FOOL'S EYE VIEW
A Free Market Solution To Teachers' Pay

By David Kuo (TMFDragon)
April 4, 2002

When moderate trade unions, and there can be none more restrained than the unions that represent teachers' interests, decide to take industrial action then you know there is a serious problem within the teaching profession. Just pick up any copy of The Times Educational Supplement (TES) if you are in any doubt. The pages are crammed full of job adverts for teachers across the country. Moreover, those vacancies are not just restricted to middle and lower order pedagogues but also cover positions for head teachers and department heads. Many of those posts will most likely remain unfilled leaving the Department of Education (DoE) with a huge problem on its hands.

An independent survey conducted for the National Union of Teachers (NUT) concluded that the problems for the teaching profession could worsen. More teachers are leaving the profession than those that enter through new recruitment schemes. It is estimated that schools expect to make 32,500 appointments this summer. And with 30,000 final-year trainees graduating shortly the schools will hope to draw their candidates from that promising pool of new recruits. However the survey found that the dropout rate amongst final year students was high with almost 40% failing to make it from the training room to the classroom. Additionally just under one in five teachers that are eventually recruited will leave within three years of joining. And with 18% of teachers now over the age of 40, and many of those close to retirement, the black hole for the state educational system can only grow larger.       

The teachers' unions believe the solution to the problem lies in better working conditions, higher remuneration and shorter working hours. The NUT has already voted to take industrial action as a means of achieving those ends. The Association of Teachers and Lecturers (ATL), whilst supportive of the NUT, are not in favour of strike action. The NASUWT will vote on a resolution to go on strike unless new systems of performance-related pay are introduced. They claim the existing scheme has been discredited because the schools are unable to pay all the teachers that have attained their performance objectives. This is because schools have only been given half the money promised to them. Head teachers are also dissatisfied with the scheme because they have been forced to choose between paying staff their bonuses and buying textbooks for the school.

If there was ever a case for Private Finance Initiative (PFI) or Public Private Partnership (PPP) to play a role then this must be it. The state educational system has become a vast bureaucracy that is unable to react to the demands of the market. The failure of many schools to fill teacher vacancies is evidence of the widening gap between the demand for teachers and those are prepared to work in the profession. That gap has been created as a result of depressed salaries and a failure of those salaries to reflect the work that many teachers carry out under tough conditions. In any free market employers are forced to compete for the services of their employees. But in this instance the market for teachers is predominantly controlled by one body, namely the DoE, which dictates both pay and conditions across the country. Clearly this regulated market has failed to deliver the goods.

It has failed for several reasons. Primarily bureaucracies are unable to separate the need to provide a service and the payment that it must make for the provision of that service. It cannot be right, for example, that teachers are paid the same amount in various parts of the country simply because the rigid pay scale structure cannot differentiate between areas where of teachers are in high and low supply. As a result of this inflexibility schools are forced to turn to teacher supply agencies, which can charge up to £170 a day for the provision of supply teachers. This is a dreadful waste of resources.

The introduction of some form of private finance initiative would eradicate much of the profligacy within the industry. There is little doubt that higher standards of education are needed in any industrialised society. But just like the provision of any service within a free market demand for entry into schools that provide a higher standard of education should carry a premium. Furthermore those who value that higher standard should then pay for that premium. In turn that premium would translate into better wages for higher calibre teachers and individual schools will need to compete in the open market for the service of those that are in demand.