Teacher Wage Rates

[John Simkin]

Article in today's Guardian about wage-rates over the last 40 years.

http://money.guardian.co.uk/news_/story/0,,1758878,00.html

The leak this week of the huge salaries of top BBC personalities, the news that some GPs are now earning £250,000 a year and the announcement that Peugeot's factory in Coventry is to close tell us much about what has been happening to pay in Britain over the past few decades.

We are all aware of the £100,000 a week-plus pay that goes to top footballers and there is growing disquiet about "fat-cat" pay among company bosses, but many of us are probably less sure about what has been happening to the pay of other groups in society.

While overall figures show that the economy and average wages have grown steadily since the deep recession of the early 1990s, making Britain as a whole richer than ever before, the average hides big changes in who has managed to get what slice of the pie.

Research by the Guardian, using data from the Office for National Statistics, shows, for example, that teachers got 50% more than average pay in 1966 but now are barely above the average. This may help to explain why the supply of teachers has dwindled in recent years.

GPs are back in the news as their average pay has reportedly climbed towards £100,000. Their last officially recorded mean average of nearly £70,000 was nearly two and a half times the average salary. Forty years ago, however, they were earning three and a half times the average. The latest rises in their pay have been part of a deliberate policy by the government to address a shortage of doctors.

Factory workers earned 12% above the average wage in 1966, but now sit about 13% below it. Their bosses have fared much better. Figures for 1966 are difficult to obtain but research by the University of Manchester's business school shows that directors earned 10 times their workers' earnings in 1979, a figure that has now risen to more than 50 times.

That, of course, pales into insignificance compared with footballers. The average footballer was paid about £100 a week in 1966, the year the World Cup was won, and that was about five times average pay. Now the average premiership footballer is earning basic pay of £676,000, according to a survey by the Independent, although that can be doubled by performance-related bonuses. The basic figure is about 25 times the median average pay in Britain of around £23,000 a year.

So what are the forces that have been driving these changes in pay?

The first, and most obvious, is known as the "superstar" element. This not only affects footballers and actors, but also people such as barristers.

The principle is that in businesses where winning is paramount, and the top pool of available winners is small, those few will earn a great deal. In an age of celebrity, and as football has become a more globally televised sport, so the rewards for the top few players have grown hugely. There are only a few genuinely world-class players, and they get the big money.

Similarly, in a top court case where millions, even billions of pound are at stake, the litigants involved will want the top lawyer money can buy. So the top few barristers earn fortunes, even compared with most other barristers.

This principle is also behind the big pay of top BBC personalities. In a world where ratings are paramount, those who can pull in the audiences are perceived by their employers to be of immense value.

But, leaving the superstars aside, what about everybody else? Professor Karel Williams of Manchester University's centre for research on socio-cultural change, says the past 35 years have been a tale of winners and losers. The big losers, exemplified by the closure of Peugeot's Ryton plant, have been semi-skilled manufacturing workers without transferable skills. As manufacturing has declined as a share of the economy, hit by increasing competition from around the world, wages of manual workers have declined relative to the average. Teachers and doctors suffered, too, as public sector pay was held down during the 1980s and early 1990s.

The big winners, says Prof Williams, are first and foremost the "fat-cat" company bosses who have managed to grab a bigger slice than almost anyone else of the economy's growing wealth, even though their companies' profits have only grown in line with the overall economy.

Paul Sellers, pay adviser at the TUC, says this has nothing to do with the "superstar" argument that chief executives like to say applies to them. "They get huge pay rises because their pay is set by their mates."

Prof Williams also points to all the accountants and lawyers, or "intermediaries" as he calls them, who have benefited from the restructuring of the British economy over the past 30 years away from manufacturing and into services. "There are 600 executive directors in the FTSE 100, who are the poster boys of greed, but we should not forget that there are 4,500 partners in the top four accountancy and law firms, and they are earning an average of £400,000 a year."

Another phenomenon is the growing pay of a small group of public sector workers such as chief executives of local authorities. The prime minister's salary of £170,000 used to represent the top public sector salary, he says, but not any longer.

Average pay 1966

Men £23.47

Women £12.11

2006

Men £571

Women £437