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The Impact of Pay Increases on Nurses' Labour Market: A Review of Evidence from Four OECD Countries

Author

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  • James Buchan

    (Queen Margaret University)

  • Steven Black

Abstract

Nurses are usually the most numerous professionals in the healthcare workforce, and their contribution is a core component in attaining the policy objectives of improved productivity, quality of care and effectiveness in the health sector. The recent global economic crisis, and its related impacts on health sector funding and health labour market dynamics, has reinforced these policy priorities. This report reviews the impact of pay increases on nurses’ labour market indicators. It presents background data on trends in the numbers of nurses and the remuneration of nurses in OECD countries; summarises the limited evidence base on pay and labour market behaviour; reports on four case study countries where a significant pay raise was awarded to at least some categories of nurses in recent years in response to perceived labour market challenges – the United Kingdom (UK), New Zealand, Finland and the Czech Republic – using a variety of indicators to illustrate impact; and concludes with key points for policy makers. There has been variable growth in nurses’ employment levels in OECD countries in recent years, and nurses’ pay rates, in comparison to other earnings in national economies, vary markedly across OECD countries. The country case studies in this report highlight that there were several main drivers for the implementation of a pay rise for nurses, and also identified a range of possible indicators that can be used to assess the impact of changes to nurses’ pay. The main impetus for a pay increase came from: labour market concerns (geographic or specialty shortages), which were reported in all four countries; pay equity issues (New Zealand and the UK); structural changes in the pay systems (e.g., increased flexibility) (Finland, New Zealand and the UK); attempts to improve organizational productivity and the quality of care (UK); and improving international pay competitiveness (Czech Republic after EU accession). The review concludes by arguing that how nurses are paid - as well as how much they are paid – is an issue worthy of more detailed examination. While the same policy drivers exist in most OECD countries, nurses’ pay systems are very different. The findings suggest that, in the short term at least, the pay increases in the four countries contributed to an increase in the potential “new” supply of entrants to nurse education; the effect on those already in work is more difficult to assess, as their behaviour is also impacted by the complex interaction of other aspects, such as working environment and working conditions, career possibilities, and individuals' priorities. Le personnel infirmier est habituellement la catégorie la plus nombreuse des professionnels de santé, et leur contribution joue un rôle essentiel dans l’atteinte des objectifs d’amélioration de la productivité, de la qualité des soins et de l’efficacité dans le secteur de la santé. La crise économique mondiale récente, et ses impacts sur le financement des dépenses de santé et sur la dynamique du marché du travail dans ce secteur, est venue renforcer ces objectifs. Ce rapport examine l’impact des augmentations de salaire sur les indicateurs du marché du travail du personnel infirmier. Il présente des données de base sur les tendances concernant le nombre d’infirmières et leur rémunération dans les pays de l’OCDE ; résume les résultats des travaux de recherche disponibles sur les liens entre la rémunération des infirmières et les comportements sur le marché du travail ; présente de façon plus détaillée quatre études de cas de pays (Royaume-Uni, Nouvelle-Zélande, Finlande et République tchèque) où des augmentations significatives de salaire ont été octroyées à au moins certaines catégories d’infirmières et analyse l’impact de ces augmentations en utilisant différents indicateurs ; et conclut par quelques points clés à l’attention des décideurs politiques. La croissance de l’emploi du personnel infirmier a été variable au cours des dernières années dans les pays de l’OCDE, et les salaires des infirmières, en comparaison avec le salaire moyen dans chacun des pays, varient fortement d’un pays à l’autre, Les études de cas présentées dans ce rapport mettent en évidence plusieurs facteurs ayant entraîné une augmentation significative des salaires des infirmières dans les quatre pays en question, et identifient une série d’indicateurs susceptibles d’être utilisés pour mesurer l’impact de ces augmentations. Les principaux moteurs de ces augmentations de salaire sont venus : d’inquiétudes concernant le marché du travail dans les quatre pays (des pénuries sur le plan géographique ou au niveau de certaines spécialités) ; de questions entourant l’équité salariale (Nouvelle-Zélande et Royaume-Uni) ; des changements structurels dans les systèmes de paiements, notamment la mise en place d’une plus grande flexibilité (Finlande, Nouvelle- Zélande et Royaume-Uni) ; de tentatives d’amélioration de la productivité et de la qualité des soins (Royaume-Uni) ; et de l’amélioration de la compétitivité internationale des salaires (République tchèque après son entrée dans l’UE). Une des conclusions de ce rapport est que non seulement le niveau moyen de rémunération des infirmières mais aussi les méthodes de paiement mériteraient des études plus approfondies. Ces méthodes de paiement varient fortement d’un pays à l’autre alors que les mêmes défis se posent dans la plupart des pays. Les résultats des études de cas suggèrent qu’au moins à court terme, les augmentations de salaire des infirmières dans les quatre pays ont contribué à accroitre le nombre de personnes intéressées à étudier et travailler dans ce domaine. Il est toutefois difficile d’évaluer l’impact que ces augmentations ont eu sur les infirmières déjà sur le marché du travail, étant donné que leur comportement est aussi affecté par de nombreux facteurs tel que l’environnement et les conditions de travail ainsi que les priorités individuelles.

Suggested Citation

  • James Buchan & Steven Black, 2011. "The Impact of Pay Increases on Nurses' Labour Market: A Review of Evidence from Four OECD Countries," OECD Health Working Papers 57, OECD Publishing.
  • Handle: RePEc:oec:elsaad:57-en
    DOI: 10.1787/5kg6jwn16tjd-en
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    Cited by:

    1. Alessandro Fedele, 2018. "Well‐paid nurses are good nurses," Health Economics, John Wiley & Sons, Ltd., vol. 27(4), pages 663-674, April.
    2. Hofmarcher, Maria M. & Festl, Eva & Bishop-Tarver, Leslie, 2016. "Health sector employment growth calls for improvements in labor productivity," Health Policy, Elsevier, vol. 120(8), pages 894-902.
    3. Decramer, Adelien & Audenaert, Mieke & Van Waeyenberg, Thomas & Claeys, Tine & Claes, Claudia & Vandevelde, Stijn & van Loon, Jos & Crucke, Saskia, 2015. "Does performance management affect nurses’ well-being?," Evaluation and Program Planning, Elsevier, vol. 49(C), pages 98-105.
    4. Burgess, Simon & Greaves, Ellen & Murphy, Richard, 2022. "Deregulating Teacher Labor Markets," Economics of Education Review, Elsevier, vol. 88(C).
    5. Kroezen, Marieke & Dussault, Gilles & Craveiro, Isabel & Dieleman, Marjolein & Jansen, Christel & Buchan, James & Barriball, Louise & Rafferty, Anne Marie & Bremner, Jeni & Sermeus, Walter, 2015. "Recruitment and retention of health professionals across Europe: A literature review and multiple case study research," Health Policy, Elsevier, vol. 119(12), pages 1517-1528.
    6. Yunmi Kim & Hyun-Young Kim, 2021. "Retention Rates and the Associated Risk Factors of Turnover among Newly Hired Nurses at South Korean Hospitals: A Retrospective Cohort Study," IJERPH, MDPI, vol. 18(19), pages 1-14, September.

    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor

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