Japan gets talked about a great deal from the outside. Some of it is careful, but a lot of what circulates on social media is memes, clickbait and the same few statistics repeated without context. The demographic numbers are real. What rarely makes it into that coverage is what Japanese companies are doing about it, day to day.

This piece looks at that side, drawing on what the Japanese business press has reported over the past year.

The short answer

Japanese companies are raising starting pay, keeping older employees working longer, filling gaps shift by shift through spot work apps, repaying new hires’ student loans, hiring more foreign workers, and bringing skilled trades in-house as permanent jobs. The more interesting cases go further and redesign the job or the employer brand to reach people who would not otherwise have applied.

The pressure on individual businesses

The national figures are familiar. Less familiar is what the shortage does to individual companies. Teikoku Databank counted 441 bankruptcies attributed to labour shortages in the year to March 2026, about 1.3 times the previous year and a record. In 118 of those, the trigger was staff leaving. Construction accounted for a quarter of cases, followed by road freight, elderly care and restaurants. The first half of 2026 set another record, at 227 cases.

What companies are doing

Raising starting pay. For graduates joining in April 2026, 67.5% of companies raised starting salaries, by an average of ¥9,462, according to Teikoku Databank. Only half of small companies did so. Several cited the risk of new hires earning more than the staff already training them.

Keeping people longer. As of June 2025, 34.8% of companies had measures in place to keep employees working to age 70, up 2.9 points in a year, according to the Ministry of Health, Labour and Welfare. A small but growing group, 3.9%, have abolished mandatory retirement altogether.

Filling gaps by the shift. Spot work platforms such as Timee let employers book workers for a single shift rather than hire. Demand keeps outrunning supply: in March 2026, spot work postings outnumbered applicants by more than four to one, a ratio that had risen for 22 consecutive months, according to figures reported by Business Insider Japan.

Paying off student loans. Under a JASSO scheme, employers repay their staff’s student loans directly, with tax and social insurance advantages on both sides. By the end of January 2026, 4,614 companies had adopted it, covering 24,086 employees.

Hiring from overseas. Japan had 2.57 million foreign workers as of October 2025, up 11.7% and a record for the 13th consecutive year. Manufacturing employs the largest share. At the same time, the government has tightened residence management, so this is not a lever companies can rely on indefinitely.

Reaching people who would not otherwise apply

Most of the measures above compete for the same pool of people, or keep existing staff a little longer. A smaller number of companies are widening the pool itself.

Visionary, a Nagoya-based care provider, runs group homes, day services and visiting care for people with disabilities, and is moving into senior care. Care has one of the most severe staff shortages in Japan, and the usual fixes are well known: higher wages and foreign workers.

Visionary took a different route. It set out to attract younger, fitness-focused people - a group well suited to physically demanding work, and one that rarely considers care as a career. It calls itself the care company with the most muscular staff in Japan. Every employee gets free access to Fit Easy gyms nationwide and free on-site massages. Members of its corporate fitness team, 7SeaS, train for two hours a day on work time and receive a ¥20,000 monthly allowance for protein and supplements. The team competes and runs its own events, and has drawn media coverage in France and Germany.

It works for both sides. Visionary gets staff who can handle the physical demands of the job and are less likely to be injured or burn out. Staff get a workplace that makes room for time in the gym.

Blue-collar work is being repriced

The sharpest change is in skilled manual work - the jobs AI and robotics are least able to replace. A two-part Nikkei Business documentary on what it calls Japan’s “neo blue collar” shows how far companies are now going to find and keep these people.

Pay has moved first. Kandenko, the electrical contractor, has raised starting pay for high school graduates in skilled roles to ¥260,000 a month, and some mid-career technicians earn around ¥10 million a year. In Kumamoto, where TSMC’s arrival has driven a surge in construction, a local builder hired a woman in her fifties with no industry experience, previously working part-time at a convenience store, as a site supervisor.

Larger companies are changing how the work itself is organised:

  • Sekisui House Construction has hired craftspeople directly as permanent employees since 2024, mostly high school graduates, rather than relying on subcontractors. 134 joined in 2025, and the target is around 1,000 by 2033. Starting pay rose by up to 11%, the number of trainers doubled, and a tiered career path replaces learning by watching. One chief craftsperson in his thirties earns close to ¥8 million, against an average of about ¥4.4 million for infrastructure-related roles.
  • Nihon Kotsu, a Tokyo taxi operator, opened an office staffed only by new graduates in 2020, with a café run by the drivers themselves. The average age there is 24.6, and some drivers in their twenties earn ¥8 million on commission. Of 47 graduates who joined in 2025, one has left.
  • Obayashi trains workers in VR, compressing a week of on-site work into an hour so each person can learn several trades. Shimizu has handed spraying work to robots, operated by trained craftspeople.
  • Don Quijote gives part-time staff authority over store layout, purchasing and hiring. Applications are up between 1.3 and 4 times on the previous year.
  • Pal Group, owner of 3COINS, rewards more than 1,500 store staff for their social media following and for online sales they drive, with bonuses of up to ¥10 million a half-year for top performers.

The common thread is the same as at Visionary. These companies are not only paying more. They are changing the job - its security, training, autonomy and image - so that people who would never have considered it now do.

What this means for hiring in Japan

In a market where the talent pool keeps shrinking, reaching new people counts for more than outbidding competitors for the same ones.

Enterprise technology hiring works differently in one respect: candidates are drawn first by the product - how distinctive it is, and how much room it has to grow. The pressure, though, is familiar. Japan’s technology market is crowded, with more foreign vendors entering each year, often selling competing products into the same accounts and competing for the same limited pool of experienced people. Pay and benefits matter, and so does the hiring process itself. When good candidates have options, a slow or disjointed interview process is often what loses them.

Necessity is the mother of invention.

Sources