Leadership

Assessing the Impact of Pay and Financial Incentives in Improving Shortage Subject Teacher Supply

This study suggests an increase in pay could make a real impact in recruiting teachers, as well as retaining them.

This NFER study, commissioned by the Gatsby Foundation, suggests the Initial Teacher Training (ITT) recruitment target for maths may be met over the next four years – but is unlikely to be met in physics, chemistry, computing and across all three science subjects combined.

According to the research the attractiveness of teacher pay matters for ITT recruitment. The study estimates that a one per cent increase in the teaching starting salary – over and above the change in the outside-teaching graduate starting salary – is associated with a two per cent increase in applicants to ITT. This suggests an increase in pay could make a real impact in recruiting teachers, as well as retaining them.

The study also suggests the Government should introduce additional financial incentives to improve teacher supply, including increasing bursaries and applying the ‘levelling up premium’ early-career retention payment to all teachers of shortage subjects in England. It recommends that for some STEM subjects, combinations of additional financial measures could support the improvement of teacher supply.

The research highlights that physics and computing are highly unlikely to meet their recruitment targets under any reasonable package of financial measures. To tackle this the education system could consider additional measures, including, for example: subject specialism training in physics for trainees and teachers in the classroom; ensuring physics teachers are deployed to teach physics rather than other subjects, and addressing the relatively low numbers of students studying physics at A- Level and as an undergraduate degree.

Key Findings:

  • The relative attractiveness of teacher pay matters for teacher recruitment. The level of the teacher starting salary relative to the value of graduates’ outside options in a certain subject is associated with the number of ITT applicants to that subject. We estimate that, all else equal, a one per cent increase in the teaching starting salary – over and above the change in the outside-teaching graduate starting salary – is associated with a two per cent increase in applicants to ITT.
  • The strength of the wider labour market also matters for teacher recruitment. We estimate that, all else equal, an increase of one percentage point in the UK unemployment rate (i.e. a weaker wider labour market) is associated with a 6 per cent increase in applicants to ITT. This is not estimated using data during the Covid-19 pandemic because, due to the furlough scheme, the unemployment rate acted as a poor proxy for the state of the labour market during that period.
  • There is strong and consistent evidence that training bursaries are associated with increases in ITT recruitment. The bursary elasticity of recruitment has been the focus of a number of previous studies, and consistently estimated to be a 2.9 per cent increase in ITT applications associated with each additional £1,000 of bursary.
  • There is little compelling evidence that early career payments/ phased bursaries are associated with increased recruitment. Our estimate of the association between early career payments and ITT recruitment is statistically insignificant, suggesting that graduates may be far less responsive to early career payments, compared to bursaries. This may in part be due to their design to incentivise retention rather than recruitment, per se. However, we also have limited sample size – particularly for early career payments – and therefore higher levels of uncertainty, to estimate this elasticity.
  • While the Department for Education’s (DfE) pay proposals to the School Teachers’ Review Body (STRB)2 are likely to improve teacher supply in shortage subjects relative to a uniform pay award, overall they do not improve the relative competitiveness of teacher pay enough to support the achievement of targets in key STEM subjects.
  • Additional financial incentives could be implemented to improve teacher supply, especially those that are targeted at shortage subjects.
  • Separating the primary and secondary teacher pay scales could be effective at targeting resource where it can have greater gains in terms of overall teacher supply, in a way that is cost neutral within an existing spending envelope.
  • Physics and computing are highly unlikely to meet their respective recruitment targets under any package of measures.

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