Model essay (b): is higher pay the best fix?

What this lesson teaches

• I can explain how prices signal, give incentives and ration scarce resources in a free market.

  Syllabus 9570, 2.1.1(a). Price Mechanism and its Functions: How the price mechanism allocates scarce resources in the free market through signalling, incentive and rationing functions

• I can work out how shifts in demand or supply change price, quantity, spending, revenue, consumer surplus and producer surplus.

  Syllabus 9570, 2.1.2(f). Demand and Supply Analysis and its Applications: Changes in demand and supply can affect equilibrium price and quantity, consumer expenditure, producer revenue, consumer surplus and producer surplus

Make a guess

An essay asks whether raising wages is "the best way" to solve a nurse shortage. What must a top answer do?

1. List as many other policies as possible.
2. Explain in detail how higher wages attract more nurses.
3. Compare pay with other fixes, then judge.

The answer to part (b)

Introduction

Raising wages tackles the shortage by making nursing more attractive. Other ways are to raise the supply of nurses through training, recruitment from abroad and better working conditions. The government can also reduce the demand for nurses through technology and care outside hospitals. This essay argues that higher wages are necessary but are not the best way on their own. The judgement depends on how fast each measure works, how much it costs and whether it tackles the root cause.

Paragraph 2: how higher wages help

A higher wage raises the quantity of nurses supplied. Nurses who were thinking of leaving or retiring may stay, part-time nurses may work more hours, and some trained nurses who left the job may return. In Figure 1 of part (a), a rise in the wage towards We moves the market up the supply curve. More nurses work and the shortage narrows. Higher pay also sends a signal. Students choosing a career see that nursing pays better, so more apply to train, which raises supply in the future.

Paragraph 3: the limits of higher wages

However, supply is wage inelastic in the short run, because training takes years. A large pay rise brings in few extra nurses quickly, so it costs a lot for a small effect. Public hospitals pay for it out of their budgets, which has an opportunity cost in other health spending. Higher pay also does not fix the long shifts and heavy workloads that drive nurses out. And because the population keeps ageing, demand keeps shifting right. Each pay rise is soon overtaken, so wages alone would have to rise again and again.

Paragraph 4: raising supply in other ways

Other measures shift the supply curve right. More training places and mid-career conversion programmes bring new people into nursing. Recruiting nurses from abroad adds trained staff within months, which is why Singapore's hospitals hire many nurses from the Philippines, India and other countries. Better working conditions, such as more predictable rosters and more support staff, make nurses more willing to stay at every wage. In Figure 2, supply shifts right from SL0 to SL1, so the shortage closes at W1 without a further rise in the wage.

Paragraph 5: reducing demand

The government can also slow the growth in demand for nurses. Technology can take over some tasks, such as remote monitoring of patients at home and automated dispensing of medicines. Moving routine care into the community, and helping people stay healthy so they need less hospital care, means fewer nurses are needed for each patient. This slows the rightward shift of the demand curve. But these changes take years, and older patients will always need much hands-on care, so demand will still grow.

Paragraph 6: evaluation

The best measure depends first on how quickly the shortage must close. Foreign recruitment is the fastest, so it suits the short run, while training and conversion work only over several years. It depends second on the root cause. The shortage comes from demand that rises every year and from nurses leaving because of the workload. Pay alone does neither: it does not slow demand and does not fix working conditions. Since Singapore's population will keep ageing for decades, it needs a lasting rise in supply and slower growth in demand, not just repeated pay rises.

Conclusion

Raising wages helps to keep and attract nurses, so it is part of the answer, but it is not the best way on its own. Because supply is inelastic and demand keeps rising, higher pay is costly and is soon overtaken. The best approach combines fair pay with better working conditions. Add foreign recruitment in the short run, more training in the long run and technology to slow the growth in demand.

Margin notes: how each paragraph scores

Introduction

Defines the policy, lists the alternatives on both sides of the market, and sets out three criteria for the judgement.

Paragraph 2

Explains the wage rise as a movement along the supply curve, links back to Figure 1 and adds the signalling function of price. Precise use of terms is L3 rigour.

Paragraph 3

Limits based on elasticity, opportunity cost and the root cause, linked back to part (a). It explains why each limit matters, not just names it.

Paragraph 4

The main alternative is shown on Figure 2 with a non-wage shift of supply. Real Singapore practice (foreign recruitment) supports it.

Paragraph 5

Covers the demand side too, with its own limit. Answers that consider both sides of the market reach the top of L3.

Paragraph 6

E3: two well-explained judgements (speed, root cause), then a deciding point from Singapore's ageing population.

Conclusion

Answers 'whether ... the best way' directly and recommends a combination, with the role of each measure.

Overall: L3 and E3, 13 to 15 marks

Two-sided analysis with two labour-market diagrams and context. An answer that only praised higher wages would stay at L2 with little evaluation credit.

Worked example: A 4-minute plan

Fix the stand and the criteria first, then sort the arguments under them.

1. Stand: higher pay is needed but not the best alone. Criteria: speed, cost, the root cause.
2. For: movement along SL; keeps nurses; signals to trainees.
3. Against: supply inelastic, costly, does not fix conditions; demand keeps rising.
4. Alternatives: training and conversion, foreign nurses (Figure 2), better conditions, technology and community care to curb demand.
5. Judge: foreign recruitment fastest, training for the long run, pay and conditions to keep staff.

Watch out for this

The government should just recruit more foreign nurses, since that solves the shortage with no downside.

Foreign recruitment is fast, but other countries also compete for nurses, and new staff need time to adjust. Relying on it alone leaves the system exposed if recruitment becomes harder.

Check your understanding

In Figure 2, why does the shortage close without a further wage rise?

1. Demand for nurses falls back to DL0, so fewer nurses are needed.
2. The wage rises along the supply curve until supply equals demand.
3. Supply shifts right, so more nurses are willing to work at W1.