3.6.1 Salary policy

Teacher salary is important to teacher recruitment and retention. From a labour market perspective, education systems that pay attractive salaries relative to comparable professions will prove more successful in attracting and retaining good-quality teachers. Individuals’ decisions to become teachers and enter teacher education programmes are especially influenced by salary levels and professional incentives that together contribute to making teaching a high-status career. A salary policy that values teaching in comparison to other career choices helps attract the best secondary school graduates to the teaching profession. The evidence within the last decade points to salary as a key (although not the only) factor in the success of what are now known as ‘high-performing education systems’(OECD, 2005; OECD, 2013a; World Bank, 2013).

Conversely, where teacher salaries are not perceived as commensurate with the levels of education, training and responsibilities required, or do not allow teachers to live decently without taking second jobs, the teaching profession loses in prestige, with an adverse impact on the three policy concerns of teacher recruitment, motivation and retention. Salaries that do not meet even the basic household poverty line in very low-income countries result in teacher recruitment difficulties, absenteeism and low teacher performance of various kinds (UNESCO, 2014a: 254).

To meet the policy objectives, teacher salary levels should be established in relation to:

• National income levels – usually measured in GDP per capita
• Minimum living standards in very poor countries
• Comparator professions: professions requiring similar qualifications, length of training, knowledge, skills and responsibilities
• Education authorities’ fiscal or revenue capacity (ILO, 2012: 148–150; UNESCO, 2010a: 2–3).

For many countries, policy that meets the multiple demands of recruitment, retention, motivation and effectiveness will increasingly be placed in the framework of the post-2015 EFA agenda and discussions of cost- effectiveness, entailing in many cases difficult policy choices and trade-offs (GPE, 2014: 152–156, for issues of status and salaries).

In some contexts, this will mean prioritising education funding over other claims on resources. In part because of its proximity to much richer South Africa, Lesotho, one of the poorest countries in the world, spends 13% of its GDP and over 30% of total government expenditure on education to maintain teachers’ salaries at much higher levels than in many comparable African countries – between 3 to 5 times GDP per capita in 2005, but still below other public servant salaries (Mulkeen, 2010; GPE, 2005: 6–7).

Many low-income countries have been advised to limit teacher salaries to a benchmark initially established under the EFA Fast Track Initiative (FTI) at 3.5 times GDP per capita, in order to ensure resources for other teaching and learning needs. Such a benchmark has been a factor in large-scale hiring of contractual teachers (see Section 3.1). If used, it should be adjusted as a function of the country’s GDP – especially in very low-income countries with a small formal-sector economic base – otherwise it may lead to unreasonably low salaries that sometimes below national poverty lines (UNESCO, 2010a: 16; UNESCO, 2014a: 254). Since such a benchmark also does not necessarily take into consideration the comparative salaries of other public or private sector jobs in the country requiring the same level of training and responsibilities, it can be a disincentive for teacher recruitment and retention.

In some countries, higher salary levels may require trade-offs with other policy objectives because of the limits on government revenues. The most obvious trade-off is between salaries and teacher numbers, and the PTRs and class sizes that depend on them. Teaching, instruction time or total required hours of work may also be increased to reduce the required numbers of teachers and create more capacity for higher salaries. In both cases, the potential impact on teaching and learning quality should be weighed before adopting policies that increase class sizes or teaching time – both of which have an impact on teachers’workload (Section 3.5) and may decrease teacher job satisfaction in challenging classroom conditions (OECD, 2013a: 191).

In fact, some high-income countries choose to pay much higher salaries to well-trained teachers and accept relatively higher PTRs and class sizes in exchange. Korea, Japan and Singapore are high-income countries with average class sizes in secondary education that exceed thirty learners per class and slightly less in primary education, but still well above the OECD average. These countries pay their teachers considerably more than the GDP per capita or the average salaries earned by education graduates in comparable public or private sector jobs (OECD, 2013a: 45; OECD, 2014b: 411, 454).

Middle-income Indonesia, on the other hand, has chosen in recent years to emphasize salary increases for civil servant teachers as part of a greater professionalisation of teaching, while at the same time keeping PTRs relatively low, partly thanks to the large-scale hiring of contract teachers. Like civil servant teachers, these contract teachers are also expected to benefit eventually from employment, salaries and professionalisation measures (Chang et al., 2014; UNESCO, 2014a).

Those countries that already have very large PTRs and class sizes, particularly in primary schools, while at the same time struggling to achieve UPE and EFA and facing large-scale teacher shortages, will face difficulties in choosing this type of trade-off as part of a teacher policy. An alternative to massively recruiting lower-paid contract teachers while maintaining salaries at a level sufficient to attract and retain good teachers might be to expand and diversify the funding sources for education. Many countries with low salaries and recruitment/retention difficulties have relatively low levels of funding for education as a percentage of GDP or GNP. Only 41 countries in the world devote at least 6% of their GNP to education, which is the recommended goal for achieving EFA. Despite significant increases since 2000 in the low-income group as a whole, 25 of these countries dedicate less than 3% of GNP to education; some actually decrease funding even further. A substantial increase in those countries not yet reaching the 6% goal would permit allocating a greater share of the budget to education, which would in turn provide more funds for hiring and paying reasonable salaries to the teachers needed to meet shortages (UNESCO, 2014a: 24, 110–113).

Policy choices are also more difficult for countries that substantially depend on international aid for their education funding. Long-term funding commitments from international donors are necessary to supplement national government commitment to prioritize education funding, including teacher salaries. There is also a need for policy dialogue and coherence among all partners and education funders. Despite the principles of aid effectiveness – which promote aligning donor funding mechanisms with strategic targets in the education sector - donors favour supporting projects over supporting budgets, due to the absence of reliable medium-term budget frameworks and fears of financial mismanagement (Steiner-Khamsi, et al., 2008: 43, 46; OECD 2005/2008). Combined with a reluctance to support recurrent costs (such as teacher salaries) and cutbacks in aid to education in recent years, this means other sources of funding need to be found at the same time that pressure is applied on major donors to honour previous commitments (UNESCO, 2014a: 127–133).

A number of ways have been suggested for ‘creating fiscal space’ to make increased resources available to fund teachers’salaries. These include:^{Footnote 20}

• Increasing revenue through better tax collection, and reduced exemptions and tax evasion
• Diversifying the tax base to include large corporations, small- and medium-sized enterprises and the informal sector
• Reprioritising spending within government budgets towards education and away from relatively non- productive budget lines such as military spending
• Relaxing restrictive international practices on responsible government borrowing
• Aligning donor aid policies for macro-economic stability with recurrent education expenditures such as teacher salaries.