John Buchanan

The future of teachers’ pay: time to send a better price signal

Today we will feature two posts on the NSW Teachers’ strike. This is the first post.

At the peak of their careers teachers earn less than electricians, physios, PR people and chiropractors and half that paid to lawyers and finance managers.

What we pay people – especially those at the top of their game – says a lot about what we value.  

As we to look towards a post-Covid-19 world we need to think about what signals we send young people making initial career choices and those planning the rest of their working lives.  

Currently we are sending the wrong signal about teaching.  And that message has been deteriorating over the years.

There are two fundamental problems.

The first concerns the slide in teachers’ pay compared to other professionals in Australia.  In 1986 female teachers earned 102% of the female professionals’ average and male teachers earned 99% of the male professionals’ average. By 2018 the position of teachers had worsened- women teachers earning 93% and male teachers earning 84% of the respective professionals’ average. 

The second concerns their flat earnings profile compared to their peers overseas and most other professions in Australia.   While entry level wages for teachers are relatively high, the top of the teacher’s pay scale in Australia is compressed relative to that paid to their peers in many OECD countriesl

What needs to be done?

Research released last year points to the need for a sizeable increase (minimum of 10-15%) in teachers’ wages.  This would restore teachers’ pay relative to that earned by the average professional to what prevailed 30 years ago.

The most effective way of achieving this is to address the problem of the teacher’s compressed wage structure.  Top teachers need to be paid significantly more.  Compared to nearly all other professionals in Australia, experienced teachers are paid significantly less than experienced lawyers, doctors, engineers and ICT professionals.  These professionals have significantly higher rates at the top of the scale (in the range of 30 – 50 per cent higher than those at entry level).

It is time to review the structure of teachers’ pay classifications which are relatively compressed by international standards.  Importantly, in examining other professions, not all members of those professions get the same, higher, rate of pay.  Higher earnings go to particular sub-groups in the respective professions.  This is most evident when we examine those in the top 20% of any profession.  

Increasing the top wage rate would have the effect of increasing the attractiveness of teaching as a lifetime career and greatly increase the likelihood that the best teachers will be retained in the future.

Reports of looming teacher shortages are growing.  A longstanding cause is that as many as one third of new teachers leave within five years of entering the profession.   Conventional economic theory says employers should respond to this with higher wages.

In practice, pay alone is never the solution to staff shortages  – but equally it is difficult to overcome such problems without significant adjustments in remuneration.   Increasing pay is an ‘essential ingredient’ in any serious policy package devised to attract and retain labour.  

Such movements send a signal.  In this case it would make clear that teaching is as highly valued as many other occupations in society – professional and non-professional.  

An improved price signal, especially for those in the upper reaches of the profession, has the potential to profoundly change Australians’ career decisions at the beginning of their working life, retain the best teachers in the system and make it easier for those interested in making the transition into teaching at later stages in their careers.

Professor John Buchanan is based in the University of Sydney Business School.  The report he co-authored is entitled NSW Teachers’ Pay: How it has changed and how it compares is available on the NSW Teachers’ Federation website.