Asking whether teachers are underpaid misses the point

Want your Twitter feed littered with abuse?

I have a solution for you, dear reader: suggest that teachers should not get a pay rise.

The Taxpayers Alliance (TPA) last week published research showing that teacher pay averaged £38,400 in 2016, significantly higher than the national average salary, though lower than other graduate professions.

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Yes, there has been restraint recently in terms of pay bands rising more slowly than inflation, but this is misleading for an individual teacher. Subject to appraisal, teachers on pay scales can move upwards to different points over time – so the gross pay for an individual can still increase even when pay bands are frozen.

Coupled with reasonably generous pensions and holidays, the TPA therefore questioned whether now was time for bigger hikes in pay bands too.

This sparked predictable ire from even some conservatives, who highlighted the difficult job that teachers do. Others drew on personal experiences of hard-working teachers going unrewarded.

But beyond anecdotes, the economic evidence itself is mixed on whether pay is too high or too low.

Vacancy rates for teachers are low generally, at 0.3 per cent, compared with the broader economy, but have increased significantly from 0.1 per cent since 2010.

The National Audit Office, on the other hand, has highlighted how tens of thousands of teachers are leaving before retirement age, making it more difficult to find experienced, good quality candidates.

The existence of this very “macro” debate though is somewhat bizarre. In what other sector of the economy would we all have an opinion about how much workers up and down the land should earn based on a moral tug of war and average statistics?

Indeed, the whole notion of pay-setting being guided by central authorities in Whitehall is an anachronism in a modern economy. Local labour market conditions and the supply and demand for teachers in different subjects should lead to big pay differentials across subjects and across regions.

In 2013 and 2014, the government reformed school wage-setting in the right direction – ending automatic pay increases based on length of service, allowing schools to link all teachers pay progression to performance, and giving schools more freedom to set starting salaries. Academies and free schools in particular have much more discretion to determine remuneration.

But as of yet, there is little evidence that schools are using these powers in any meaningful way. The shadow cast by years of national pay bargaining still looms, and the system of pay bands it has bequeathed for local authority schools still substantially flattens wages across regions, with very negative economic consequences.

According to research by economists Jack Britton and Carol Propper, the average teacher wage differential across regions outside the south east of England and inner London is approximately 15 per cent, while the equivalent private sector wage differential can be as large as 45 per cent.

In other words, centralised pay-setting leads to big differences between teacher pay and private sector wages in certain regions.

This can have two major negative consequences.

Teacher wages will be relatively worse in regions where local private sector pay is high, or where alternative career opportunities for the same qualification levels are well remunerated, making teaching unattractive as a profession. Effectively, thats because wages are faced with a ceiling.

This harms quality – an increase in the local labour market wage relative to the teaching wage was found by Britton and Propper to worsen exam results and inspection outcomes, as well as leading to higher turnover of teaching staff.

But this inflexibility hurts in another sense too.

Poorer schools within regions also find it more difficult to attract staff, because they do not tend to pay the significant “compensating differentials” necessary to attract good teachers to work in difficult conditions. Indeed, teacher vacancy rates are at their highest in primary schools in the most deprived parts of England.

Instead of arguing about whether bands are too high or low, what we really need is a debate about their existence at all.

There is no reason why, for a given budgeting settlement at a given school, the school itself should not have the freedom to pay staff according to its needs. This might take account of local labour market conditions, the need to attract or retain a specific teacher, or even the opportunities for teachers to move between regions.

When it comes to setting the right level of pay for a schools needs, do we really think that Whitehall knows best?

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CityAM

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