Nurses’ pay in Japan: market forces vs. institutional constraints

Aims and objectives. To analyse Japan’s labour market for nurses and determine reasons for the continuing excess demand. Background. Japan has long been experiencing a shortage of nurses. The situation has been worsening over the past few years, as is reflected in the growing media coverage of the issue. Design. We constructed an economic model of wage setting for Japanese nurses and analysed those wages applying standard labour economics theories. Methods. We constructed a nurse labour market data base from various public sets and estimated a few alternative wage functions from this data base. We then interpreted these parameters and the differences of some parameters by function to make an evaluation of relative importance of labour market forces and policies on the setting of the Japanese nurse wages. Results. The government’s move to improve the nursing staff–inpatient ratio and the shorter inpatient hospital stays have had a positive impact on the wages of registered nurses (RNs) and licensed practicing nurses (LPNs). Yet, the nursing labour market imbalance remains. Relevance to clinical practice. The findings show that individual hospitals and clinics could take three steps to help fill the nursing vacancies. First, they could introduce a reorientation program for those nurses no longer in the labour market. Second, they could restructure the working arrangements for those nurses with family responsibilities. Third, they could be instrumental in having the current wage system reassessed.