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A Wellington principal claims the career pathway for principals of small to medium sized schools is "fundamentally broken".
How much principals are paid is determined by how big their school roll is.
That means for the leaders of primary schools with under 150 students - of which there are 862 - they can be paid less than some of their staff.
That is because they are not eligible for Management Units, which compensate for extra duties and responsibilities.
Mākara Model School principal Caro Wills told RNZ's Nine to Noon she took a $12,000 pay cut to step up to her leadership role.
"Two years ago I took the role as principal at Mākara School, but I didn't anticipate the substantial pay cut."
Wills said it opened up her eyes to the prevalent issue of the pay inequity facing small school principals.
"It's quite disheartening, really, as a leader when in a small school, half my team, half my teachers are earning substantially more than I do."
The outcome over recent pay negotiations that would impact small school principals were not set to come into place until 2024, she said.
"Which means I'll continue to earn less next year, and only almost catch up to what my DP [deputy principal] and team leader are earning 18 months after the contract was actually signed."
The pay disparity makes it seem like the career pathway for small to medium sized schools is fundamentally broken and dissuading aspiring leaders from taking on the roles, she said.
"Half my teachers are earning substantially more than I do" - Mākara Model School principal Caro Wills
NZEI representative Jane Corcoran said principals of small schools took on a range of roles on top of their principal role.
They could include caretaker, cleaning, office administration and van driver roles.
That was why they were pushing the government to address the principals' pay system, she said.
"Its actually not fit for purpose, its archaic, principals jobs have changed in the last few decades and it needs removing and replacement."
They wanted a base salary for principals that are all the same, then on top of that they could add in any allowances for the complexity of the role, Corcoran said.
"Which may be staffing, it may be if you've got a teaching principal role."
Each week they were losing quality leaders in the education system due to them being overwhelmed and overworked, she said.
"And the fact those principals are getting paid less than their colleagues is not okay."
Education Workforce Hautū Anna Welanyk said it was up to the school board and principal to determine the number of units (allowances) allocated to different roles in their school, in consultation with their teachers.
Welanyk said the number of units a school could allocate was based on the size of the school, so the number of entitlement units available to allocate varies from school to school.
"A deputy principal could receive the maximum number of units, and this could result in a situation where a deputy principal's salary exceeds that of a principal, although this is very rare."
At present, remuneration for principals was calculated based on a number of inputs, including the size of the school they were leading, she said.
Principals at smaller schools (those with 100 students or less) would receive an up to 20 percent salary increase over the next two years as their new collective agreement was implemented, she said.
Principals at larger schools will receive an 11.1 percent increase.
In addition to the salary increase, the introduction and increase in various allowances will result in better pay parity for principals at smaller schools compared to larger schools, she said.