Commentary 23/11/10 Why are nurses underpaid in Japan?

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Why are nurses underpaid in Japan?

The Japanese healthcare sector requires serious reforms, including better wages and funding mechanisms

A Japanese nurse inspects a syringe after it is filled by a medical worker with a dose of Covid-19 vaccine as Japan launched its inoculation campaign in Tokyo prefecture in February 2021. (Photo: AFP)

By Cristian Martini Grimaldi

Published: November 10, 2023 04:11 AM GMT

Japan's healthcare system has earned international praise for its advanced medical technology and remarkable life expectancy. It's a source of national pride. But, behind the scenes, there's a growing and troubling issue: a shortage of healthcare workers, particularly nurses.

The main culprit? Insufficient compensation in the healthcare sector is making it a tough sell for skilled professionals. So, what's the story behind this complex problem?

The country experienced a drawn-out economic slump, often called the "Lost Decades," which started in the early 1990s and dragged on for over twenty years. During this time, Japan struggled with weak economic growth, low GDP rates, and stagnant business expansion.

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A significant feature of this slump was persistent deflation, where prices continually dropped, making wage growth particularly problematic. Low labor productivity across sectors intensified the problem, meaning that the same effort resulted in reduced output.

Japan's aging population only adds to the complexity.  An older workforce typically means lower productivity compared to younger, more agile workers.

The growing elderly population also diverts resources from more productive sectors into healthcare and welfare. Japan's traditional corporate culture, which values seniority and job stability, also further hinders productivity.

"Aspiring nurses must navigate a lengthy and arduous certification and licensing process, creating a barrier to entry"

In fact, in such an environment, employees are less inclined to take risks or innovate, and as a result, overall growth is hampered.

Curiously, in a free market, a shortage of highly sought-after workers like nurses should drive wages up due to increased demand. However, various economic and structural factors in Japan's healthcare sector prevent this from happening.

Heavy regulation governs the healthcare industry in Japan, particularly nursing. Aspiring nurses must navigate a lengthy and arduous certification and licensing process, creating a barrier to entry that restricts the supply of qualified professionals.

This is evident in the high demand for foreign nurses, especially from the Philippines, who grapple with the rigorous language tests required for the job.

Despite the nurse shortage, working conditions in the healthcare sector are extremely stressful. Nurses often endure extended hours, overtime, and substantial pressure due to patient care demands. This, coupled with relatively low wages, dissuades potential healthcare workers from pursuing nursing careers.

However, in a normal labor market, the bargaining power of workers should significantly influence wage levels. Instead, in Japan, nurses have limited bargaining power not only owing to regulatory frameworks but also due to a cultural emphasis on conformity and hierarchy, which hinders their ability to negotiate higher wages.

Furthermore, the Japanese government, traditionally cautious about increasing healthcare spending to control national healthcare expenses, plays a significant role in setting healthcare policies and regulations.

"The shortage of nurses results also in longer waiting periods for patients seeking medical attention"

Probably the main reason why nurses’ wages are so low is the healthcare financing and reimbursement structure in the country. The government heavily subsidizes healthcare costs, especially for the elderly, covering around 90 percent of their expenses through public insurance. This setup shifts the burden of nurse salaries to the government and, consequently, constrains the hospitals' financial budget.

In this scenario, hospitals face pressure to maintain sustainability within the confines of government reimbursement rates, limiting investments in nurse salaries or additional staff, despite the labor shortage.

This, in turn, leads to inefficiencies in the healthcare system, impacting nurse job satisfaction and motivation. And the shortage of nurses results also in longer waiting periods for patients seeking medical attention, and can have detrimental effects on patient outcomes, particularly in cases of acute conditions.

Addressing these issues requires serious reforms, including adjustments to the reimbursement rates and funding mechanisms, and initiatives to attract more foreign workers, especially from developing countries where the low Japanese salary may sound attractive.

Governments would do a better job by reallocating existing budgetary resources from other areas of government spending to healthcare. But we know what this would mean. It would mean reprioritizing spending, cutting inefficient or low-priority programs, or finding cost-saving measures in other parts of the budget.

Moreover, given Japan's reputation for having one of the world's most inefficient bureaucracies, a feasible approach would involve the implementation of cost-effective practices. This would help unlock additional resources for healthcare without necessarily increasing the overall spending.

*The views expressed in this article are those of the author and do not necessarily reflect the official editorial position of UCA News.