EDUCATION:THE OECD has signalled its support for cuts in teachers' pay and allowances and pointed to potential efficiency gains across the education sector.

In its economic review, it also says Ireland, with greater efficiencies, could have saved up to 18 per cent of all education spending since 2002 – and still achieved the same educational outcomes.

The report tends to back higher class sizes, especially at second level, where pupil-teacher ratios, it says, are among the lowest in the EU.

The OECD says the percentage of the entire education budget spent on teachers’ pay at primary, secondary and third level – some 75 per cent – is well above average among developed states.

The report also tends to be sceptical of the widespread view that the education sector is seriously underfunded.

Public expenditure on education, it points out, amounted to only 4.2 per cent of GDP in Ireland in 2006, compared with the EU average of 5.2 per cent, but it is close to the EU average amount per student.

Student/teacher ratios are now among the lowest in the EU at secondary level, though closer to the norm at primary and tertiary levels, it says.

The report also tends to debunk the common perception that Ireland enjoys a world-class education service.

It says Ireland is close to international norms in terms of educational attainment for the resources committed. Overall, the education outcomes at secondary level are, it points out, good relative to the OECD average, but not as good as in the best performing countries. Performance in maths and science is, it says, below that of other high-income states.

The report says there could be further gains from bringing the least efficient schools up to the standards of the best.

It says efficiency gains could be achieved by reducing teacher inputs and making institutional reforms.

In particular, greater decision-making autonomy at the school level tends to be associated with higher levels of efficiency, while small school sizes – very common at primary level in Ireland – are associated with inefficiency.

On third level, the report – completed before the revised programme for government – backs the return of third-level fees and criticises the current free fees system.

It acknowledges that the level of State support to third level is significantly lower than the OECD average. Overall resources are further reduced, it says, by the absence of tuition fees, which is regressive because students are more likely to come from wealthier backgrounds and move into well-paid occupations.

The OECD says the rate of increase in research and development (R&D) spending has been among the highest in developed countries. However, the overall level relative to national income remains relatively low.

Most R&D activity is undertaken by foreign firms, although there is some activity in indigenous firms, such as in the food sector.

It says tax credits and other financial incentives can encourage additional innovation activity, but to date it says these measures are not well targeted.

The effectiveness of the system of tax credits for R&D and related issues should be reviewed, it says.