School fees have crushed inflation for over a decade in South Africa – here’s why

School fee increases in South Africa have, on average, been roughly 2.6% above inflation every year since 2012 – mainly due to above-inflation teacher wage increases, municipal rates, and a growing number of parents unable to pay the fees, passing the buck onto those who can.

This is according to an economic bulletin published by the South African Reserve Bank (SARB).

The report showed that harsh economic conditions and a reduction in the educational budget had put pressure on paying parents, while the older age of the average teacher had bloated wages – resulting in school fee increases well above inflation over the past decade.

The report’s analysis focused on school fees at ordinary public schools, where more than 95% of South African learners are enrolled.

Education receives the biggest portion of the government’s consolidated budget, the only budget group still receiving more than debt-servicing – the fastest-growing budget area in the past decade.

Despite this, the amount allocated has decreased from 15.3% of the budget to 13.7% over the past eight years.

As a result, and despite this large allocation from the government, school fees are a vital necessity to supplementing state funding, the economists said, and school fee increases are used to soften various budgetary shortfalls.

Public schools in South Africa also apply an ability-to-pay principle, where state funding can favour schools in poorer areas while parents from affluent areas hold greater responsibility for school fees.

According to the report, School fee inflation has outstripped CPI inflation by between 1.5% and 4.4% since 2012. The only time CPI inflation exceeded school fee inflation was in 2021, after the peak of the Covid-19 pandemic – a period in which households’ ability to pay was severely depressed.

Drivers of school fee inflation

The report highlighted three main drivers of school fee inflation – wages, cost pressures, and parents’ ability to pay.

The report noted that between 2008 and 2019, educator wage inflation has consistently outpaced CPI inflation, averaging 9.2% over the period.

To illustrate this, the SARB economists plotted the growth in spending on compensation of employees in ordinary public schools, in real terms, to the increase in the number of teachers – showing a significantly faster growth in real compensation.

However, the report noted that the bloated wage bill results from the growing age crisis of teachers.

The Department of Basic Education’s 2020 Action Plan to 2024 shows that most South African teachers are aged between 45 and 60. The report showed that wage increases positively correlated with age, putting upward pressure on compensation budgets.

“Above-inflation negotiated wage increases and an ageing teacher population have increased employee compensation, putting upward pressure on schools’ budgets.

“Because provinces have not been able to adjust budgets to the wage increases, fewer state-funded teachers have been employed, leading to more vacancies, higher compensation budgets, and, ultimately, higher school fees,” said the economists.

Another issue is the cost pressures of maintenance repairs, rates and taxes, fuel and other expenses that have increased above the government’s subsidy amount per learner.

The report highlighted that while the subsidy per learner increased by an average rate of 5.5% per year between 2015 and 2021, water prices (tariffs) increased by 7.5%, electricity by 8%, fuel by 6.6%, and books and stationery by 5.8%.

“Although these salient prices have not outpaced the subsidy by large margins, the differences are likely to be significant and are likely putting upward pressure on school budgets and fees,” it said.

Lastly, the report noted that the prevalence of non-payment can be a significant driver of school fees.

Two types of school fee non-payments exist: those in arrears and those exempted through regulation. For the latter, SASA and its regulations allow parents with insufficient income to apply for an exemption. If the school fees payable are more than 10% of their income (combined, in the case of two caregivers), parents are fully exempted.

However, due to stagnant economic growth and increasing living costs in South Africa, the report said the number of learners who qualify for exemptions and the prevalence of unpaid school fees has increased.

Credit bureau TPN said that fewer than 60% of parents pay their school fees on time in South Africa, with the situation only getting worse after the Covid-19 pandemic in 2020 and 2021.

“This has a significant knock-on effect on a school’s finances, severely impacting their ability to meet their operational costs, encouraging the need to inflate school fees,” said TPN.

The economists said schools are generally sensitive to parents’ ability to pay under severely constrained economic circumstances. However, during the less severe economic constraints of the preceding years, school fees continued their rapid upward trajectory.

“This is because, when possible, schools will shift the burden of non-payment to paying parents for the sake of maintaining quality, which results in an increase in school fees for paying parents.”

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