SME Labor Shortage Becomes Structural Crisis Beyond Simple Lack... Intensifies in Production Sites

The labor shortage faced by small and medium-sized enterprises (SMEs) is becoming more severe as it evolves from a simple lack of manpower into a structural problem resulting from a combination of labor force imbalances and changes in the labor market.

On April 20, the Main-Biz Association released the results of a survey titled "Current Status of SME Workforce Structure Restructuring and Extension of Retirement Age." The survey was conducted from March 5 to March 11, targeting 360 Main-Biz companies.

The average score for the smoothness of workforce supply and demand among Main-Biz companies was 53.1 out of 100, indicating that overall workforce supply and demand conditions are far from smooth. In particular, the shortage is most acute in technical and field positions, and small companies with nine or fewer employees are experiencing prolonged workforce vacancies. The causes of the labor shortage were found to be a combination of external factors-such as a decrease in the youth population (39.2%)-and internal factors, including low wages and insufficient welfare benefits (38.4%) as well as the burden of labor costs (34.3%).

Current Staffing Gaps by Job Category

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In response to the labor shortage, SMEs are making efforts such as expanding new hiring (49.7%) and increasing wages and performance-based bonuses (35.0%). However, these responses remain limited to certain departments (32.4%) or are only short-term measures (31.4%), failing to address the structural problems. The actual effectiveness of these responses was also found to be limited, with "some effect" (47.2%) and "short-term help" (28.0%) being the predominant results.

Regarding the extension of the retirement age, 88.6% of responding companies expressed support, demonstrating a high level of acceptance. The main reason for this support was to retain the skills and know-how of experienced employees (78.7%). When direct government support was assumed, the intention to implement retirement age extension among companies increased further. However, the need to overhaul the wage system (70.0%) was cited as a key precondition, suggesting that extending the retirement age should be accompanied by a restructuring of the wage and productivity structure, rather than simply increasing the age limit.

From a policy perspective, positive evaluations (45.6%) of government measures to address the labor shortage among SMEs exceeded negative evaluations (14.2%). However, relatively lower ratings were observed in certain sectors such as information and communications and professional services within the non-manufacturing industry, as well as among companies with 50 to 59 employees, indicating differences depending on industry and company size.

Accordingly, the association stated that SME workforce policies need to shift focus from simply increasing labor supply to improving workforce structures. In the short term, it is necessary to ease the burden on companies by supporting employment retention costs, offering tax incentives, and streamlining administrative procedures, while establishing a response system centered on retaining skilled employees. In the mid to long term, the association stressed the need to build a sustainable workforce ecosystem by narrowing the welfare gap between large and small companies, promoting digital transformation (DX), and utilizing skilled foreign workers.

A representative from the Main-Biz Association stated, "The labor shortage in SMEs is transforming into a structural and complex issue due to changes in population structure, dual labor market structure, and competitiveness gaps between companies," adding, "Future policies need to be designed to focus on building a workforce ecosystem, requiring a shift in the way support methods are conceived."

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