TDB
Staffing companies are also “short-staffed,” with the number of bankruptcies reaching the highest level since 2015. Rising labor costs are weighing on business, and there is a possibility of more bankruptcies among companies that cannot pass this on to staffing fees.
Bankruptcy trends in the “staffing industry”: Nationwide corporate bankruptcies compiled November 2023 report
……
Teikoku Databank conducted a survey and analysis on the occurrence of bankruptcies in the “staffing industry”.
-Survey results (summary)-
Staffing companies are also “short-staffed” with the highest number of bankruptcies since 2015
Aggregation period: Until November 30, 2023 Aggregation target: Bankruptcy investigations through legal liquidation with debts of 10 million yen or more: Teikoku Databank Co., Ltd.
[Image 1
The temporary staffing industry is booming in response to the recent rise in demand for human resources, serving as a bridge between companies and workers that are short of workers, but bankruptcies are also on the rise. From January to November 2023, there were 72 bankruptcies of “temporary staffing” businesses that generate revenue by dispatching staff to companies, the highest number since 2015. The annual number of cases is expected to reach the
pre-coronavirus level of just under 80 cases.
The temporary staffing industry has expanded its market even during the coronavirus pandemic by capturing the demand for human resources that arises regardless of industry. At the same time, however, “soaring labor costs” due to a shortage of temporary staff are weighing on temporary staffing companies. Despite having “increased revenue” in FY2011, 38.7% of temporary staffing agencies experienced a “deterioration” in profits. Max Alpha (Tokyo), a logistics-related temporary staffing company whose business had been improving due to demand from people staying at home during the coronavirus pandemic, also went bankrupt due to rising “personnel costs” for temporary workers.
[Image 2
Difficulty in passing on price increases due to soaring labor costs is also a serious issue. A survey by Teikoku Databank found that for every 100 yen of cost increase, temporary staffing agencies were able to pass on only about 33 yen to the cost. Coupled with the management circumstances of the client company, which is reluctant to pass on the cost, saying, “We can’t raise the temporary staffing fee even though we are unable to satisfy the wage increases for our full-time employees,” we are unable to fully pass on the cost to the temporary staffing fee, so we have no choice but to bear the cost ourselves. This situation is making it increasingly difficult for temporary staffing companies to manage their businesses.
The industry as a whole appears to be polarized between those who can cope with labor shortages and increased costs and those who cannot. There is a possibility that the number of bankruptcies of temporary staffing companies will continue to increase, as small and
medium-sized companies, which are unable to secure temporary staff and cannot pass on the soaring costs, will be weeded out.