While Large Japanese Firms Like Uniqlo Raise Starting Salaries by 10%, SMEs Face Labor Shortages

Share of Employment at Large Corporations Rises to 24%
SMEs Face Hiring Difficulties During the Same Period
Wage and Work Environment Gaps Widen Polarization

Uniqlo store in Tokyo, Japan. Photo by AFP News Agency

Fast Retailing, the operator of Uniqlo, raised the starting salary for new university graduates by 10% compared to the previous year, setting it at 330,000 yen (approximately 3.15 million KRW) as of March. Similarly, Zensho Holdings, which operates Sukiya, decided to apply a starting salary of 310,000 yen (about 2.96 million KRW) for new hires beginning in April.

As large corporations in Japan are implementing aggressive wage increase policies to attract young talent, small and medium-sized enterprises (SMEs) are reportedly facing labor shortages. Among SMEs that are unable to find appropriately aged workers, there is a noticeable increase in dependence on elderly workers.

On May 26, Nihon Keizai Shimbun (Nikkei), citing the results of a labor force survey by the Ministry of Internal Affairs and Communications, reported that the number of employees at large companies with more than 1,000 workers reached 14.89 million last year, marking a 26% increase over the past decade. During the same period, the proportion of employees at large companies rose from 21% in 2014 to 24% last year.

By industry, the increase in employment numbers was 650,000 in wholesale and retail, 540,000 in manufacturing, 360,000 in medical and welfare, and 350,000 each in information and communications, and services. By age group, the number of employees aged 15 to 64 increased by 2.55 million, while those aged 65 and older grew by 500,000.

For medium-sized companies with 100 to 999 employees, the number of employees last year was 16.02 million, a 14% increase compared to 2014.

In contrast, the number of employees at SMEs with fewer than 99 workers was 24.35 million last year, representing a 0.2% decrease from 2014. The number of employees aged 15 to 64 decreased by 1.25 million, while those aged 65 and older increased by 1.12 million. It is analyzed that SMEs have increased employment of older workers due to difficulties in hiring younger staff.

Nikkei pointed out that large corporations, which have generated significant profits, have implemented much larger wage increases than SMEs and have created relatively flexible work environments through measures such as remote work, thereby attracting more job seekers. Saito Taro, a researcher at Nikko Research Institute, noted, "Large corporations are able to expand hiring due to improved business performance."

He further added that, given the expected decline in the labor force due to population decrease, SMEs will not be able to resolve labor shortages unless they quickly implement wage increases and adopt flexible work systems. According to Teikoku Databank, a private credit research firm, the number of bankruptcies in Japan due to labor shortages reached 350 cases in the 2024 fiscal year (April 2024 to March 2025), marking an all-time high.

According to estimates from labor policy research and related organizations, the labor force is expected to decrease by 1.5 million between 2025 and 2035. Nikkei emphasized that, as a result, SMEs need to focus not only on securing talent but also on retaining employees and improving profitability.

This content was produced with the assistance of AI translation services.