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Managing the teacher pay system: What the local and international data are telling us


  • Martin Gustafsson

    () (Department of Economics, University of Stellenbosch)

  • Firoz Patel

    () (System Planning and Monitoring, Department of Education)


A review of a few input-output models indicates the importance of teacher ability, which may be independent of years of training, for improving pupil performance. A historical analysis confirms the substantial pay increases experienced by teachers in the mid-1990s, moderate pay increases in real terms since 1996, and a falling ratio of teacher pay to GDP per capita. Analysis of Labour Force Survey data reveals that in 2007 teachers were paid less than other professionals, even if the comparison is made conditional on a number of non-pay variables. Working hours is not used as a conditioning variable, however, and low pupil performance levels suggest that the average productivity of teachers is not high. In 2007 the age-pay slope for teachers was flatter than that for other professionals. The impact of the 2008 changes to the teacher pay system are considered. These changes initiate a gradual closing of the pay gap between teachers and other professionals, and convert a rather flat age-pay slope for teachers into one that compares favourably to that of other professionals, and to those of teachers in other countries. The fact that the new system links progression up the salary scales to the behavioural input characteristics of teachers is line with good practice elsewhere, but the linking of pupil performance to teacher pay is probably best undertaken collectively at the level of the school. The teaching hours put in by teachers compares favourably to those in other countries, yet the utilisation of teacher time in many schools is not optimal, resulting in class sizes that are unacceptably high.

Suggested Citation

  • Martin Gustafsson & Firoz Patel, 2009. "Managing the teacher pay system: What the local and international data are telling us," Working Papers 26/2009, Stellenbosch University, Department of Economics.
  • Handle: RePEc:sza:wpaper:wpapers99

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    References listed on IDEAS

    1. Ronelle Burger & Servaas van der Berg, 2003. "Education and Socio-Economic Differentials: A Study of School Performance in the Western Cape," Working Papers 03073, University of Cape Town, Development Policy Research Unit.
    2. Paul Glewwe & Nauman Ilias & Michael Kremer, 2010. "Teacher Incentives," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 205-227, July.
    3. Emiliana Vegas & Ilana Umansky, 2005. "Improving Teaching and Learning through Effective Incentives : What Can We Learn from Education Reforms in Latin America?," World Bank Other Operational Studies 8694, The World Bank.
    4. Daniel Cohen & Marcelo Soto, 2007. "Growth and human capital: good data, good results," Journal of Economic Growth, Springer, vol. 12(1), pages 51-76, March.
    5. Dorrit Posel & Daniela Casale, 2005. "Who replies in brackets and what are the implications for earnings estimates? An analysis of earnings data from South Africa," Working Papers 07, Economic Research Southern Africa.
    6. Hoenack, Stephen A., 1996. "The economics of education in developing countries: An assessment of the state of the art," Economics of Education Review, Elsevier, vol. 15(4), pages 327-338, October.
    7. Martin Gustafsson, 2007. "Using The Hierarchical Linear Model To Understand School Production In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 75(1), pages 84-98, March.
    8. Alejandra Mizala & Pilar Romaguera, 2004. "Teachers’ Salary Structure and Incentives in Chile," Documentos de Trabajo 193, Centro de Economía Aplicada, Universidad de Chile.
    9. Servaas VAN DER BERG & Onelle BURGER, 2003. "Education And Socio‐Economic Differentials: A Study Of School Performance In The Western Cape," South African Journal of Economics, Economic Society of South Africa, vol. 71(3), pages 496-522, September.
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    Cited by:

    1. Robert Cameron & Vinothan Naidoo, 2016. "When a ‘ruling alliance’ and public sector governance meet: Managing for performance in South African basic education," Global Development Institute Working Paper Series esid-060-16, GDI, The University of Manchester.
    2. Paula Armstrong, 2014. "Teacher Wages in South Africa: How Attractive is the Teaching Profession?," Working Papers 08/2014, Stellenbosch University, Department of Economics.
    3. C.N. Mbatha & M.A. Gustafsson, 2013. "The standard error of regressions: a note on new evidence of significance misuse," Agrekon, Taylor & Francis Journals, vol. 52(1), pages 28-39, March.

    More about this item


    Teacher; School; Wage Differentials; Incentive; South Africa;

    JEL classification:

    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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