Everyone loves a good stat, don’t they? And there was a really really interesting piece on the BBC’s More or Less yesterday, looking at a National Education Union (NEU) figures on teacher’s pay.
Perhaps unsurprisingly, the NEU’s claim of a 24% real-terms fall since 2010 turned out to be based on shaky assumptions. They arrive at that very high-sounding number in two ways: first, using a higher, less credible measure of inflation than everyone else (RPI); second, by only looking at the very highest classroom teacher salaries.
When the Institute of Fiscal Studies (IFS) did the same exercise they used what most economists consider a better inflation measure – CPIH – and compared it to a weighted average of salaries from across the pay range.
This gave a real-terms fall of 11% – still big, but much less than the NEU’s 24%.
Above all, we ought to be talking a hell of a lot more about pensions when we’re debating how well paid various professions are.
I taught in state schools from 2002 until 2017, the last five years of which I was a Headteacher. One of the biggest increases in the cost of employing teachers during this time was the size of the ’employer contribution’ to the Teachers Pension Scheme. In 2010 schools would pay an additional 14.1% of salaries into the scheme on behalf of teachers; since 2019 it’s been 23.7%. This is a big increase, and one of the reasons why school budgets have got tighter in recent years.
In my experience, public sector workers tend to see employer pension contributions not as an important part of their pay package, but as a completely separate entitlement. But pension contributions are really just a form of deferred pay, money foregone today to be received later on. And, on average, public sector pension contributions are three times higher than in the private sector – 18%, versus 6%.
That More or Less discussion got me thinking about how much the increase in pension contributions affected the real-terms fall in the overall teacher package. Thanks to how clearly the IFS laid out their analysis I was able to add in the pension contributions for 2010 and 2022 for the different teachers’ salary bands (see below). It shows that the overall picture is pretty different compared to when you just consider gross salaries.
There’s no getting away from it: the package is still down in real-terms. Class teachers today are on average getting less overall than in 2010. However, pension contributions have softened the fall, reducing the decline to 3.5%, much less than the 11% fall in gross salaries. Also, most of the pain has been felt by more experienced and better paid teachers. The 20% of teachers in their first few years today are either very slightly better off or the same as their 2010 counterparts.
It’s vital we talk about this more, as to just consider upfront pay is to ignore an important part of the package.
Focusing on pay alone also ignores the complex reasons that people leave the profession. The evidence suggests it’s more about horrible Heads and naughty kids than poor pay, especially when you consider that those who leave the profession typically take a 10% pay cut, and many end up earning less than if they’d stayed in teaching.
Don’t get me wrong: teachers should be well rewarded, especially as we have a big shortage of them in quite a few regions and subject areas. So if we want to get great people into the profession let’s make sure they know about the (rightly) generous pensions contributions they can expect – especially as it is at levels the private sector can only dream of.
There’s also a broader question here about whether those in the public sector should get more flexibility over how they are paid.
As CPS director Robert Colvile, and Fraser Nelson and others have written recently, the overall packages for the public sector are pretty generous overall, but not necessarily in ways that work for everyone. Perhaps letting people take less in pension contributions and more in upfront pay when they’d most benefit from the cash would help smooth out the lifetime benefits better?
Obviously this would be more expensive for the Treasury in the short run. They rely on current pension contributions to fund many of today’s public sector pension payments. And there are loads and loads of complexities generally around the Government’s pension liabilities.
But we’re in a tricky economic position anyway, so perhaps everything should be on the table right now? But whatever your view, let’s make sure we have that debate on the basis of real, accurate figures, not the kind of misleading stats put out by the NEU of late.
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