Wednesday, July 13, 2005

Why is teacher pay not budging?

When I first returned in 2002, it seemed at last that teacher pay was on the rise after many years of remaining stagnant. Alas, from reading and many Taiwan blogs, that does not seem to be the case. The reality is that teacher pay is stuck between $500 and $600 per hour, and has been there since I got here in 1989. Taking into account inflation, it is apparent that teacher pay has actually regressed.

Most people, including this writer from time to time, have blamed the influx of South Africans and perhaps Canadians, whom everyone says are willing to work for lower pay. This is somewhat like the complaint of Americans at home that immigrants and third-worlders take their jobs. While this explanation looks attractive, it misses out on some structural features of the changing world of English teaching that I'd like to highlight in this entry.

Back in the 1980s my wife ran an English school in downtown Taipei. At its peak it boasted over a thousand students and a horde of foreign and local teachers. However, toward the end of the 1980s the English market in Taiwan began to take off as affluence trickled down even to the working class. Large chain schools began to open in the suburbs, and the flow of students to my wife's school began to dry up. Her investors, clueless about the changes in the market, blamed my wife, and forced her out, installing the son-in-law of one of them as the head. He spoke no English, and knew nothing about the business. Within 6 months the school was gone, to my wife's everlasting sadness.

As the chains proliferated, the size of schools began to shrink rapidly. It is now the case that around large elementary schools in Taiwan there may be a dozen or two English schools, each serving only a few score students. Essentially a situation of perfect competition has arisen in the market, where producers are small relative to market size, prices are equal to marginal cost and marginal revenues, and everyone knows the market well. Schools must struggle to keep costs down if they want to stay alive. Growth is difficult, for if the market increases anywhere, another school will quickly open to subdivide the market. Teacher pay is a major cost component for schools. With competition intense, and everyone facing the same cost structures, it was inevitable that teacher pay should become identical and stagnant within local markets.

At the same time, Taiwan's economy began to undergo severe structural changes as the 1990s opened. Income inequality in Taiwan is now a rising problem (the top now makes 11.67 times more than the bottom, up 50% from the 7+ times more ten years ago, the highest in the modern era). In the 1970s and 1980s Taiwan was celebrated for its great growth and high income equality. As the underground economy began to disappear as factories shifted to China or as business became more formalized, income inequality began to rise. Further, real GDP per capita growth rates have declined, unemployment has risen, and the industrial economy is changing to a post-industrial one (see some facts and figures in this presentation from East Asia econ expert Lawrence Lau). With incomes rising only slowly or not at all, especially among the working class, the ability of the middle and lower middle classes to pay high salaries for English teachers has also fallen.

Additionally, the government has initiated many changes in English education in Taiwan. The public schools now offer English, mandated from the fifth grade. Not only does this compete with the cram schools, offering the same services for free, but many primary schools have begun to offer English from the 1st grade on under local and county educational directives, cutting into a prime cram school market. For example, I supervise our university teaching intern program, and the schools we work with in an ordinary working class community all offer English from the first grade, as does my daughter's school. All of the elementary schools I have taught in in Taipei, Taichung, and Kaohsiung did this. Moreover, English services in the schools are often provided by native speakers, or by skilled locals. Even when the local primary school teachers are not competent, locals are generally unaware, since they themselves lack the requisite English skills to make meaningful judgments. Why should anyone pay for what they can get for free in the elementary school?

Finally, the cram schools have to compete with a new range of "bilingual" experimental schools springing up everywhere. These offer K-12 education in both Chinese and English. The result is that in order to appear a bargain, cram schools must hold their prices down.

In sum, next time you think about this issue, don't blame the South Africans. They are caught up in larger social trends that are quietly changing Taiwan, and will continue to hold teacher pay down.


Anonymous said...

Wow, it's good to hear your input on pay over the years, since my boss obviously has it out for South Africans. But there are a few schools in town here that hire only South Africans, since no one else will accept 400-450 an hour. And don't forget the mormons, who give free lessons! :)

In my town, I've never met any Americans. It's just Canadians, South Africans, and a few Australians and English. Are you saying that 10 years ago there were many Americans? Do you think they've stopped coming because the pay is not good enough anymore?

Michael Turton said...

I don't think the Americans have stopped coming. But they are swamped by the much larger numbers of Canadians and S Africans. Plus, I think the congregate in great numbers in Taipei, thinning out as you go further south.


David said...

Interesting analysis. So many people blame the South Africans for it, but it seems their presence is merely a symptom rather than the cause of the problem. I have nothing against South Africans by the way.

Anonymous said...

Scott Sommers wrote,
The problem with pay is something that is only effecting one side of the pay scale. For highly qualified, experienced teachers, the potential for big money and great jobs has never been better.

A better explanation for the probelm you write about is that the market is maturing. As such. it is far better prepared to attract and manage highly qualified teachers. The large numbers of poorly qualifed, inexperienced people trying to enter the market, regardless of their nationality, are having the same experience as any group of poorly qualified, inexperienced individuals trying to enter such a market.
Scott Sommers' Taiwan Weblog

Red A said...

Funny, I always had teaching jobs that only paid NT$ 300-400 an hour in 1992 on....

But most likely, the supply of teachers has increased to meet pace with demand. It also explains the HUGE amounts of South Africans and Canadians who are simply spotting the chance to work for less and meet the demand.

No harm there.

Mark said...

Your daughter is a first grader in a local school? I'll bet that English class must be easy. Does she learn anything in it at all?

Even in the top paying buxibans I've posted about before, salaries are pretty stagnant. According to my old co-workers, the starting pay for that kind of job was $700 ten years ago. It's only $900 now. Considering how it was $27NT to $1US then and it's $32NT to $1US now, not even those jobs have improved much.

With a population greater than that of all the native English speakers on the planet, a growing interest in learning English from foreigners, and the most rapidly growing economy in the world, how much longer do you figure it will be before mainland China offers better pay for English teachers?

Right now it's not too tough for an entry level teacher to get about 8000RMB/month in Beijing. That's only about $30000NT, but consider that a beer is only 1-2RMB ($4-$8NT), and food and housing is much cheaper than in Taiwan. I think it's only a matter of time before the foreign teacher population in Taiwan starts to drop.

Anonymous said...


Thanks for your comment on the English-Blog regarding compensation for English teachers.

I wanted to invite your readers to read your own response to my entry here at:

Nice to hear from you!


P.S. It IS interesting to see where one's name will turn up online, I agree!

Anonymous said...

Only 900 nt now??? Ha! I've been herre for 5 years teaching now and I have NEVER seen that kind of hourly pay for Buxiban work. 900 per hour is private tutor level pay. If someone has a 900 nt-per hour job, they better keep it and appreciate it because it is NOT typical pay. 600-700 nt range is the average. Of course there are exceptions to everything. As for not seeing many Americans, I'm American and I have to agree that I've seen very few other American teachers. Mostly S.African and Canadian. Most Americans are used to 401 K, dental plan, paid round trip airline ticket, housing subsidies and other perks that they've come to expect working for American companies. So most Americans won;t find Taiwan appealing, compared to, say, Korea, where housing subsidies and higher salaries are the norm. So why am I here? Taiwan's central location to other holiday places in Asia, moderate cost of living, and comparatively decent wage for what we do. I've made a good living here playing sticky ball and dancing around with little kids. Life is good.