Indicator C7. Which factors influence teachers’ salary cost?

The four factors determining salary costs per student affect the value in different ways. The impact of the first factor, teachers’ salaries, is direct: higher salaries lead to higher salary costs. The other three factors affect it by changing the number of teachers needed, assuming that the number of students enrolled is constant. If instruction time increases or teaching time decreases, more teachers must be hired to keep class sizes constant. Similarly, more teachers would be needed to reduce class sizes while keeping everything else constant. Although linked, theoretical class sizes do not directly reflect statutory class sizes (see Methodology section).

By comparing salary costs to the OECD average, it is possible to determine the contribution of each of the four factors to any difference from the average. In other words, it is possible to assess whether a given salary cost is above average, for example, because of higher salaries, longer instruction time, shorter teaching hours, smaller class sizes or any combination of these four factors. Changing one of these factors may require compensatory trade-offs among the other factors in order to keep total salary cost constant.

On average across OECD countries and economies, teachers’ salary costs amount to USD 3 614 per primary student and USD 4 424 per lower secondary student (Figure C7.1). These averages mask a wide range of costs across countries. For example, in primary education, the salary cost per student in Denmark (USD 5 458) is over three times that in the Slovak Republic (USD 1 587).

The higher costs at lower secondary compared to primary education are mainly due to three factors: higher teachers’ salaries, longer instruction times for students and shorter teaching times. In 2021, the OECD average annual salary for 25-64 year-old teachers was USD 49 115 at lower secondary level, around USD 2 300 more than the average at primary level. The average annual instruction time in lower secondary education was 105 hours longer than in primary education, while average teaching time was 65 hours shorter. This means more teachers are needed to teach a given number of students in lower secondary than in primary education (Tables C7.4 and C7.5, available on line).

Theoretical class sizes run counter to these other three factors, increasing from an average of 13.6 students at primary level to 14.4 at lower secondary level, which slightly offsets the increase in cost from the other factors. In general, however, the effect of larger class sizes is not enough to offset the other increases, although exceptions exist. Chile, Costa Rica, Hungary and Slovenia are the four OECD countries where teachers’ salary costs per student are lower in lower secondary than in primary education (Tables C7.2 and C7.3 and Figure C7.1). This is mainly due to significant increases in theoretical class sizes at lower secondary level.

As the salary costs of teachers per student are positively correlated with countries’ GDP per capita, it is important to also take wealth levels into account when comparing countries. On average across OECD countries, the salary cost of teachers per student corresponds to 7.3% of GDP per capita at primary level and 7.9% at lower secondary level (Table C7.1).

The interpretation of teachers’ salary cost per student can change when national output is taken into account. Some countries devote a greater share of their GDP to teachers’ salary costs, even though the absolute value may be low. For example, Costa Rica’s salary cost of teachers in primary education is USD 3 400 per student, below the OECD average. However, this corresponds to 15.0% of the country’s GDP per capita, which is 7.7 percentage points above the OECD average. In contrast, in the Netherlands, where the salary cost of teachers per student in primary education (USD 4 015) is significantly higher than the OECD average, it is only 6.3% of its GDP per capita, well below the OECD average (Table C7.1).

Figure C7.2 shows the wide variety of combinations of the four factors across countries and their different effects on the salary cost of teachers per student. The size of the contribution each factor makes to the difference between a country’s salary cost and the OECD average depends on the difference between the factor itself and the respective OECD average. The sum of each factor’s contribution equals the difference in salary cost between that country and the OECD average. For example, the salary cost per student in primary education in Australia is USD 4 336, which is USD 722 higher than the OECD average. This difference is the result of the following contributory effects: above-average teachers’ salaries add USD 1 165 above-average instruction time adds USD 896, above-average teaching time subtracts USD 489 and above-average theoretical class sizes subtract USD 851 (Table C7.2).

Higher levels of expenditure on education cannot automatically be equated with better performance by education systems. This can be seen when comparing the average performance of 15-year-olds on the OECD Programme for International Student Assessment (PISA) 2018 reading literacy scale with cumulative spending per student between the ages of 6 and 15 in 2018 (OECD, 2020[2]). This is not surprising, as expenditure figures do not necessarily account for structural factors affecting learning outcomes (such as demographic changes). In addition, countries spending similar amounts on education do not necessarily have similar education policies and practices. For example, France and Hungary have nearly the same teachers’ salary costs per primary student, but teachers’ actual salaries in France are about twice those than in Hungary, which is more than balanced out by classes in France having about six more students on average (based on the theoretical class size). To illustrate the wide range of policy choices that countries have made despite similar spending levels, the countries shown in Figure C7.2 are divided into four groups with similar teachers’ salary costs per student (see Methodology section).

This group, which has the highest salary cost of teachers per student in primary education, comprises eight countries and other participants (Figure C7.2). Teachers’ salary costs in this group range from USD 4 682 per student to USD 5 458. These salary costs per student represent between 8.0% and 10.7% of their respective GDP per capita (Table C7.1).

As mentioned, the four factors analysed in this indicator affect salary costs per student in different ways, allowing them to counterbalance each other. However, the high-spending countries in this group tend to share more similarities between the four factors than the countries in other groups. They all pay above-average teacher salaries and all of them except Austria have below-average teaching time. However, the drivers behind these high teachers’ salary costs per student still differ across the group. In Austria, Denmark and Germany, the high cost is mostly the result of high teachers’ salaries whereas in Norway it mainly stems from small theoretical class sizes, and in Iceland and Slovenia from shorter teaching time.

There are eight countries with close-to-average or above-average salary costs (Figure C7.2). Salary costs per student in this group range from USD 3 400 to USD 4 336 (Table C7.1). The countries in this group differ widely in terms of GDP per capita and education expenditure, illustrating the variety of policy choices that countries with similar salary costs can make.

In all of these countries, except Finland and Portugal, teachers’ salary costs per student reflect the result of a trade-off between teachers’ salaries and theoretical class size. Australia, Ireland and the Netherlands have above-average teachers’ salaries, which push the salary cost up, but these are partly offset by above-average theoretical class sizes. On the other hand, Costa Rica, Greece and Italy have significantly below-average teachers’ salaries which are offset by small theoretical class sizes.

A second trade-off observed in all these countries except Italy, is between students’ required instruction time and teachers’ teaching time. In five countries, above-average instruction time, which increases salary costs per student, is more than entirely offset by above-average teaching time, reducing the number of teachers that need to be hired. In Costa Rica, instruction time is 43% longer than the OECD average, but this is more than fully counterbalanced by teaching time which is 59% above the OECD average.

This group is composed of six countries with below-average salary cost of teachers per student (Figure C7.2). Teachers’ salary costs in this group range from USD 2 518 per student to USD 3 238 (Table C7.1).

They all have lower than average teacher salaries. However, there are also differences between these six countries. In four of them, the below-average salary cost per student stems from a combination of low teachers’ salaries and shorter instruction time. These six countries differ in how the other two factors are combined. In Estonia, Hungary and Poland, lower teachers’ salaries are partially compensated by shorter teaching time, and by below-average theoretical class sizes in Hungary and Poland. This is not the case in the other three countries – France, Israel and Lithuania - where teaching time is longer than the OECD average.

This group is composed of the four countries with the lowest salary cost of teachers per student in primary education (Figure C7.2). Teachers’ salary costs per student in this group range from USD 1 587 to USD 2 181 (Table C7.1). These countries all have below-average GDP per capita.

These countries have certain characteristics in common: they all have lower than average teacher salaries, shorter instruction hours (except in Chile) and larger than average theoretical class sizes (except in Latvia). The combined effect of these three factors leads to a significant reduction in the salary cost of teachers per student. However, these countries have still made different policy choices. The salary cost per student in Latvia is 37% higher than in Slovak Republic, even though teachers’ salaries in both countries are fairly similar (USD 27 387 in Latvia and USD 27 610 in Slovak Republic). The difference in salary cost mainly stems from Slovak Republic having larger theoretical class sizes, with around 4 more students per class than in Latvia. In contrast, the Czech Republic has similar salary costs per student to Chile, as higher salaries in the Czech Republic are counterbalanced by larger theoretical class sizes.

Between 2015 and 2021, the salary costs of teachers per student in primary and lower secondary education increased in constant prices terms in all OECD countries except Austria (for both levels), Denmark and Slovenia (for lower secondary education only). On average among countries with data for both years, they increased by 15% (from USD 3 135 to USD 3 614) at primary level and by 6% (from USD 4 166 to USD 4 424) at lower secondary level.

At each level of education, teachers’ salaries generally have the greatest impact on the degree to which countries’ salary cost of teachers per student diverges from the OECD average. The second most influential factor is the theoretical class size. The trade-off between these two variables, which are often the target of educational reforms and policies, reflects the choice countries have to make between increasing teachers’ salaries and hiring more teachers (Tables C7.4 and C7.5, available on line). In fact, controlling for the total salary cost of teachers, countries with higher teachers’ salaries tend to have larger class sizes (OECD, 2018[3]). Variations in the other two factors, instruction time and teaching time, are usually smaller both across countries and within countries over time, but the average is influenced by large variations in some countries.

Figure C7.4 plots the evolution of teachers’ actual salaries and theoretical class sizes between 2015 and 2021. During this period, among countries with available data for both years, teachers’ salaries increased in real terms by 11% at the primary level, while theoretical class sizes fell by 2%. Most countries have increased teachers’ salaries over this period, by more than 30% in some Eastern European countries (the Czech Republic, Estonia, Latvia and the Slovak Republic). While the 2000s were marked by budget freezes or even cuts that had an impact on teachers’ salaries, many countries appear to have made a gradual upward adjustment since 2015.

Figure C7.4 groups countries into four different categories, each represented in a quadrant of the chart. Countries in the top-right and bottom-left quadrants have made a trade-off between increasing teachers’ salaries or decreasing theoretical class sizes over this period. For instance, those in the top-right quadrant increased theoretical class sizes (bringing the salary cost of teachers per student down) and increased teachers' salaries (pushing the cost up). The most notable examples are the Czech Republic and Latvia, where theoretical class sizes increased by more than 20% between 2015 and 2021, offsetting the impact of teachers’ salaries, which increased by over 35%. Only two countries (Italy and Norway) made the opposite choice, with theoretical class sizes falling but somewhat compensated for by falling teachers’ salaries. It is important to note that although these changes have opposite effects on salary costs, they are not necessarily made in response to each other. In Italy, for example, the reduction in the theoretical class size was mainly due to demographic changes (see Figure C7.5 in Box C7.3).

No particular trade-off between these two variables seems to have been made in the countries in the top-left and bottom-right quadrants. Those in the top-left quadrant increased theoretical class sizes and reduced teachers’ salaries between 2015 and 2021, both measures that push down teachers’ salary costs. In contrast, countries in the bottom-right quadrant reduced theoretical class sizes and increased teachers’ salaries, both measures that increase salary costs. Globally, the size of the change in each variable differs across countries, with teachers’ salaries increasing by over 30% in the Czech Republic, Estonia, Latvia and the Slovak Republic while theoretical class sizes fell by nearly 35% in Slovenia (Figure C7.4).

The data refer to public institutions only.

Instruction time refers to the time a public school is expected to provide instruction to students on all the subjects integrated into the compulsory and non-compulsory curriculum, on school premises or in before or after-school activities that are formal parts of the compulsory programme (see Indicator D1).

Teachers’ teaching time is the annual average number of hours that full-time teachers teach a group or class of students, including all extra hours, such as overtime (see Indicator D4 of Education at a Glance 2022).

Actual salaries for teachers/school heads aged 25-64 refer to the annual average earnings received by full-time teachers/school heads aged 25-64, before taxes., converted to USD using purchasing power parity (PPP) for private consumption (see Indicator D3). It is the gross salary from the employee’s point of view, since it includes the part of social security contributions and pension-scheme contributions that are paid by the employees (even if deducted automatically from the employees’ gross salary by the employer). However, the employers’ premium for social security and pension is excluded (see Indicator D3).

Theoretical class size refers to the theoretical size of classes given the statutory – or theoretical – values of instruction and teaching time and the student-teacher ratio (see Methodology section). It does not reflect the actual average class size in countries.

The salary cost of teachers per student (SCS) is calculated as:

SCS=Teacher salary*Instruction time*1Teaching time*1Theoretical Class Size

Where theoretical class size is calculated as:

Theoretical class size=Instruction timeTeaching time*StudentsTeachers

The contribution of each factor to the level of the salary cost of teachers per student is analysed by comparing the salary cost of teachers per student in each country to the OECD average then calculating the contribution of these different factors to the variation from the OECD average. This exercise is based on a mathematical relationship between the various factors and follows the method presented in the Canadian publication Education Statistics Bulletin (Quebec Ministry of Education, Recreation and Sports, 2003[8]). Using this mathematical relationship and comparing a country’s values for the four factors to the OECD averages makes it possible to measure both the direct and indirect contribution of each of these four factors to the variation in salary cost per student between that country and the OECD average.

Countries are grouped in four clusters with respect to their teachers’ salary cost per student. The cluster analysis allows countries within a group to be more similar to each other than to countries in other groups. On the other hand, countries across groups are as dissimilar as possible.

Please see the OECD Handbook for Internationally Comparative Education Statistics 2018 (OECD, 2018[9]) for more information and Education at a Glance 2023 Sources, Methodologies and Technical Notes, https://doi.org/10.1787/d7f76adc-en for country-specific notes.

Data referring to the 2022 school year are based on the UNESCO, OECD and Eurostat (UOE) data collection on education statistics and on the Survey on Teachers and the Curriculum, which were both administered by the OECD in 2022.

References

[6] EC (2021), Education and Training Monitor 2021: Croatia, European Commission, https://op.europa.eu/webpub/eac/education-and-training-monitor-2021/en/croatia.html.

[4] EC (2019), Education and Training Monitor 2019: Ireland, European Commission, https://education.ec.europa.eu/sites/default/files/document-library-docs/et-monitor-report-2019-ireland_en.pdf.

[7] EC (2019), Education and Training Monitor 2019: Lithuania, European Commission, https://education.ec.europa.eu/sites/default/files/document-library-docs/et-monitor-report-2019-lithuania_en.pdf.

[5] EC (2019), Education and Training Monitor 2019: Slovenia, European Commission, https://education.ec.europa.eu/sites/default/files/document-library-docs/et-monitor-report-2019-slovenia_en.pdf.

[1] OECD (2023), Education at a Glance 2023 Sources, Methodologies and Technical Notes, OECD Publishing, Paris, https://doi.org/10.1787/d7f76adc-en.

[2] OECD (2020), PISA 2018 Results (Volume V): Effective Policies, Successful Schools, PISA, OECD Publishing, Paris, https://doi.org/10.1787/ca768d40-en.

[3] OECD (2018), Education at a Glance 2018: OECD Indicators, OECD Publishing, Paris, https://doi.org/10.1787/eag-2018-en.

[9] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018: Concepts, Standards, Definitions and Classifications, OECD Publishing, Paris, https://doi.org/10.1787/9789264304444-en.

[8] Quebec Ministry of Education, Recreation and Sports (2003), “Le coût salarial des enseignants par élève pour l’enseignement primaire et secondaire en 2000-2001”, Education Statistics Bulletin, No. 29, Éducation Québec, http://www.education.gouv.qc.ca/fileadmin/site_web/documents/PSG/statistiques_info_decisionnelle/bulletin_29.pdf.

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