TOKYO, Jan. 21 (Xinhua) -- Japan's elderly care sector is facing mounting challenges, with record number of business closures reported in 2023, a research report has shown.
There were 510 closures, suspensions, or dissolutions, in the elderly welfare and care sector in 2023, marking the highest number since the start of the survey in 2010.
In addition, 122 bankruptcies were witnessed in the elderly welfare and care sector last year, the second-highest level despite a 14.6-percent decrease from the previous year's figure, according to the survey conducted by Tokyo Shoko Research Ltd., a local credit research company.
Among these, bankruptcies in the sub-sector of home care service reached a staggering 67, surpassing the previous record.
The leading cause of bankruptcies was sales slump, which was often attributed to competition with major players and labor shortages, resulting in a decline in users, according to the survey.
In terms of employee numbers, over 80 percent of businesses had less than 10 employees, with the highest number of bankruptcies, or 75, occurring among businesses with fewer than five employees.
Japanese caregiving industry is experiencing an early onset of tough times as the country braces for the full impact of an aging society, the report said, adding that issues such as labor shortages and intense competition are posing significant hurdles to business stability despite a 1.59-percent upward revision in caregiving reimbursements for the fiscal year 2024.
According to the survey, approximately 600 caregiving businesses, mainly small-scale operators facing uncertain prospects and financial struggles, exit the market annually.
The report noted that as the elderly care industry grapples with a severe shortage of caregivers and the challenges of an aging population, competition for talent from other industries, particularly the catering business, remains fierce.
With major insurance companies and funds entering the caregiving sector, 2024 is anticipated to witness a further surge in bankruptcies and shutdowns for small and medium-sized businesses, it added. ■