This is the final installment in the series, and it lands at a pivotal moment.

Japan’s labor market is undergoing a quiet but significant transformation. In a recent Nikkei/Japan Center for Economic Research survey, 47 economists were asked whether the growing number of foreign residents would improve living standards for average Japanese citizens. The response was clear: an overwhelming majority, 76%, said yes. This signals not just economic optimism, but a broader shift in how Japan views the role of foreign workers in its future.

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Japan’s labor market is undergoing a quiet but powerful transformation. As the country grapples with a persistent labor shortage, companies are being forced to rethink how they attract and retain talent. One of the most visible outcomes? Wage hikes. According to a survey by Teikoku Databank covering approximately 10,000 companies, the percentage of firms planning to “improve wages” has steadily increased over the past decade. The graph shows a clear upward trend from FY2013 onward, peaking around FY2019, dipping slightly during the pandemic years, and rising again toward FY2024.

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For decades, Japan’s labor market was defined by stability. Workers joined companies straight out of school and often stayed until retirement. But as the accompanying graph shows, that era is fading, and fast. From 2013 to 2019, the number of workers changing employers each year steadily increased, peaking at around 3.5 million. Although the pandemic years saw a temporary dip, the trend has resumed, with job-hopping numbers climbing again in 2022 and 2023.

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With Obon approaching, it feels like the perfect moment to reflect on how Japanese workers are using their paid time off. According to the Expedia Vacation Deprivation Report, Japanese employees took an average of 22 regular vacation days and 4 additional days in 2022, placing them among the highest globally in terms of days taken, at least according to the accompanying graph. On the surface, this might suggest a healthy work-life balance. But the reality is more nuanced.

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A recent survey by Mynavi of 1,200 university students entering the workforce in April 2025 reveals a clear generational shift in workplace expectations. The top priority for these young job seekers is compensation, including salary and paid leave, cited by 22% of respondents. Close behind are company culture and atmosphere (20%) and job stability (15%).

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Japan’s labor shortage isn’t just a long-term concern—it’s already having a serious impact. The Asahi Shimbun reported that in the first half of 2025, 172 companies went bankrupt specifically because they couldn’t find enough workers. That’s a 17.8% increase from last year and the highest number since records began in 2013. This means that the 2023 record will be broken again this year.

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