Ukraine war impacts Japanese dental practices

Dental clinics in Japan are under pressure due to soaring material costs as a result of the armed conflict in Ukraine, according to Grand Jute Co., Ltd.

Delivering the bad news ahead of their upcoming “Recruitment Practice Seminar”, the consulting business specializing in dental clinics further stated reasons why dental industry salaries should remain unchanged.

According to Yuko Ito, the company’s representative, dental clinics across Japan will face tough times ahead due to rising materials costs and accelerating inflation, following Russia’s invasion of Ukraine. These pressures, she believes, will also hamper future recruitment activities of the dental practice.

The problem of “cost-push” inflation

She cites “cost-push” inflation as one of the factors exerting pressure on the management of dental clinics.

“Following the invasion, prices of crude oil and gasoline have been accelerating, and prices of energy, food, timber, finance, etc. are rising significantly.

“In Japan, import prices have been soaring, and the year-on-year rate of change exceeded 40% at the end of 2021. Although the preliminary figures for February 2022 settled at 34%, corporate prices – which are the purchase prices of companies – were up 9.3% year-on-year, and it continues to trend upwards.  

“Companies that can’t absorb the costs are raising prices one after another. They are entering into “cost-push” inflation, which is mainly caused by rising costs such as raw material costs. Furthermore, the depreciation of the yen, which reached the 120-yen level for the first time in six years, has spurred inflation. Material costs for dental clinics, which are heavily imported, will inevitably rise further after April.”

Unstable raw material costs

Ito also talked about the gold-silver-palladium alloy, which she says is indispensable for dental treatment.

“Russia accounts for 40% of the world’s production of palladium, which is the raw material for it, and prices are rising due to concerns about supply stagnation from Russia, which is subject to economic sanctions.

“In addition, the price of “gold”, which is the same raw material as palladium, continues to rise due to the situation in Russia.

“We have heard from many of our consulting leaders that the cost of materials has exceeded the cost of medical care, which has affected the management of the clinic.

Salary increases should be avoided

“We collect average salary statistics for dentists, dental hygienists, dental technicians, and dental assistants based on the data from the individual’s “Salary Survey” every month,” Ito said.

“The movement of job seekers became sluggish for all occupations, and the average salary of non-dental hygienists decreased. It is speculated that this decline may be due to the suspension of job offers under favourable conditions and the revision of salaries due to the influence of the COVID-19 pandemic.

“After that, the movement of job seekers became active and it was confirmed that the average salary increased in all occupations. It is probable that a competition for human resources has occurred and a competition for raising wages has occurred.”

Ito warned against raising the job salary solely on account of the inability to hire staff.

“It is strange that the salary of workers does not rise even though inflation is accelerating.

“I think that the mood for raising wages will spread throughout Japan in the future, so this year we have no choice but to raise the salary of existing staff. If that happens, “easy wage increases” are expected to put further pressure on clinic management.”

High salary offers not working

Despite dangling high salaries for job offers, Ito said dental clinics were not “flooded with applications”.

“With so much uncertainty surrounding rising prices and wage increases, the future impact of the situation in Ukraine remains uncertain, but we expect that the trend of salary increases in dental jobs will soon level off.

“In that case, treatment conditions rather than salary will be the point of differentiation from other clinics. It is better to hire personnel who can sympathize with the philosophy and ethos of the clinic.”