207th Business Conditions Survey: Special Survey on 'Current State of Price Pass-Through' and the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises'
According to the 207th Business Conditions Survey by Osaka Shinkin Bank, Japanese small and medium-sized enterprises (SMEs) are facing rising procurement and labor costs but are largely unable to pass these on to sales prices. The manufacturing sector, in particular, finds price pass-through difficult, and while awareness of the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises' is high, expectations for its effectiveness are low.
📋 Article Processing Timeline
- 📰 Published: April 30, 2026 at 22:30
- 🔍 Collected: April 30, 2026 at 14:01
- 🤖 AI Analyzed: April 30, 2026 at 23:49 (9h 47m after Collected)
Difficult Price Pass-Through: 'Less than 10-30%' increase in procurement costs (58.6%) > 'Less than 10-30%' increase in sales prices (31.7%)
Compared to one year ago, the increase in procurement prices was 'less than 10-30%' for 58.6% of companies and 'less than 10%' for 25.2%. In contrast, the increase in sales prices was 'less than 10-30%' for 31.7% and 'less than 10%' for 64.4%. This indicates that sufficient price pass-through has not been achieved compared to a year ago.
In the manufacturing industry, while procurement prices increased by 'less than 10-30%' for 57.3% of companies, sales prices increased by 'less than 10%' for 64.4%, indicating that price pass-through remains difficult.
Rising Labor Costs, Flat Overtime: Labor costs increased by 'less than 10%' for 80% of companies, overtime 'flat' for 40%
Compared to one year ago, the increase in labor costs was 'less than 5%' for 41.5% of companies and 'less than 5-10%' for 41.1%, with over 80% experiencing an increase of less than 10%. Against the backdrop of rising wage increase momentum among large corporations, companies struggled to raise labor costs.
On the other hand, compared to one year ago, overtime hours were 'flat' for 46.4% of companies and 'decreased' for 20.6%. Despite chronic labor shortages, there has not been a significant increase in overtime hours.
Although labor costs are increasing, working hours remain unchanged, intensifying the burden of fixed costs.
High Awareness, Half Negotiate: 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises' awareness 75.1%, 'price negotiations conducted' 24.3%
Awareness of the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises' was 'somewhat aware' for 37.3% of companies, 'roughly aware' for 34.3%, and 'well aware' for 3.5%, meaning over 70% of companies have some form of awareness.
Among companies aware of the Act, 24.3% responded that they 'have already conducted negotiations.'
In particular, manufacturing and wholesale industries actively engage in negotiations compared to other industries, while construction and retail industries find it difficult to initiate negotiations.
Low Expectations for the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises', Slight Profit Increase: 'Expectations' 29.3%, Profit 'less than 10% increase' 86.2%
Expectations for the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises' were 'expect significant effects' for 3.1% and 'expect some effects' for 26.2%, with total expectations stopping at 30%. Meanwhile, 'hardly expect any effects' was 33.9%, suggesting low expectations at present. Furthermore, 80% of companies that do have expectations responded that profit increases would be less than 10%, indicating that it is unlikely to lead to significant profit growth.
For more details, please see here:
https://www.osaka-shinkin.co.jp/pdf/report/202603_tokubetsu.pdf
Survey period: Mid to late March 2026
Responding companies: 576 companies (response rate 40.1%)
Survey method: Mail survey, web response survey
Compared to one year ago, the increase in procurement prices was 'less than 10-30%' for 58.6% of companies and 'less than 10%' for 25.2%. In contrast, the increase in sales prices was 'less than 10-30%' for 31.7% and 'less than 10%' for 64.4%. This indicates that sufficient price pass-through has not been achieved compared to a year ago.
In the manufacturing industry, while procurement prices increased by 'less than 10-30%' for 57.3% of companies, sales prices increased by 'less than 10%' for 64.4%, indicating that price pass-through remains difficult.
Rising Labor Costs, Flat Overtime: Labor costs increased by 'less than 10%' for 80% of companies, overtime 'flat' for 40%
Compared to one year ago, the increase in labor costs was 'less than 5%' for 41.5% of companies and 'less than 5-10%' for 41.1%, with over 80% experiencing an increase of less than 10%. Against the backdrop of rising wage increase momentum among large corporations, companies struggled to raise labor costs.
On the other hand, compared to one year ago, overtime hours were 'flat' for 46.4% of companies and 'decreased' for 20.6%. Despite chronic labor shortages, there has not been a significant increase in overtime hours.
Although labor costs are increasing, working hours remain unchanged, intensifying the burden of fixed costs.
High Awareness, Half Negotiate: 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises' awareness 75.1%, 'price negotiations conducted' 24.3%
Awareness of the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises' was 'somewhat aware' for 37.3% of companies, 'roughly aware' for 34.3%, and 'well aware' for 3.5%, meaning over 70% of companies have some form of awareness.
Among companies aware of the Act, 24.3% responded that they 'have already conducted negotiations.'
In particular, manufacturing and wholesale industries actively engage in negotiations compared to other industries, while construction and retail industries find it difficult to initiate negotiations.
Low Expectations for the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises', Slight Profit Increase: 'Expectations' 29.3%, Profit 'less than 10% increase' 86.2%
Expectations for the 'Act on the Promotion of Fair Subcontracting Transactions for Small and Medium-sized Enterprises' were 'expect significant effects' for 3.1% and 'expect some effects' for 26.2%, with total expectations stopping at 30%. Meanwhile, 'hardly expect any effects' was 33.9%, suggesting low expectations at present. Furthermore, 80% of companies that do have expectations responded that profit increases would be less than 10%, indicating that it is unlikely to lead to significant profit growth.
For more details, please see here:
https://www.osaka-shinkin.co.jp/pdf/report/202603_tokubetsu.pdf
Survey period: Mid to late March 2026
Responding companies: 576 companies (response rate 40.1%)
Survey method: Mail survey, web response survey