The worker shortage in Japan has grown into a serious economic challenge for the country, Azernews reports.

According to the Organization for Economic Cooperation and Development (OECD), Japan's working-age population has declined by 16% compared to its peak in 1995. This demographic contraction has triggered fierce competition for employees. Two-thirds of Japanese companies report that labor shortages are having a significant negative impact on their business. Surveys show that the lack of staff has become the leading cause of corporate bankruptcies between April and September. Tokyo Shoko Research notes that the number of bankruptcies in the first half of the year reached its highest level in 12 years.

One visible consequence of the labor shortage is the relaxation of strict appearance standards traditionally imposed by Japanese employers. Some companies are reconsidering rules regarding brightly colored hair and nail polish, while others have lifted bans on piercings. Many department stores no longer require employees to wear uniforms, and even the iconic white gloves long associated with Japanese taxi drivers are gradually disappearing.

Students are also reshaping employer expectations. Two-thirds of surveyed students said they want the freedom to choose their appearance when taking part-time jobs. A third admitted to withdrawing job applications due to strict dress codes imposed by potential employers.

Japan's economic difficulties were further exacerbated in the third quarter of 2025, when the country's economy contracted by nearly 2%. Analysts attribute much of this decline to U.S. tariffs on Japanese exports imposed by President Donald Trump, which hit manufacturing and automotive sectors particularly hard.

Interestingly, some economists believe that Japan's current labor crisis may accelerate long-discussed reforms - from broader automation and robotics adoption to new immigration policies. As one analyst noted,“Japan is entering a stage where social norms change just as fast as economic indicators.”

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