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 Forumosa.com 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.