NZ universities ‘underinvesting in staff’, says union

But representative body says conclusions from analysis of university financial accounts are based on flawed assumptions

August 29, 2022
University of Otago, Dunedin, Otago, South Island, New Zealand
Source: Alamy

New Zealand’s universities have slashed the proportion of their revenue that goes to staff and used the proceeds to fund buildings, an analysis commissioned by the country’s academic union suggests.

Universities disagree, saying their personnel expenses have risen in line with general wages.

The Tertiary Education Union (TEU) said the analysis, by Wellington consultancy Business and Economic Research Limited, showed that university staff had been getting “an increasingly raw deal” from their employers.

The company analysed the annual reports of the country’s eight universities between 2008 and 2020 and found that their operating revenue had increased by more than half over that period.

Allowing for general inflation, university earnings had risen by 25 per cent. But allowing for wage inflation, which is normally higher than general inflation, the amount expended on personnel had grown by just 7 per cent, with staff costs rising by less than half as much as staff numbers.

The report found that average salaries had not kept up with wage inflation; it cited the universities of Otago and Auckland as examples, saying average salaries at the two institutions had fallen by 10 per cent and 17 per cent, respectively, in inflation-adjusted terms.

Meanwhile, the proportion of income invested by universities in property, plant and equipment – especially new buildings, land purchases and revaluations – had increased.

“Staff are the core investment in any human and social service, including tertiary education…yet the data shows an unwillingness of university leaders to invest properly in staffing,” the report says.

TEU national secretary Sandra Grey said the report showed that universities could afford “real” pay rises for their employees. “It’s a matter of priorities – do the vice-chancellors and the public value university staff enough to ensure they are properly remunerated? Or are they happy to watch talented staff walk away from the sector or overseas to contribute to another country’s knowledge base?”

Universities New Zealand said the report seemed to assume that pay should be linked to overall expenses. “This just isn’t how salaries work in any organisation, including universities,” said chief executive Chris Whelan.

He said universities’ expenditure on personnel over the period covered by the report had risen by 49 per cent, which was comparable to the 50 per cent increase in median weekly earnings for all wage and salary earners.

Mr Whelan also disputed a claim that personnel expenses constituted a shrinking proportion of universities’ overall costs, saying they had declined by less than two percentage points. “Overall, expenditure on salaries has remained very similar over the 12 years covered by the report.”

The row coincides with negotiations to renew collective agreements at all eight universities and a TEU campaign to “redress gender pay inequities experienced by workers in low-paid female-dominated areas”.

The analysis also found that universities were increasingly reliant on student fees and research contracts for their income. Money from those two sources had grown by 45 per cent and 48 per cent, respectively, in inflation-adjusted terms, while government funding had increased by just 16.5 per cent.

Mr Whelan said universities’ cost increases were typically 50 per cent to 60 per cent higher than general inflation because their major expenses – such as personnel, property, information technology and library subscriptions – were not factored into the consumer price index.

He said a key concern for New Zealand universities was that they remained able “to recruit and retain excellent people”.

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