NYJC 2023 H2 Economics 9570 P2 Answers

Question 1 1. Singapore recorded an increase in attrition rates among local and foreign nurses in the public sector in 2021, compared with 2020. The number of nurses now is 58,000 and Ministry of Health estimates that this will need to grow to 82,000 by 2030 as one in four Singaporeans will be aged 65 and above, u p from one in six today. The base salaries of public healthcare nurses were also increased between 5 and 14 per cent. Source: Adapted from 30 Nov 2022, CNA (a) Explain why a shortage of nurses might still exist even with the rise in the salaries of nurses. [10] (b) Other than increasing salaries of nurses, discuss possible measures Singapore government can adopt to overcome future shortages of nurses. [15] Suggested answer: (a) Explain why a shortage of nurses might still exist even with the rise in the salaries of nurses. [10] Introduction: • Define shortages: Shortages arise when the quantity demanded for nurses exceed the quantity supplied of nurses. • Approach to question: [can differ depending on the approach adopted by the students] The shortages might still exist due to inelastic demand and supply of nurses, and the increase in demand and/or fall in supply of nurses. R1: Shortages might still exist due to inelastic demand and supply of nurses • Define P(W)ED: Measures the responsiveness of quantity demanded for nurses with respect to a change in salary (wage) of nurses, ceteris paribus. • Inelastic P(W)ED: PED for nurses is inelastic as the role of nurses is essential in assisting doctors in treatments and provide critical services such as monitoring of patients’ medical conditions and treatments, and providing care and support patients recovery. Due to the role of nurses being a necessity in healthcare services, the increase in wage of nurses will lead to a less than proportionate fall in quantity demanded for nurses, making demand for nurses price inelastic. • Define P(W)ES: Measures the responsiveness of quantity supplied of nurses with respect to a change in wage of nurses, ceteris paribus. • Inelastic P(W)ES: PES of nurses is inelastic as nurses need to be trained and certified by the respective authorities before they can be employed by hospitals. The time needed for nurses training and certification could take from two to four years due to the specialised skills. At the same time, due to the harsh working conditions of nurses in terms of working environment and work schedule, the nursing profession has difficulty attracting people to join nursing. Hence, an increase in the wage of nurses will lead to a

less than proportionate increase in quantity supplied of nurses, making supply price inelastic. • Given the inelastic demand and supply of nurses, the current market wage of nurses is not high enough to meet the shortages. • With reference to the figure above, the current market wage of nurses is at W0. However, at this wage, the quantity demanded for nurses is at Q1 while the