Cabinet Decision on the 2026 White Papers on Small and Medium Enterprises and Small Enterprises

1. Message of the 2026 White Papers on Small and Medium Enterprises and Small Enterprises

• SMEs continue to see wage increases at the highest level in nearly 30 years during spring labor-management negotiations, and minimum wage increases are also progressing. For the growth of the Japanese economy, achieving sustainable wage increases for SMEs is extremely important. However, compared with large corporations, SMEs have limited capacity to raise wages, making it a challenge to continuously secure further funds for wage increases.
• In addition, firms’ perceived labor shortages have intensified in many industries since the 2010s. Based on certain estimates, the number of employees in small and medium-sized enterprises is expected to decrease with the advent of a labor supply-constrained society, which could exacerbate labor shortages.
• In this time of significant change in the business environment, maintaining the status quo would be the greatest risk. It is important for SMEs to shift to a management approach with strategies to rebuild businesses and organizational structures from a long-term perspective, rather than focusing on short-term profits and losses, in order to enhance earning power and grow into stronger SMEs.

2. Key points of analysis in the 2026 White Papers on Small and Medium Enterprises and Small Enterprises

(1) Enhancing earning power to grow into stronger SMEs

• Earning power is essentially the power to create value-added. In Japan, a labor supply-constrained society in which decreased labor input is expected, improving labor productivity, which indicates performance per unit of labor input, is essential in order to maintain or increase added value. An examination of the labor productivity situation in SMEs reveals that while the average working hours per person are decreasing, added value is increasing, resulting in an upward trend in labor productivity per hour. Furthermore, there are some SMEs whose labor productivity is comparable to that of large corporations.
• To further improve labor productivity, it is important to work on increasing added value through measures such as promoting price pass-through, increasing the added value of products, goods, and services through growth investments, and business restructuring through business succession and M&As, as well as optimizing labor input by promoting the use of AI and digitalization. Companies that actually implement these measures have been found to achieve increases in added value and optimized labor input compared with companies that do not.

(2) Improving the management literacy of small enterprises and maintaining and expanding their businesses through cooperation between businesses

• The White Papers analyzed management literacy by dividing it into four categories: finance and accounting; organization and human resources; operational management; and business strategy. The White Papers showed that while there is room for improvement in the current state of management literacy among small enterprises, companies with management literacy achieve a clear difference in performance and human resources acquisition. For example, companies that implement detailed cost management tend to have higher price pass-through rates, and companies that are working to revitalize their organization tend to be more successful in recruitment.
• Furthermore, given that small enterprises have limited management resources, cooperating with other companies to complement their management power is considered one effective strategy. These White Papers showed that for small enterprises seeking to maintain or expand their business, mutual complementarity through cooperation between businesses is an effective approach.

Related Material (in Japanese)

• Overview of the 2026 White Papers on Small and Medium Enterprises and Small Enterprises(PDF:3,235KB)

Related Links (in Japanese)

• The 2026 White Paper on Small and Medium Enterprises in Japan (in Japanese)
• The 2026 White Paper on Small Enterprises in Japan (in Japanese)
• White papers and statistics (in Japanese)

Division in Charge

Research Office, Business Environment Department, Small and Medium Enterprise Agency