
"Bankruptcies Due to Labor Shortages" Continue; Outflow of Young People from Rural Areas Remains a Challenge. As the shortage of full-time employees persists, its impact on business operations is becoming increasingly apparent.
According to a survey (press release), the cumulative number of “labor shortage-related bankruptcies” from January through October 2025 reached 359, already surpassing the 342 cases recorded for all of 2024 and setting a new record high for the third consecutive year.
The survey found that “young talent tends to seek employment at large companies, so even when we post job openings, we don’t get any applicants.”
The outflow of young talent from rural areas—such as those involved in “paving work in Iwate Prefecture”—and a shortage of highly skilled workers are expected to be factors keeping the shortage of full-time employees at a high level.
[References] “Status of General Job Placement (Employment Security Statistics)” published by the Ministry of Health, Labor and Welfare; Teikoku Databank, Ltd., “Survey on Corporate Trends Regarding Labor Shortages (October 2025)” https://prtimes.jp/main/html/rd/p/000001190.000043465.html
