Paid how much?

The ongoing public sector strike has raised several interesting points.

Not least of which is what teachers actually earn. A full-page advert in newspapers last weekend gave some very respectable figures  for teacher salaries.  A teacher just starting out, with a 4 year qualification has a total cost to employer of around R229,000 per year. This includes 13th check, pension, medical aid and housing allowance, but is a surprisingly high number. It also included the then-proposed 7% increase (versus CPI at 3.7% at the moment).

The offer was increased to 7.5% since the original advert, but the numbers below are the unadjusted numbers in the advert. These are annual basic packages excluding benefits. (It’s unclear whether the before Total Cost to Employer columns include or exclude the 13th check, which is definitely included in the TCE column).

Experience 2007 2008 2009 2010 TCE 2010
1 year 107,007 129,948 150,105 160,614 229,790
5 years 111,357 131,256 153,129 163,851 233,718
10 years 117,042 135,228 160,920 172,185 243,830
20 years 136,923 158,568 194,421 208,032 287,324
30 years 151,257 175,152 220,278 235,698 320,892

This advert prompted an immediate outcry from teachers writing to complain that they earn nothing close to that figure. This was followed up by government affirming that the figures are correct, noting that many teachers may not add up all the non-cash benefits.

IOL has an article purportedly showing that teachers are well aware of the extra benefits and aren’t paid what government claims .

The Daily Dispatch has a similar article, and includes a scan of a salary slip showing clearly (if the slip is genuine) that the government figures are bogus. From the salary slip, a teacher with 15 years of experience shows R12,885 as a monthly total cost to company translates to R167,505 as a TCE, assuming a 13th cheque equal to the entire monthly TCE (which is almost certainly an overestimate since it’s unlikely housing allowance and medical aid would be included in 13th cheque). This should be compared against the 2009 column since this doesn’t yet reflect any increases for the current year. The comparison shows that the TCE is probably slightly below what the government has as a basic salary for someone with 15 years of experience.

The figures are so different, that I can’t help wonder if it isn’t the government that is confused about the additional benefits. The total salary reflected on payslips includes the additional benefits (but probably not 13th cheque) and these benefits are deducted from the total before arriving at the cash pay for the teacher.

I can’t understand why this story hasn’t been ruthlessly followed up by the media. A few reports here and there aren’t enough. There are only a few options:

  1. The government blatantly lied about the figures.
  2. The government is confused about what it actually pays teachers (wow – this is problematic)
  3. Teachers are not paid consistently. Perhaps some teachers do earn what the government put out in the advert, but others don’t. (How is this fair, and does the government even realise this?)
  4. Teachers are misleading the press about what they earn, either inadvertently or deliberately.

Surely this is massively newsworthy no matter which of the options is correct? Doesn’t this change the bargaining positions completely?

Even if the gross figures in the table are wrong, the relative sizes might still be correct. According to the table, teachers have been getting average annual increases over the past four years of between 9.7% and 11.1%. These are not insignificant increases at all given that inflation has average well below this point. Teachers have been getting real increases every year for several years.

It’s hard to justify this based on efficiency improvements (more on this in a later blog). It’s also hard to say that education has improved over this period (although this is much debated).

The experience adjustment translate to an additional increase of between 0.4% and 1.6% per annum. So an actual teacher being according to this scale would experience an annual increase of above 10% each year, when allowing for experience adjustments.

There are so many questions of fact here. What is the point of long-running strikes and heated debates about affordability and fair wages if we can’t even agree on the current numbers?

Published by David Kirk

The opinions expressed on this site are those of the author and other commenters and are not necessarily those of his employer or any other organisation. David Kirk runs Milliman’s actuarial consulting practice in Africa. He is an actuary and is the creator of New Business Margin on Revenue. He specialises in risk and capital management, regulatory change and insurance strategy . He also has extensive experience in embedded value reporting, insurance-related IFRS and share option valuation.

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1 Comment

  1. Wow, quite scary when you set it out like this. As you say, an agreed starting point would be nice.

    I suspect it has something to do with averages – the figures might be fair but as you say, no consistency. Meaning some are smiling looking at these figures while others scratch their heads in confusion.

    Let’s hope they at least agree to sort that out if nothing else.

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