shortages, says Peter Dolton.

MY WIFE spent most of the summer half-term this year completing an application for a pay rise. She was reluctant to do this as she did not agree with this method of rewarding her efforts as a teacher. However, she was encouraged by colleagues and her union to do so.

Yet in July, her union, the National Union of Teachers won a High Court case which ruled that the Secretary of State had acted illegally by unilaterally ordering changes to teachers’ conditions of service by attempting to introduce a “threshold payment” of pound;2,000 per annum. Where is the logic in this?

In the UK we currently face a crisis in the recruitment and retention of teachers. As part of the Government’s plans for teachers it intends to introduce performance-related pay (although the Government prefers to say pay and performance and management reforms as they are broader than simple PRP).

Since around 80 per cent of teachers who were eligible for the threshold payment had applied for it and around 80 per cent were expected to receive it, the High Court ruling appears to be a defeat for all parties.

What is the truth of the situation? What is the current position of teacher pay and recruitment? Why does the Government want to introduce PRP and why do teachers’ unions want to oppose it?

The market for teachers functions like any other labour market. Teacher shortages have been cyclical and a regular occurrence over the past 50 years and they have always been accompanied by low relative teacher wages. The situation is worse in subjects, like maths, where the “outside option” - namely an alternative career - has been best.

In recent years, teachers’ pay is falling in relative terms. Since 1993 salaries have declined by 14 per cent relative to average non-manual earnings. Teachers earnings have also declined by 11 per cent relative to the earnings of police officers since 1981 and by 25 per cent relative to nurses since 1973. Hence it is no surprise that recruitment is at a low ebb and the A-level scores of those intending to be teachers are falling.

Stated simply, the Government wants to introduce PRP since there is good evidence to suggest that if workers’ wages are geared explicitly to their output they perform more efficiently. Everybody knows that there are good teachers and bad teachers and it would be desirable to reward the good ones with higher pay and induce the bad ones to either perform better or leave the profession. The problem, of course, is that the output of schoolteachers, tat is, the education of their pupils, is multidimensional and not easy to measure.

Nor is it easy to observe which teachers are responsible for enhanced performance. In addition, there are inherent weaknesses in any system of measurement and reward since it may induce undesirable side-effects. For example, it may result in teachers concentrating their efforts on pupils on the margin of passing examinations.

Teachers and their unions have variously reported that they don’t like PRP for many reasons:

Teaching is based on team- work and co-operative effort and hence rewarding one teacher and not another is difficult. Individual PRP reduces co-operation between teachers.

The additional paperwork and the monitoring effort involved in producing evidence of competence is extremely time-consuming and this could be better allocated to teaching preparation.

Assessment, even by colleagues using peer review, may promote a divisive and threatening culture.

Quality of educational output cannot be measured in exam scores or their changes over time. Even value-added measurements of achievement may not adequately control for schools from different catchment areas teaching kids of widely differing abilities in dynamically mobile pupil populations.

The method of the threshold implies that teachers are guilty of incompetence until they can prove otherwise - this could destroy morale and induce dysfunctional behaviour in relation to discretionary activities.

The application of PRP where individual performance is difficult to measure is problematic. The introduction of a fair and efficient incentive system which induces the desired reaction from individuals is extremely difficult to construct and hence the Government should proceed with the utmost caution.

Most parents and voters would like to see good teachers rewarded better. We must, however, appreciate that market forces will induce high-quality graduates to make alternative career choices if relative wages in teaching are low. Government reforms which require a huge effort from stretched teachers in a short time are counter-productive.

Hence the answer to a high-quality teaching stock in the future is higher relative wages and carefully planned pay reforms which induce the right incentives for effort and performance.

Peter Dolton is professor of economics at the University of Newcastle-upon Tyne and the Institute of Education, University of London. He will be speaking at a TESCentre for Economic Performance debate at the Labour party conference in Brighton on Monday. For full details, see page 24