How much do teachers cost?

by Eric Charbonnier and Etienne Albiser
Analysts, Directorate for Education and Skills

Can increasing the salaries of teachers lead to better learning outcomes? Does reducing class size have a positive effect on learning outcomes? Given the current background of tight public budgets, governments seeking to ensure value for money must ask themselves these questions before increasing the salary cost of teacher per student, as teachers account for a major part of education expenditure.

The latest edition of Education Indicators in Focus highlights that the salary cost of teacher per student is a combination of four factors: teachers’ salary, class size, the number of teaching hours in front of a classroom and the number of hours of instruction received by students.

Countries that have similar levels of expenditure on education do not necessarily have similar educational policies and practices. A given level of expenditure may result from a different combination of these factors. One country may pay higher salaries to teachers while another may have smaller class sizes and thus more teachers to pay.

Between 2000 and 2010, increases in the salary cost of teacher per student were mainly influenced by changes in teachers’ salaries and class size
 With the exception of France and Italy, the salary cost of teacher per student at the primary and lower secondary levels increased between 2000 and 2010, and on average it increased by one-third and one-quarter, respectively (for countries for which data is available). In the majority of cases, this increase was due to an increase in the level of teacher compensation (16% at the primary level and 14% at the lower secondary level). The largest salary increases (more than 50%, in constant prices) were seen in the Czech Republic, Estonia and Turkey.

During the same period, class size decreased, by 14% (primary) and 7% (lower secondary), but this was often the result of changing demographics and not of a change in education policies.

Little change in instruction time and teaching time
With the exception of a few countries, there was little or no change with respect to the two other variables (instruction time and teaching time) during the same period. This may be due to the political sensitivity of reforms in these areas. At the primary level, teaching time increased most significantly in the Czech Republic (200 hours) and instruction time increased the most in Iceland (by nearly 200 hours).

The higher the level of education, the higher the salary cost of teacher per student, with great disparities between countries
Spending on education rises sharply with the level of education. The OECD average salary cost of teachers is USD 2 307 per primary student, USD 2 856 per lower secondary student and USD 3 301 per upper secondary student. In some countries, the differences between the different levels of education is quite small (in Chile and Hungary it is less than USD 50) while in others it is quite important (exceeding USD 2 000 in the Flemish Community in Belgium).

In general, teachers of higher levels of education earn more money than teachers at lower levels. In addition, teaching time generally decrease as the level of education increases (meaning that more teachers are necessary to teach the same number of students).

Wrapping up
Reforms relating to these four factors have an impact on education expenditure and may also affect learning outcomes. However, the link between expenditure and outcomes is not straightforward. PISA results show that between 2000-2009, the performance of 15-years olds did not vary significantly in the majority of countries, regardless of the changes we have seen in instruction time, teaching time, class size and teacher compensation. What is more, changes relating to pedagogy may have an impact on outcomes without necessarily having an impact on expenditure.

The bottom line is that in the past ten years, increasing teachers’ salaries and reducing class size have not led to better learning outcomes in the majority of countries. This raises the question: has all of the additional money been well spent?

For more information
On this topic, visit:
Education Indicators in Focus: www.oecd.org/education/indicators
On the OECD’s education indicators, visit:
Education at a Glance 2012: OECD Indicators: www.oecd.org/edu/eag2012
Chart source: OECD Education at a Glance 2012:  Indicator B7 (www.oecd.org/edu/eag2012)

Bridging the skills gap

by Kathrin Hoeckel
Analyst, Skills Beyond Schools Division, Directorate for Education

If you were to ask someone which countries tend to bear the brunt of a shortage of skills in this era of globalised trade, you couldn't fault them for thinking of developing countries.

While this is certainly true, the problem is by no means limited to poorer countries. Indeed, even in countries at the forefront of the developed world and consistently at the top of the PISA rankings, skills shortages can plague the economy.

Two such countries are Australia and Canada.

The Canadian Council on Learning says there is a clear “gap between the demand for workers with strong literacy and numeracy skills and the supply of Canadians who possess them.” They point out that the growth in the information communication technology industries, coupled with the reduced demand for unskilled workers due to foreign outsourcing, has only served to intensify the need for skilled workers. The question is why there is such a gap when Canadian teenagers do so well on tests such as PISA's. The answer, they posit, lies in the failure of adults to keep up with the “demands of the emerging knowledge society and information economy”. In other words, lifelong learning is as essential to a strong economy as successful schools (as can be seen in the OECD’s Education at a Glance statistics on adult participation in education and learning, job-related training is comparatively low in Canada).

Australian companies are also hard hit by the skills gap. The Australian Institute of Management recently released a study that found 82% of organisations admit to a skills shortage in their workplace, with middle management lacking particularly in leadership and technical skills.

Brian Schmidt, Australia's 2011 Nobel Prize winner for Physics, feels that a key problem is the lack of skilled teachers, particularly in maths and science. He points to the OECD’s Education at a Glance statistics on teacher salaries, which indicates that there tends to be a correlation between well paid teachers and students that excel.

The country's mining industry is suffering, in Mr Schmidt's opinion, from a direct consequence of this. He says that the industry's lack of highly trained engineers threatens the resource boom currently under way in Australia. He relates how the chair of the mining company BHP Billiton told him the biggest problem his company faces is finding highly skilled employees competent in mathematics.

The consequences could be dire for Australia. BHP Billiton predicts that the mining industry alone will require an additional 150 000 workers over the next five years.

Furthermore, Chris Evans, Australia's Minister for Tertiary Education and Skills, estimates that Australia will need over 2 million additional workers by 2015 with higher vocational education and training (VET) qualifications. To meet this challenge, Australia drew up ambitious plans just last year to improve its existing VET system (which, as Learning for Jobs: OECD Reviews of Vocational Education and Training shows, is already quite strong) by investing up to €15 billion by 2020.

In Latin America, an altogether different region of the world, the economic pain from the skills gap – evocatively known in Spanish as “la brecha”, or the breach – is also acutely felt. According to the Inter-American Development Bank (IDB), youth unemployment has increased across Latin America more than any other region in the world, and this can be directly attributed to young people lacking the skills required by the labour market. Not surprising when time and time again the research shows that poor skills go hand in hand with economic hardship.

In a study released earlier this month, the IDB stated that the youth in Latin America have a long way to go in developing the “interpersonal skills the market requires, such as responsibility, communication and creativity”. Its research shows that the majority of young workers across the region have informal jobs and lack social benefits.

One thing that is common to all these countries is that children from disadvantaged socio-economic backgrounds are disadvantaged when it comes to foundation skills in reading, mathematics and science (see OECD’s Education at a Glance statistics on equality in educational outcomes and opportunities). However, countries with the very best scores in PISA tend to have schools that are more inclusive. In other words, students can score well regardless of their socio-economic background. This in turn benefits the economy and society as a whole.

For if knowledge and skills are the global currency of the 21st century, countries will do well to stock up on their reserves. They can do so by encouraging people to learn, enticing skilled people to enter their countries, encouraging people to use and build their skills at work, retaining skilled people, matching skills to demand, and finally increasing the demand for high-level skills. That goes for economic heavyweights and flyweights alike.

Interested in learning more? Watch out for the OECD Skills Strategy, coming in May 2012, where we will lay the land for bridging the skills gap, turning brain drain into brain exchange, coping with ageing societies and declining skills pools and more.

Links:
OECD Skills Strategy
Education at a Glance 2011: OECD Indicators
Programme for International Student Assessment (PISA)

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