Photo/Illutration An international caregiver offers assistance at a nursing home in Saitama Prefecture. Despite more care providers going out of business, demand for their services continues to rise. (Asahi Shimbun file photo)

Amid a growing labor shortage and rising living costs, a record number of nursing care providers have gone out of business in the first half of this year.

According to a survey by Tokyo Shoko Research Ltd., the number of care provider bankruptcies between January and June reached 81, a significant 50 percent increase compared to the same period last year.

This is the largest figure since the 2000 introduction of the state nursing care insurance system, exceeding the previous record of 58 in 2020, when the industry was severely impacted by the COVID-19 pandemic.

Home-visit care services accounted for the largest share with 40 bankruptcies, followed by day care and short-stay care providers at 25. Privately run nursing homes accounted for nine closures.

All categories saw an increase compared to the previous year.

The smallest providers were hit hardest, with more than 90 percent of the bankrupt businesses having fewer than 20 employees.

This was all despite increased funding for the industry. In fact, the government raised overall official fees for nursing care services by 1.59 percent in the fiscal year starting in April.

However, the pay increase was smaller than anticipated, failing to keep pace with rising costs and proving insufficient to attract desperately needed applicants, according to Tokyo Shoko Research.

Furthermore, home care providers actually saw a reduction in the basic component of official service fees.

Despite the health ministry's claim that this decrease would be more than offset by increases in other parts of the complex fee system, home care workers criticize the move. They argue it is not benefiting businesses, particularly smaller ones.

Tokyo Shoko Research suggested that home-visit care services that experienced negative fee revisions may have contributed to the record number of bankruptcies.

The research firm predicted this trend will continue for some time.

The latest statistics cast a shadow over the nation's future as demand for care services continues to grow and securing a sufficient workforce becomes increasingly urgent.

According to health ministry estimates, 2.4 million care workers will be needed in fiscal 2026, representing a shortfall of 250,000 compared to the 2.15 million workers in fiscal 2022.

By fiscal 2040, when the 65-and-over population is expected to peak, the demand for care workers will reach 2.72 million, leaving a shortfall of 570,000.

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