NHS report: why higher pay for health workers can lead to a more efficient and effective system

A comprehensive review of the performance of the UK’s National Health Service has found that the NHS is in a “critical condition”. Although it also highlights its strong “significant indicators”, the report, by surgeon general and former Labor minister Lord Darzi, certainly highlights many problems.

The secretary said he was “shocked” by the findings, and the prime minister has promised a ten-year plan to transform the service. Our research suggests that part of that plan must be to address NHS pay and staffing levels – and the behavior of people caring for patients.

Darzi’s report was published a few days before England’s junior doctors are due to vote on a salary agreement of about 22.3%, compared to 2023 rates.

If doctors agree to accept the proposal, their pay rise will cost the UK Treasury around £350 million. But the Chancellor of the Exchequer, Rachel Reeves, has argued that this is far less than the cost to the NHS of operating the junior doctor industry (estimated at £1.7 billion so far).

The government will no doubt hope that the deal will begin to heal the NHS which has suffered from the issues reported by Darzi. To deal with operational problems such as long waiting lists, hospitals are in dire need of doctors, nurses and other health workers. And they should catch those who might be tempted to leave in search of better working conditions elsewhere.

An improved salary package for junior doctors can play a role in motivating them to stay. Research suggests that dissatisfaction with pay is the main reason why people who work in health care choose to leave their jobs.

There is also evidence that improved staffing conditions lead to improved health outcomes for patients. It has also been shown that unions improve those outcomes, because they help to maintain better working conditions, which means that health workers are satisfied with their jobs and have time enough to do it well.

So perhaps the UK government’s pay proposal signals a new direction for NHS pay systems, and a strategy aimed at finding a balance between pay and workloads. If it does – and if NHS staff see that it is right – this could start to reverse low staff morale and high levels of employment.

Investing in care

But doctors are not the only ones who think they should be paid more. At the end of June 2024, in our survey of a representative sample of 2,252 UK representatives aged 16-75, 48% of respondents thought that newly qualified doctors on £32,398 a year were paid too little. Only 6% thought they were paid too much. Similarly, 49% thought that newly qualified nurses on £28,407 were not paid enough.

The link between salary levels, workloads, and retirement considerations can be explained by a concept known as “compensation for effort”. It’s a concept that most people will be familiar with, wherever they work, and it has to do with the balance between the effort required by the employer and the wages the workers receive. When people feel overworked and underpaid, the paycheck isn’t what it should be.

Where more effort is put in, workers expect more pay, otherwise they see the situation as unfair. In general, unfairness reduces motivation, increases levels of dissatisfaction and willingness to leave.

Other important factors related to workloads and salaries include nurses’ poor physical and mental health, and perceptions of being unable to provide high quality care.

These issues are not limited to the UK, with many other rich countries facing similar problems. Health workers including doctors, nurses and ambulance workers in Ireland, France and Germany have gone on strike over poor working conditions in recent years. In 2022, the European director of the World Health Organization called the health workforce crisis a “ticking timebomb”.

For the long-term improvement of the health service, the government needs to ensure that there is a fair wage bill, which should start by solving the payment problems for all NHS workers first – and continue to embed wages into a comprehensive workforce strategy. This will require more investment, but it is an investment that will lead to more motivation, better staff retention and better services – which will result in a better, more efficient NHS.