Can wage changes solve the labour crisis in the National Health Service?

Area of Science:

• Health Economics
• Labor Economics
• Healthcare Management

Background:

• The National Health Service (NHS) in England faces a significant labor crisis.
• Understanding the responsiveness of healthcare labor supply and demand to wage changes is crucial for addressing staffing shortages.

Purpose of the Study:

• To analyze the wage elasticity of labor demand and supply for healthcare professionals in the NHS.
• To assess the impact of wage changes on hiring and willingness to work within the NHS.

Main Methods:

• Utilized simultaneous error-correction regression analysis.
• Employed secondary data from the NHS and Office for National Statistics spanning from 2009 Q3 to 2022 Q1.

Main Results:

• Healthcare labor demand and supply for Hospital, Community, and Health Services (HCHS) doctors in the NHS exhibit high inelasticity concerning real wages.
• A 10% increase in real wages results in only a 0.1% decrease in hiring and a 0.8% increase in full-time equivalent work willingness.
• Quarterly wage disequilibrium adjustment is approximately 22%, indicating a moderate adjustment speed.

Conclusions:

• Wage setting alone is insufficient to resolve the ongoing NHS labor crisis.
• Innovative and sustainable strategies are required to mitigate the demand for skilled health labor and enhance its supply.