Indicator C7. Which factors influence teachers' salary cost?

This analysis calculates the salary cost of teachers per student using four factors: teachers’ salaries, students’ instruction time, teachers’ teaching time and theoretical class size (see Definitions section). Different levels of salary cost of teachers per student result from various different combinations of these four factors.

On average across OECD countries, the salary cost of teachers per student rises from USD 2 784 in primary education to USD 3 380 in lower secondary education.

The two main factors influencing the level of teachers’ salary costs are teachers’ salaries and theoretical class sizes. Between 2005 and 2017, teachers’ salaries increased in most OECD countries, and this additional cost was often offset by similar increases in the average class size.
Context
Governments have become increasingly interested in the relationship between the amount of resources devoted to education and student learning outcomes. They seek to provide more and better education for their population, while ensuring that public funding is used efficiently, particularly when public budgets are tight. Teachers’ compensation usually accounts for the largest share of expenditure on education and thus of expenditure per student. The salary cost of teachers per student, as calculated in this indicator, is a function of students’ instruction time, teachers’ teaching time, teachers’ statutory salaries and theoretical class sizes (see Methodology section).
Differences among countries in these factors may explain differences in the level of expenditure per student. Similarly, a given level of expenditure may be associated with different combinations of these factors. This indicator examines the choices countries make when investing their resources in primary and secondary education and explores how different policy choices related to these factors affect the salary cost of teachers.
The salary cost of teachers per student can be affected by other variables not directly assessed in this indicator, such as demographic changes. For example, in countries where enrolments have been declining in recent years, class sizes would also shrink (assuming all other factors remain constant), unless there was also a simultaneous drop in the number of teachers. This indicator does not distinguish between a reduction in class size due to demographic changes and a deliberate policy decision to reduce class size.
Other findings

Similar levels of expenditure among countries can mask a variety of contrasting policy choices. For example, France and Hungary have nearly the same salary cost of teachers per primary student, but teachers’ statutory salaries in France are 80% higher than in Hungary, which is more than balanced out by classes in France having about seven more students on average (based on the theoretical class size).

On average across OECD countries, the salary cost of teachers per student represents 6.7% of gross domestic product (GDP) per capita at primary level and 8.2% at lower secondary level.

Given a fixed level of salary cost, a reduction in class size can be compensated for by a decrease in teachers’ salaries, a decrease in instruction time or an increase in teaching time. For example, in Australia, in order to reduce theoretical class size by one student and keep the salary cost per student constant, annual teacher salaries would have to fall by USD 3 600, annual instruction time would have to be reduced by 57 hours, or annual teaching time would have to increase by 53 hours
Note
The salary cost of teachers per student is estimated based on values for teachers’ gross statutory salaries after 15 years of experience and the most prevalent qualifications (see Indicator D3), the theoretical instruction time for students (see Indicator D1) and teachers’ statutory teaching time (see Indicator D4). This measure may differ from the actual salary cost of teachers (see Box C7.1).
The use of statutory salaries means that this indicator does not take into account the actual level of qualifications and the seniority of the teaching workforce. The statutory salary also does not include employer’s contribution to social security and pension and therefore does not represent the full cost incurred by the employer (i.e. the government). As a result, this measure is not comparable to the indicator on expenditure on teacher compensation (see Indicator B6).
Analysis
Variation in the salary cost of teachers per student by level of education
On average across OECD countries and economies, the salary cost of teachers is USD 2 784 per primary student, USD 3 380 per lower secondary student and USD 3 274 per general upper secondary student (Figure C7.1). Each of these averages masks a wide range of salary costs across countries. For example, in primary education, the salary cost of teachers per student in Germany (USD 4 679) is over six times the cost in Latvia (USD 720). Higher salary costs are a result of higher teachers’ salaries and/or having more teachers per student, which is itself pushed up by smaller classes, longer required instruction time for students or shorter teaching hours for teachers.
The general increase in teachers’ salary cost between primary and lower secondary education is the result of increases in teachers’ salaries and students’ instruction time, as well as a reduction in teaching time, all of which push up the cost. In 2017, the OECD average annual statutory salary for teachers with 15 years of experience was USD 43 007 at lower secondary level, around USD 1 950 more than the average salary at primary level. Moreover, the average annual instruction time in lower secondary education was 124 hours longer than in primary education, while average teaching time was 83 hours shorter, implying that more teachers were needed to teach a given number of pupils.
In contrast to the other factors, theoretical class size tends to increase between primary and lower secondary education, which partially offsets the increase in cost between the two levels (the OECD average theoretical class size increases from 15 students at primary level to 17 students at lower secondary). However, in general, the effect of the larger class size is not enough to offset the increase in cost caused by the other three factors. Chile, Colombia and Mexico are the only OECD countries where the salary cost of teachers per student in lower secondary is less than in primary education (Tables C7.5a and b, available on line). This is mainly due to an increase in theoretical class size between primary and lower secondary levels in these countries.
In a few countries, the learning environment and the organisation of schools are relatively similar in primary and lower secondary education. For example, in 2017, the difference in the salary cost of teachers per student between primary and lower secondary was less than USD 100 in Canada, Hungary, Mexico and Turkey. The greatest difference was in Slovenia, where it was of USD 4 036.
Variation in the salary cost of teachers per student after accounting for countries’ wealth
The level of the salary cost of teachers per student is positively correlated with countries’ GDP per capita, so it is important to also take into account relative wealth when comparing countries. On average across OECD countries, the salary cost of teachers per student represents 6.7% of GDP per capita at primary level, 8.2% at lower secondary level and 8.0% in general programmes at upper secondary level (Table C7.1).
The ranking of a few countries changes once GDP per capita is taken into account. For example, Poland’s salary cost of teachers per student in primary education is below the OECD average, at USD 2 355. However, this amount represents 7.9% of the country’s GDP per capita, above the OECD average of 6.7%. This means that Poland devotes an aboveaverage share of its GDP per capita to teachers’ salary cost, even if the absolute amount is relatively low. The opposite is the case in Ireland, where the salary cost of teachers per student in primary education (USD 3 844) is considerably above the OECD average, but represents only 5% of the country’s GDP per capita, well below the OECD average.
Teachers’ salary cost per student, as presented in this indicator, is an estimated measure of how much is spent on teachers’ salaries in each country. In addition to teachers’ salaries themselves, the indicator takes into account three factors that influence the number of teachers a system requires: the number of required instruction hours, the number of hours teachers spend teaching and the theoretical class size. Please see the Methodology section for more information on how these factors relate to each other and are combined to calculate the salary cost.
It is important to consider the limitations of this indicator’s methodology when interpreting the results. First, the indicator is calculated using the statutory values for teaching and instruction time and teachers’ statutory salaries. Therefore, the results presented in this indicator are theoretical in nature, and do not reflect the actual time teachers spend teaching or how much they actually earn each year. Indeed, even the concept of teaching and instruction time have become increasingly theoretical in nature as learning settings become more flexible, making it difficult to accurately measure the amount of time spent on these activities.
Second, by using national figures, the indicator misses the wide discrepancies that may exist within countries. The tradeoff between teachers’ salaries and class size, for example, may have very different effects depending on the socioeconomic status of students and schools. Moreover, the tradeoffs highlighted in this analysis are only a few of the many decisions countries must make when allocating their resources. Countries must also examine potential tradeoffs with other investment areas, such as teacher training and school infrastructure, as well as tradeoffs between different levels of education.
Although some of these limitations are difficult to address due to current data availability, there are several possible avenues to take that would expand the analytical potential of this indicator once more data become available. The first would be improving the measure used to estimate the cost of teachers. One way to achieve this might be to use teachers’ average actual salaries, taking bonuses and allowances into account, instead of the statutory salaries. Another possibility would be to take into account the full cost to the government of teachers’ salaries, including costs that do not go directly to teachers, such as employer’s contributions and pensions.
Other avenues for potential future development include exploring the link between teachers’ salary costs and school funding formulae, and how the tradeoffs associated with teachers’ salary costs may differ across subnational levels of decision making, such as schools, school districts and municipalities.
Contribution of each factor to the salary cost of teachers per student
The four factors which determine the salary cost of teachers per student affect it 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 the salary cost 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 need to be hired in order to reduce class sizes while keeping everything else constant.
By comparing a country’s salary cost to the OECD average, it is possible to determine the contribution of each of the four factors to the difference from the average. In other words, it is possible to assess whether a given salary cost is above average because of higher salaries, longer instruction times, shorter teaching hours, smaller class sizes or a combination of these four factors. Changing one of these factors may require compensatory tradeoffs among the other factors in order to keep the total salary cost constant (Box C7.2).
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. The size of the contribution of each factor 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 Poland is USD 2 355, USD 429 lower than the OECD average. This difference is the result of the contributory effects of the four factors: belowaverage theoretical class size adds USD 521 to the difference, belowaverage teaching time adds USD 864, belowaverage teachers’ salary subtracts USD 1 226 and belowaverage instruction time subtracts USD 588 (Table C7.2).
Different policies in countries with similar spending
Higher levels of expenditure on education cannot automatically be equated with better performance by education systems (OECD, 2016[1]). In addition to the fact that structural changes cannot guarantee better learning outcomes, countries spending similar amounts on education do not necessarily have similar education policies and practices. The OECD countries and economies shown in Figure C7.2 can be divided into four groups, each with similar teachers’ salary cost per student, in order to better illustrate the range of policy choices that are possible – and have been made by other countries – while spending similar amounts.
Group 1: High salary cost of teachers per student in primary education
This group, which has the highest salary cost of teachers per student in primary education, is composed of Australia, Austria, the Flemish and French communities of Belgium, Canada, Germany, Norway and Switzerland. The salary cost of teachers per student in this group ranges from USD 4 013 to USD 4 679. All of these countries have aboveaverage GDP per capita, but the relationship between salary cost and GDP per capita is not onetoone. Some countries allocate a larger share of their wealth to this type of expenditure than others (Table C7.1).
Compared to countries from the other groups, it may seem as though these highspending countries do not face tradeoffs between the four factors analysed in this indicator. Indeed, most of the countries in this group can afford both aboveaverage teacher salaries and belowaverage theoretical class sizes. However, the magnitude of the difference between these factors and the respective OECD averages differs considerably across these countries. In Germany, for example, the high salary cost of teachers is mostly a result of high teachers’ salaries, whereas in Austria it is mostly the result of small theoretical class sizes.
Group 2: Moderately high salary cost of teachers per student in primary education
This group is composed of 11 countries with aboveaverage salary costs: Finland, Greece, Iceland, Ireland, Italy, Japan, the Netherlands, Portugal, Slovenia, Spain and the United States. The salary cost of teachers per student in this group ranges from USD 2 833 to USD 3 844 (Table C7.1). This group is highly heterogeneous in terms of GDP per capita and education expenditure, which sheds light on the many different choices countries with similar spending can make.
A potential tradeoff observed in some countries is between students’ required instruction time and teachers’ teaching time. In the Netherlands, for example, students receive 147 hours more instruction time per year than the OECD average, but this is almost entirely offset by teaching time that is 150 hours longer than the average. Requiring longer teaching hours, which limits the number of teachers that need to be hired, can also be used to compensate for higher teachers’ salaries. This is the case in the United States, where the requirement for 224 teaching hours above the OECD average helps offset for the additional USD 19 970 teachers receive each year (the statutory teachers’ salary in the United States is USD 61 028 compared to the OECD average of USD 41 058).
Group 3: Moderately low salary cost of teachers per student in primary education
This group is composed of six countries with belowaverage salary cost of teachers per student: Chile, France, Hungary, Israel, Lithuania and Poland. Teachers’ salary cost in this group range from USD 1 875 per student to USD 2 355 (Table C7.1). With the exception of France, all of these countries have belowaverage GDP per capita.
All six countries in this group have belowaverage teacher salaries, which is one of the main drivers of the belowaverage salary cost in primary education. However, there are considerable differences between them. In Hungary, Lithuania and Poland, lower teachers’ salaries are partially compensated by shorter teaching hours and smaller theoretical class sizes. This is not the case in the other three countries, where teaching time and theoretical class sizes are both above average. France and Hungary have nearly the same salary cost of teachers per student, but teachers’ statutory salaries in France are 80% higher than in Hungary, which is more than compensated for by having about seven more students per class (based on the theoretical class size).
Group 4: Low salary cost of teachers per student in primary education
This group is composed of the seven countries with the lowest salary cost of teachers per student in primary education: Colombia, the Czech Republic, Estonia, Latvia, Mexico, the Slovak Republic and Turkey. The salary cost of teachers per student in this group ranges from USD 720 to USD 1 560 (Table C7.1). These countries all have belowaverage GDP per capita.
In an overall crosscountry comparison, Latvia and the Slovak Republic might be bundled together as having low salary costs due to belowaverage salaries and belowaverage theoretical class sizes. However, there are important differences in the education characteristics of these two countries. The Slovak Republic’s larger theoretical class size (compared to Latvia’s) allows it to pay teachers over twice as much as Latvia, which has the lowest teachers’ salaries and smallest theoretical class sizes of all OECD countries.
Evolution of average class size and teachers’ salaries
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 tradeoff 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. In fact, controlling for the total salary cost of teachers, countries with higher teachers’ salaries tend to have larger class sizes (OECD, 2018[2]).
Figure C7.3 plots the evolution of teachers’ statutory salaries and average class sizes between 2005 and 2017. The average class size, unlike the theoretical class size discussed in the previous sections of this indicator, refers to the average actual class size obtained by dividing the number of students enrolled by the number of classes in each country (please see the Definitions section for more information on the difference between theoretical and average class size).
The figure groups countries into four different categories, each represented in a quadrant of the chart. Countries in the topright and bottomleft quadrants exhibit a tradeoff between average class size and teachers' salaries in this period. Countries in the topright quadrant increased average class sizes (which brings the salary cost of teachers down) and increased teachers' salaries (which pushes the cost up). The most notable example among this group of countries is Mexico, where the average class size increased by over 20% in the period, helping to offset the cost of increasing teachers’ salaries by over 30%. Only two countries (Greece and Japan) faced the opposite tradeoff, where average class sizes were reduced, but the additional cost was somewhat compensated for by lower teachers’ salaries. It is important to note that although these changes have opposite effects on the salary cost, they are not necessarily taken in response to each other. In Japan, for example, the decrease in average class size was mainly due to a demographic change whereas the decrease in teachers’ salaries was at least partially due to a change in teachers’ generation.
No particular tradeoff between these two variables seems to have taken place in this period in the countries and economies in the topleft and bottomright quadrants. Those in the topleft quadrant increased average class sizes and reduced teachers’ salaries over this period, both measures that push down the salary cost of teachers. In some countries and economies, the cost was mostly pushed down by larger average class sizes – in Portugal, for example, average class size increased by 17% in this period – and in others the cost was mostly pushed down by lower teachers’ salaries – in England (United Kingdom), teachers’ salaries decreased by 10%.
The opposite trend is found in countries in the bottomright quadrant, which reduced average class sizes and increased teachers’ salaries, both measures that increase the salary cost of teachers. Once again, the size of the change in each variable differs across countries. Between 2005 and 2017, teachers’ salaries increased by nearly 40% in Luxembourg, while average class sizes fell by nearly 30% in Korea.
It is interesting to observe countries that had a similar evolution in one of the factors, but followed a very different path for the other. For example, between 2005 and 2017, both Austria and Hungary increased teachers’ salaries by about 9%. However, during the same period, Hungary also increased average class sizes by 10%, thus offsetting some of the additional cost of higher salaries, while Austria reduced average class sizes by about 8%, thus increasing the salary cost of teachers even more.
Smaller class sizes are often seen as beneficial, but the evidence regarding their impact on student learning is mixed. Results from the latest Programme for International Student Assessment (PISA) show that students in larger classes have higher scores in science on average across OECD countries (OECD, 2016[3]). Other research has found that smaller class sizes may be beneficial in some cases, such as for students from disadvantaged backgrounds who may need more individualised attention (Dynarski, Hyman and Schanzenbach, 2013[4]). Given that reducing class size is a costly measure (Box C7.2), it is important to compare its impact with other possible interventions (OECD, 2016[1]).
This indicator assesses the impact of four factors (teachers’ salaries, instruction time, teaching time and theoretical class size) on countries’ salary cost of teachers per student and the tradeoffs that can exist between them. This analysis can be used to answer the following question: assuming that the number of students and the salary cost remain constant, what are the potential tradeoffs among the other factors which would compensate for a smaller class size? More specifically, by how much would salaries or instruction time have to fall, or teaching time have to increase, in order to maintain the same salary cost?
Table C7.a presents the simulation results for decreasing the theoretical class size by one student. For each factor, the value is calculated keeping everything else constant. For example, in primary education in Australia, in order to reduce the theoretical class size by one student and keep the salary cost per student constant, teachers’ salaries would have to fall by USD 3 600, annual instruction time would have to fall by 57 hours, or annual teaching time would have to increase by 53 hours. Any one of these tradeoffs would compensate for the additional cost of the smaller class size, without any change to the total salary cost of teachers per student.
These results emphasise the fact that reducing class sizes, by as little as one student, comes with a price tag. Indeed, class sizes have been decreasing in several OECD countries over recent years (see Indicator D2), although often as a result of demographic changes rather than of active policy choices. Class sizes tend to fall when student enrolment falls because of the political, economic and organisational challenges of simultaneously reducing the number of teachers. However, in the long term, not reducing the teaching workforce is in itself a policy choice that will keep classes smaller. Table C7.a shows that the price of smaller class sizes can either be reflected in higher salary costs, or it can be offset by changes to the other three factors.
It is important to assess the results presented in Table C7.a by taking into account the current values of each factor in the country. For example, Chile already has the longest teaching hours of all OECD countries, so further increases to compensate for smaller class size may not be feasible or desirable.
This simulation is not meant to assess the real cost of reforms. The simple model only takes into account four factors, and it only shows the tradeoff for one factor at a time. In reality, tradeoffs will often consist of changes in several factors at the same time. Moreover, important regional variations, not captured by this indicator, may require specific policies that would not necessarily be reflected in the national averages. Rather, this analysis is only meant to highlight the importance of tradeoffs in policy decisions, and to provide some guidance as to the direction and size of the potential tradeoffs across the four factors assessed in this indicator.
As observed in Figure C7.3, one alternative measure is to increase teacher salaries. Evidence from PISA points to the importance of highquality teaching in improving student outcomes (OECD, 2016[1]) and one way to help school systems attract the best candidates to the teaching profession is by offering higher salaries. However, attracting good candidates to the teaching profession and retaining the effective ones is not just a matter of raising salaries. Other factors include the quality of training before and after entering the profession and the relationship between teachers and society.
Definitions
Average class size refers to number of students enrolled in a given education level divided by the number of classes. It measures the average number of students that are grouped together in classrooms (see Indicator D2).
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 noncompulsory curriculum, on school premises or in before or afterschool activities that are formal parts of the compulsory programme (see Indicator D1).
Teachers’ teaching time is the annual average number of hours that fulltime teachers teach a group or class of students including all extra hours, such as overtime (see Indicator D4).
Teachers' salary refers to the annual statutory salary of teachers after 15 years of experience, converted to USD using purchasing power parity (PPP) for private consumption (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.
Methodology
The salary cost of teachers per student (SCS) is calculated as:
$SCS=Teachersalary*Instructiontime*\frac{1}{Teachingtime}*\frac{1}{TheoreticalClassSize}$
Where theoretical class size is calculated as:
$Theoreticalclasssize=\frac{Instructiontime}{Teachingtime}*\frac{Students}{Teachers}$
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 and 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[5]). 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.
Please see the OECD Handbook for Internationally Comparative Education Statistics 2018 (OECD, 2018[6]) for more information and Annex 3 for countryspecific notes (http://dx.doi.org/10.1787/eag201836en).
Source
Data referring to the 2017 school year are based on the UOE data collection on education statistics and on the Survey on Teachers and the Curriculum, which were both administered by the OECD in 2018.
Note regarding data from Israel
The statistical data for Israel are supplied by and are under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
References
[4] Dynarski, S., J. Hyman and D. Schanzenbach (2013), “Experimental evidence on the effect of childhood investments on postsecondary attainment and degree completion”, Journal of Policy Analysis and Management, Vol. 32/4, pp. 692717, http://dx.doi.org/10.1002/pam.21715.
[2] OECD (2018), Education at a Glance 2018: OECD Indicators, OECD Publishing, Paris, https://dx.doi.org/10.1787/eag2018en.
[6] OECD (2018), OECD Handbook for Internationally Comparative Education Statistics 2018: Concepts, Standards, Definitions and Classifications, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264304444en.
[3] OECD (2016), PISA 2015 Results (Volume I): Excellence and Equity in Education, PISA, OECD Publishing, Paris, https://dx.doi.org/10.1787/9789264266490en.
[1] OECD (2016), PISA 2015 Results (Volume II): Policies and Practices for Successful Schools, PISA, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264267510en.
[5] Quebec Ministry of Education, Recreation and Sports (2003), “Le coût salarial des enseignants par élève pour l’enseignement primaire et secondaire en 20002001”, Education Statistics Bulletin, No 29, http://www.education.gouv.qc.ca/fileadmin/site_web/documents/PSG/statistiques_info_decisionnelle/bulletin_29.pdf.
Table C7.1 Salary cost of teachers per student, by level of education (2017)
Table C7.2 Contribution of various factors to salary cost of teachers per student in primary education (2017)
Table C7.3 Contribution of various factors to salary cost of teachers per student in lower secondary education (2017)
WEB Table C7.4 Contribution of various factors to salary cost of teachers per student in general programmes of upper secondary education (2017)
WEB Table C7.5a Factors used to compute the salary cost of teachers per student in public institutions, in primary education (2017)
WEB Table C7.5b Factors used to compute the salary cost of teachers per student in public institutions, in lower secondary education (2017)
WEB Table C7.5c Factors used to compute the salary cost of teachers per student in public institutions, in general programmes of upper secondary education (2017)
Cutoff date for the data: 19 July 2019. Any updates on data can be found on line at http://dx.doi.org/10.1787/eagdataen. More breakdowns can also be found at http://stats.oecd.org/, Education at a Glance database.
StatLink: https://doi.org/10.1787/888933981172