An examination of teachers pay

Transcription

1 Incomes Data Services 23 College Hill EC4R 2RP Telephone: Facsimile: Website: An examination of pay A report for the National Union of Teachers by Incomes Data Services August 2008

2 This report was prepared by Incomes Data Services (IDS) on behalf of the NUT. It was researched and written by: Nicola Allison Angela Bowring Jessica Evans Alastair Hatchett Incomes Data Services 23 College Hill EC4R 2RP Telephone: Facsimile: Website: Copyright Incomes Data Services 2008

3 Contents 1. Key findings 1 2. An assessment of the current ; pay structure Background Teachers pay settlements compared with the whole economy Earnings growth and pay drift 7 3. Pay and progression in teaching compared with other graduate professions Graduate progression Graduate progression by sector Comparing with other occupations Graduate applications 23

4 1. Key findings Reform of the pay structure for was started in 2000, to aid recruitment and retention. It offered higher salaries more quickly and access to a higher pay scale. This was in the context of the Government s public sector pay policy, which saw an expansion of public sector employment, initiatives on recruitment and retention, and generalised pay modernisation between 2000 and 2004, followed by what is effectively an incomes policy for the public sector from 2005, with pay increases to be kept below 2.5 per cent. Looking at pay settlements over the period 2002 to 2007, did consistently worse than the whole economy median in every year except 2002 and The forthcoming pay increase of 2.45 per cent from September 2008 is significantly lower than all-items inflation (currently 5.0 per cent). Similarly, the 2009 indicative pay increase for of 2.3 per cent which is due to take effect from 1 September 2009, is below the forecast rate of inflation of 2.7 per cent. The settlements gap between and the rest of the economy is not being closed by additional earnings growth. Pay drift (the difference between average earnings growth and the pay settlement) was negative for in 2006, and minimal in 2007, indicating that the opportunities for additional earnings growth for have disappeared. Zero pay drift for is also forecast for the current period. It could be argued therefore that new pay structure introduced in 2000/02 has reached its full value and will now deteriorate over time. The pay structure has gone through the cycle, with the high proportion of who were previously stick at the top of the main pay scale now stuck at the top of the upper pay scale (31 per cent in 2007), leading to the low or negative pay drift. Pay data from IDS research on graduates has been used to see how much would be paid if they progressed at the same rates as graduate recruits in other sectors. A band D teacher at the top of the pay scale, ie after five years, received 29,427 in band D. This would be 8 per cent higher, at 31,699, if the IDS median, giving typical graduate progression over the first five years of a career, had been applied. The 1

5 equivalent figure for average graduate progression would be 34,709, some 18 per cent higher than the M6 figure. Using average earnings figures for different occupations between 2003 and 2007, ie since the new pay structure was introduced, earnings growth has been below that of chemists, biologists, mechanical engineers, electrical engineers and medical practitioners. Data on the most popular career sector for graduates show that teaching went from being outside the top five before 1999 to being the most popular choice in Since then, however, it has fallen back, to third most popular in

6 2. An assessment of the current pay structure 2.1 Background A major reform of the pay structure began in 2000 with the creation of the Upper Pay Scale and the subsequent shortening of the main pay scale from nine points to six. The main aim of these changes was to set higher salaries to aid recruitment and retention, and simultaneously to give higher rewards for good to stay in the classroom rather than move into management roles. Initially the Upper Pay Scale (UPS) was to have five scale points and progression to the first point from the top of the main pay scale was to be strictly performance based. In reality around 180,000 moved to scale point 1 on the UPS from the spring of 2001 with increases backdated to September Progression up the five-point UPS was to be discretionary and performance-based. This wholesale movement of so many showed how many had been stuck on the main structure maximum salary before the UPS was created. It also showed that head used the new possibility of progression as a retention measure. The degree to which progression was entirely performance-based was immediately questioned. Classroom pay structure from 1 September 2007 Main pay scale Band D National, pa Band C Fringe, pa Band B Outer, pa M1 20,133 21,102 23,118 24,168 M2 21,726 22,692 24,501 25,548 M3 23,472 24,438 26,247 27,327 M4 25,278 26,250 28,053 29,328 M5 27,270 28,239 30,432 31,584 M6 29,427 30,393 32,751 33,936 Upper pay scale U1 31,878 32,847 34,650 37,809 U2 33,060 34,026 35,832 39,666 U3 34,281 35,250 37,164 41,004 Band A Inner, pa 3

7 The main pay scale was shortened to six points with effect from September The aim here was to accelerate to the top of the scale to get a higher salary earlier, as the STRB had identified the fact that were leaving the profession in their third, fourth or fifth year of service because they had to wait until the ninth year of service to get to the scale maximum. A further reform of pay came from the STRB recommending a form of zonal pay whereby four pay structures were introduced with significantly higher salaries for UPS in inner to aid retention among experienced in their thirties who were either leaving or leaving teaching. The zones/bands ranged from band A for inner to band D for national outside the fringe area of the South East. Public sector pay policy All these changes came as part of a wide number of pay and structural changes in 2000 and 2001 as the Government responded to recruitment and retention difficulties across the public sector. For example in June 2000, Jack Straw, the Home Secretary, announced an increase in the joint allowances for the Met Police to 6,000 a year. Then in November 2000, the Prime Minister, Tony Blair, announced that extra pay supplements were to be made available to nurses and other key NHS staff in areas with full or near full employment. The main police pay scale was also shortened at this time in much the same way as that for and with a similar intent. This plethora of initiatives to aid recruitment and retention came after a long period of pay restraint in the public sector which has started in 1993 when the Conservative Government imposed a 1.5 per cent ceiling on all public sector pay rises. Thereafter, pay increases had to be funded through existing paybills. This policy ran until Labour came to power in 1997 at which point the new Labour Chancellor, Gordon Brown, said that the policy would be maintained for two more years until The policy of pay restraint in the public sector came up against the tightening of the labour market that occurred in the second half of the 1990s, thus producing the recruitment and retention issues to which the Government then had to respond. The period from 2000 to 2004 was then one in which the Government funded an expansion of jobs, initiatives on recruitment and retention and generalised pay modernisation. One of the central planks of pay modernisation was to improve public service delivery and to have more well-trained staff doing their jobs effectively in the front line rather than gaining higher salaries by moving into management whether, nurses or midwives. The creation of the UPS was part of this 4

8 overall strategy, as was the subsequent creation of the Advanced Skills Teacher role for those above this grade who are expected to act as mentors to other. Progression to the new maximum Between 2001 and 2007 progressed through the pay scales in the normal way, and the newly-created headroom provided by the UPS allowed progression for those previously on the main pay scale maximum. The upper pay scale was established in 2000 and implemented in Teachers who progressed to UPS2 in 2002 were then eligible to progress to UPS3 from September There is evidence that this labour market initiative had a very good impact on teacher retention. By 2007 over half of full-time in band D were on the UPS and 35 per cent of secondary school in band D were on point 3 of the UPS. This is the new scale maximum on the UPS because the top two points were eliminated earlier. Proportion of full-time on each scale point % Band A (Inner ) Band B (Outer ) Band C (Fringe) Band D (National) M1 M2 M3 M4 M5 M6 U1 U2 U3 Spine point Source: Survey of ' pay Research conducted by ORC International on pay in 2007 shows just over 50 per cent of both primary and secondary in band D (the national scale outside the South East) were on the upper pay scale. In and the fringe area there was a minority of both primary and secondary on the UPS. There are lower proportions of on the 5

9 UPS in because of the youthfulness of the teacher workforce in the area, including those who leave or leave teaching at a critical point in their careers, between four and six years service. The ORC survey suggests that 45 per cent of all classroom (52 per cent of primary ) in inner were in their first five years of teaching. The corresponding figures for England and Wales (band D) was 33 per cent (35 per cent in primaries). Pay awards for compared to whole economy median pay settlement/forecast RPI 5 4 % Teachers' pay award IDS median pay settlement/forecast RPI Teachers pay settlements compared with the whole economy The bar chart shows the differences between pay settlements and the IDS median pay settlement, between the years 2002 and This shows that did consistently worse in every year with the exception of years 2002 and In 2002, according to the IDS pay databank, the pay settlement was around 1 per cent greater than median pay settlements across the economy. And in 2005, again according to the IDS pay databank, median pay settlements across the economy were.05 per cent lower than the pay settlement in that year. Teachers pay awards in 2008 and 2009 compared with inflation forecasts Median pay settlements are currently close to the all-items RPI, the key pay bargaining measure, so this has been used to forecast how will fare for the next two years. 6

10 According to the terms of the latest pay settlement for covering the years 2008 to 2010, are due a basic pay rise of 2.45 per cent from 1 September This is significantly lower than the average quarterly all-items inflation forecast of 4.6 per cent for the third quarter of Similarly, the 2009 indicative pay increase for of 2.3 per cent which is due to take effect from 1 September 2009, is below the forecast rate of inflation of 2.7 per cent. Difference between the pay settlements and IDS median settlements Teachers pay IDS median Difference award settlements Teachers pay awards in 2008 and 2009 compared with inflation forecasts Average quarterly all-items inflation forecasts at 9 July Teachers pay awards 2008 % % rd quarter th quarter st quarter nd quarter rd quarter Earnings growth and pay drift Is the settlements gap between and the rest of the economy being closed by additional earnings growth for outside of the pay settlement? The evidence shows positive pay drift for between 2003 and 2005, so that earnings growth was above the pay settlement, but negative pay drift in 2006 and minimal in 2007, indicating that the opportunities for additional earnings growth for have disappeared. 7

11 If we compare the value of pay settlements with the growth in teacher earnings between the years 2003 and 2007 as measured by ASHE, it can be seen that in 2003 for secondary and primary school the 4.6 per cent growth in earnings was greater than the value of the pay settlement at 2.9 per cent and implies that were moving up the (relatively) new pay scale. This was not the case for special education for whom earnings at 2.9 per cent were exactly in line with the pay settlement. The situation for special education was reversed in 2004 in that earnings for this group increased by 4.8 per cent against a pay settlement of 2.5 per cent. Earnings growth of 2.8 per cent for secondary grew by slightly more than the settlement value of 2.5 per cent while earnings growth for primary school at 2.1 per cent was slightly lower than the 2.5 per cent value of the pay settlement. This could be because of a contraction in the number of primary school in that year. Comparison of pay settlements with growth in average annual earnings of fulltime teaching professionals (ASHE) Pay Secondary Special education Primary settlement growth pay drift growth pay drift growth pay drift In 2005, it appears from the ASHE figures that all three groups of teaching professionals experienced earnings growth above the value of the pay settlement. In this year the settlement was staged and gave 2.5 per cent from 1 April 2005 followed by a further 0.75 per cent from 1 September Earnings for secondary grew by 5 per cent, and they grew by 6.2 per cent for primary. The growth in earnings for special education was 3.8 per cent. In 2006, this situation was reversed, with secondary and primary school experiencing average earnings growth below the value of the pay settlement of 2.5 per cent. The curtailment of the scope for pay progression was again evident in The value of the settlement for 2007 was 2.5 per cent against earnings growth of 2.9 per cent from secondary and of 8

12 2.6 per cent. This implies that many have reached the top of their pay range and are relying on the basic pay award for any increase to pay. Difference between pay settlement and average earnings growth for 4 3 % Secondary Primary According to the STRB s 2008 report pay drift among has become negligible. Leaving on one side IDS s view that planned progression should not be seen as drift, the Department for Children, Schools and Families has forecast pay drift of 0.7 per cent for in 2008/08 and zero pay drift for 2008/09 onwards. The STRB understand this to mean that future growth in the overall pay bill would be driven almost entirely by the annual pay award. This all means that a combination of progression stopping at the new scale maximum and staff turnover at key points such as after four, five and six years has brought about zero drift in the pay bill. In effect it could be argued therefore that a new pay structure brought into play in 2000/02 has now reached its full value but that this value is now deteriorating, and will continue to do so given the indicative low pay increases for in 208 and It is often remarked among HR managers in the private sector that most new pay systems have a useful life of up to seven years before they lose their capacity to deliver. Other figures on the spine point distribution of full-time classroom taken from teacher pay surveys between 2002 and 2007 confirm this trend. In 2002 around 44 per cent of 9

13 were bunched on upper pay spine 1 but by 2007 the figures show that 31 per cent of all were at the top of their pay range. For secondary outside of and the south east this proportion rises to 35 per cent and for special school also outside of and the south east this rises to 36 per cent. Proportion of full-time classroom by spine point distribution 2001 % 2002 % 2003 % 2004 % 2007 % Main scale 1-5* Main scale 6** Upper pay spine Upper pay spine Upper pay spine Source: Teachers pay surveys. Note: No pay surveys were conducted in 2005 and 2006 *1-8 in 2001 **9 in 2001 With zero pay drift, pay will only rise by the annual awards for the foreseeable future. This reduction in movement through the scales has come at a time of an incomes policy for the public sector for the five years from 2005 to 2010, with increases to be kept below 2.5 per cent in relation to the CPI inflation target of 2 per cent. And this is happening at a time of higher than anticipated inflation. 10

14 3. Pay and progression in teaching compared with other graduate professions Pay and Progression for Graduates is an annual publication by the IDS Executive Compensation Review which provides information and analysis on the state of the graduate market. One part of the report looks at how successful employers have been in holding on to their graduates recruited in past years and tracks how much their salaries have progressed since starting work with them. Every year IDS asks employers to provide us with the current salary details of graduates they took on five years ago, a group termed five-yearlings. In order to work out the salary progression of this group five-year salaries are charted against the starting rate for the current intake of graduates. For example, in the most recent report published in February 2008, fiveyearlings are those taken on in To calculate the salary progression of these fiveyearlings, we subtract the 2007 starting rates as provided by employers from current average salaries over the five-yearlings in the same organisation. The difference, expressed as a percentage, is the salary lead. The data allows us to look historically at how the salaries of five-yearlings have progressed over the past five years and relate these increases to the equivalent increases in salaries of graduates entering the teaching profession on main pay scale M1 and moving up to the top of the main scale pay band M6 after five years. In order to provide the clearest indication of whether salaries have lagged behind salaries in other professions over this period this information is calculated across the four sectors of manufacturing, service, finance and 50,000 All sector median salary differences, ,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS median salary lead 31,699 33,225 36,399 38,053 11

15 50,000 All sector average salary differences, ,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS median salary lead 34,709 36,380 39,855 41,666 public/not-for-profit, taking information from the five-yearlings which covers 107 organisations, with median and average salary leads from these figures. Taking these, the M1 salary points were multiplied by the median and average salary leads to show where the M6 salary points would stand if they had increased over the five years by the IDS figures. To provide a further comparison this same process was applied to looking at the salary differences by sector. 3.1 Graduate progression The results show that at M6 across all locations salaries are below what they would have been if an IDS all-sector median salary lead had been applied to the pay scale. The differences between the two sets of figures are even greater if the average salary lead had been applied. For example, at Band D a teacher at the top of the pay scale would be paid 29,427, but this figure would stand 8 per cent higher at 31,699 if the IDS median, giving typical graduate progression over the first five years of a career, had been used. The equivalent figure for the average is 34,709, some 18 per cent higher than the M6 figure. 12

16 50,000 Finance sector median salary differences, ,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS median salary lead 36,159 37,899 41,520 43,406 Finance sector average salary differences, ,000 40,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS average salary lead 36,743 38,511 42,190 44, Graduate progression by sector Looking at the sectoral pattern it can be seen that when increasing the M6 pay scale by the finance salary-lead median it produces the highest salary in comparison to the other sectors. For example, taking band A the M6 salary point is 33,936, but when using the IDS finance sector salary lead the figure increases to 43,406. Manufacturing has the smallest lead over, but it is still positive, at 36,252 in band A. 13

17 Manufacturing sector median salary differences, ,000 40,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS median salary lead 30,200 31,653 34,677 36,252 Manufacturing sector average salary differences, ,000 40,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS average salary lead 31,468 32,982 36,133 37,775 When using average salary-leads, the service sector has the largest salary difference with, at 44,276 in band A, but is closely followed by the finance sector, at 44,107. The manufacturing sector has the third-greatest difference at 33,774 in band A, with the public sector having the smallest, at 37,170 in band A. The graph shows that at the average if pay had increased in line with the increases in the service sector at M6 salary would range from 36,884 to 44,276 depending on location, while the equivalent range using the finance salary-lead would be 36,743 to 44,

18 50,000 Service sector median salary differences, ,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS median salary lead 33,562 35,177 38,538 40,288 Service sector average salary differences, ,000 40,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS average salary lead 36,884 38,659 42,352 44,276 15

19 50,000 Public sector median salary differences, ,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS median salary lead 30,965 32,455 35,555 37,170 50,000 Public sector average salary differences, ,000 Annual salary pa 30,000 20,000 10,000 0 Band D National Band C Fringe Band B Outer Band A Inner Teacher on M6 29,427 30,939 32,751 33,936 If IDS average salary lead 30,743 32,223 35,301 36,905 16

20 4. Comparing with other occupations One way of charting salaries in relation to other professions is to use the Office of National Statistics Annual Hours and Earnings Survey (ASHE). Charting data back over the past five years, using the detailed four-digit level, median and average salaries for a number of occupations can be viewed in comparison to. All professions analysed have been indexed against the figures from 2003, the point at which the new pay structure had been introduced. We have analysed a variety of roles within four areas: science, engineering, health and business and professional services, and against these categories we have compared in secondary education, and in primary and nursery education. 1 By looking at these indexes against other professional roles it provides a further understanding of the levels at which salaries have increased over the period in comparison to other jobs. The first charts show salaries in relation to science professionals, from which a 120 Indexed median science professionals Chemists Biological scientists Physicists Secondary education Primary & nursery ASHE data includes at all level, including head. The data for special needs was not included, as the sample was not felt to be reliable enough. 17

21 120 Indexed average science professionals Chemists Biological scientists Physicists Secondary education Primary & nursery mixed picture can be drawn. Looking at median earnings, physicists saw higher earnings growth than both secondary and primary, secondary kept pace with physicists and biologists, while primary fell behind slightly. Looking at average earnings, both teaching groups saw lower earnings growth than chemists or biologists, but greater earnings growth than physicists. Comparing with engineering professionals, mechanical and electrical engineers saw substantially greater earnings growth at the median over the period. Secondary kept pace with civil engineers, but primary fell behind. There was a similar pattern for average earnings, with primary faring slightly better than secondary. Looking at health professionals, earnings growth was lower than that of medical practitioners, but kept paced or grew slightly faster than psychologists and pharmacists. 18

22 125 Indexed median engineering professionals Civil engineers Mechanical engineers Electrical Secondary education Primary & nursery

23 120 Indexed average engineering professionals Civil engineers Mechanical engineers Electrical Secondary education Primary & nursery

24 120 Indexed median health professionals Medical practitioners Psychologists Pharmacists Secondary education Primary & nursery

25 125 Indexed average health professionals Medical practitioners Psychologists Pharmacists Secondary education Primary & nursery

26 5. Graduate applications To provide another indication of whether teaching is an attractive career to a graduate is to look at the number of applications made by graduates to the teaching scheme in relation to the number of applications to other graduate occupations. We are able to chart this over the last 10 years using data provided by High Fliers Research Ltd, which annually produces The UK Graduate Careers Survey, in association with The Times. Most popular career sectors for graduates from 1999 to 2008 (Source: High Fliers Research) Most 2 nd 3 rd 4 th 5 th popular Year (% of (% of (% of (% of (% of finalists) finalists) finalists) finalists) finalists) Management consultancy (14.1) Marketing (15.8) Consulting (15.5) Marketing (13) Media (11.7) Media (11.8) Teaching (12.7) Media (12.4) Media (13.4) Media (13.1) Marketing (13.5) Management consultancy (14.6) Marketing (14) Media (13) Marketing (10.8) Marketing (11.2) Media (12.7) Teaching (11.9) Teaching (12.7) Investment banking (12.6) Media (12) Media (14.6) Media (13.9) Consulting (12.9) Teaching (10.5) Teaching (11.1) Marketing (11.7) Investment banking (11.1) Investment banking (12.4) Teaching (12.4) Research & development (11.6) Research & development (11.9) Investment Banking (10.8) Investment banking (10.5) Consulting (9.6) Investment banking (10.5) Investment banking (10.8) Marketing (11) Marketing (11.8) Marketing (11.4) Accountancy (10.7) Engineering (11.5) Teaching (10.1) Teaching (10.1) Civil Service (9.4) Consulting (10.2) Research & development (9.9) Accountancy (10.8) Accountancy (11.1) Accountancy (11.2) As can be seen from the table in 1999 and 2000 teaching fell outside the top five, and but in 2001 it entered as the fifth most popular choice for graduates. By 2005 teaching had became the most popular choice for graduates, before falling back in the rankings. In 2008 teaching is 23

27 the third most popular choice for graduates. Over the ten-year period some of the most popular professions have included the media, investment banking, accountancy and research and development. Position of teaching as a graduate career choice