Cash, no credit

30th May 2008 at 01:00
Economists have pointed to a gathering financial storm. Madeleine Brettingham analyses what it means for jobs in education and discovers that the clouds have a silver lining if you're a teacher
Economists have pointed to a gathering financial storm. Madeleine Brettingham analyses what it means for jobs in education and discovers that the clouds have a silver lining if you're a teacher

The nice decade is behind us," said the governor of the Bank of England this month, predicting that prices will rise, the housing market will weaken, and the British economy could see periods of negative growth. While he didn't go as far as mentioning the "r" word - recession - few doubt that the British economy is in a precarious state.

So what do the gathering storm clouds mean for teachers' wages, jobs and schools? Will it mean saying sayonara to your carefully-laid career plans? Or is it just a cue for the nation's bankers to cut down on their Cuban cigars?

The first thing to note is that we've been here before. Well, sort of. While today's economic climate might not bear all the hallmarks of the recession that swept across Britain in the late Eighties and early Nineties (both unemployment and inflation are, so far, lower) there are likenesses.

Rising oil prices, a wobbly pound, rollercoaster stock markets and a housing bubble so big and shiny it could have drifted straight out of Willy Wonka's chocolate factory are just some of the warning signs that have made economists reach for their seat belts in recent months. Not to mention the fact that Gross Domestic Product growth, while not yet negative, is at its lowest quarterly level for three years.

But just how will a recession, if that's what we're seeing, affect teaching? After all, unlike the City, education isn't reliant on private finance. Nor do its consumers, pupils, have much choice about whether they buy the product. This is what makes predicting the workings of the education sector during an economic downturn so difficult. However, we can say with some confidence that one area is likely to benefit - recruitment.

Between 1993 and 1998, as the economic boom got underway in earnest, PGCE applications in England dropped by 10 per cent, or 2,000 students. It's part of a recruitment trend that seems to operate in tandem with the economic cycle. When the economy's fizzing, graduates seek out better-paid jobs in the private sector. But during a recession, as in the Seventies and late Eighties, businesses shut their doors and teaching starts to look more tempting. During both recessions, there was a surge in the number of students applying for teaching courses, mirrored by a simultaneous spike in graduate unemployment.

"As the economy picked up in the Nineties, it triggered a prolonged downturn in teacher recruitment, and education didn't necessarily get all the best graduates from the best universities," says Alan Smithers, director of the centre for education and employment research at Buckingham University. "A recession could mean we get a better share, potentially benefiting the state of teaching in schools."

It's a cycle that could be already playing out, according to John Howson, The TES Magazine careers expert. During times of plenty, shortage subjects such as maths and physics haemorrhage graduates, lured by hefty pay packets in the private sector (maths PGCE applicants dropped by more than half between 1993 and 1998). When they start coming back, it's normally a sign that times are changing. And although there hasn't yet been a major reversal of the trend, Professor Howson says that as of this year the downward slide in subjects such as ICT and physics seems to be slowing. "It's possible that graduates are already being shaken out of the City," he says.

But what about your job prospects? Will a recession mean more teachers competing for fewer vacancies? Actually, it's not that straightforward. Although economic gloom will sap budgets in the private sector, last year's school funding settlement means school coffers are safe for the next three years. There'll be no direct pressure, then, to cut jobs, although the effects of inflation eating into school budgets could mean heads are pushed to make redundancies, as the National Association of Head Teachers has already warned.

But overall, other factors play a much bigger role in the teaching job market. Teacher numbers don't habitually drop in a recession, and although vacancy rates fell to 0.5 per cent of the workforce by the end of the last downturn, probably due to a surge in applicants, the influx took a few years to make itself felt. So teacher job security isn't hugely dependent on the state of the economy. In fact, other influences such as rising pupil numbers and the raising of the leaving age to 16 in 1972 affected the job supply much more significantly. So whatever the effects of a downturn, an immigration-fuelled population boom and the introduction of diplomas later this year could make a much larger impact.

But what about wages? New teachers could see the golden hellos and bursaries that have materialised over the past few years (worth up to pound;5,000 and pound;9,000 respectively) disappearing, as the Government realises it no longer needs to pull out the stops to attract new recruits. "There was a severe teacher shortage in the Eighties, so the Conservative government put in place bursaries for physics and maths, and then chemistry and languages," says Professor Smithers. "But the recession did away with these, as recruitment picked up. It may be that some of these incentives will be reined back, although we still have a huge deficit of teachers in science and maths."

For established teachers, the outlook is less clear. The three-year pay deal means there is no immediate threat to wages, but creeping inflation could eat away at their real value. The Government put the annual rate of inflation in last month at 3 per cent, but critics complain the real rate is higher. The price of an average shopping basket is up 20 per cent on last year, according to

If government finances are stretched when teachers' pay next comes up for review in 2011, it could prompt a series of below-inflation pay rises. With a 2.45 per cent rise scheduled for September, followed by a 2.3 per cent rise over each of the following two years, unions say this is already happening. The National Union of Teachers is arguing for a 4.1 per cent rise, but the Government won't agree, hence last month's strike.

So does that mean you should cut your losses and leave the job you love? Not necessarily. Whereas in boom time, private sector pay soars ahead, making corporate jobs look much more appetising (between 1992 and 2004, teacher's pay declined by 6 per cent relative to other non-manual jobs), in recessions the gap usually remains constant, or even closes. This is not only because recessions depress private sector wages, but because big improvements in teachers' salaries are often doled out by governments in the latter stages of a recruitment crisis. And this is likely to come at the end of a boom, just before the economic bubble pops.

And what about heads? Well, Professor Howson fears a recession could see repercussions in the leadership market as the housing market cools and families sink into negative equity. "You're more likely to have to move house to take up a head's post, even within London, and if you're at the top of the chain selling a pound;500,000 house, you might be finding it more difficult. As a deputy you might think, do I really want the hassle?"

But no one really knows how a recession will affect leadership. It could be that falling house prices, particularly in overheated markets such as the South East of England and London, make it easier for heads to move from the provinces and take up inner city posts.

In education, as in many other sectors, the future is hard to predict. But teachers can rest easy in the knowledge that they are much better placed than many other workers to withstand an economic downturn. After all, schools, unlike companies, rarely go bust.

How the last recession affected education

- PGCE applications surged as jobs in the private sector dried up.

- Recruitment to shortage subjects such as maths and physics improved.

- Golden hellos and bursaries disappeared.

- Wages did not drop relative to the private sector.

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