Minister says it is premature for institutions to consider pay cuts while revenue is stable
New Zealand’s universities are well placed financially to weather the Covid-19 crisis—and calls for researchers and teaching staff to take pay cuts are “alarmist” and not supported by evidence, education minister Chris Hipkins has said.
“They have cash reserves and borrowing facilities of up to around about a billion dollars,” he told Radio NZ, the country’s public broadcaster.
“Everyone, I think, is having to draw on reserves and draw on borrowing and so on—in order to keep businesses operating—and universities are no different to that. Their difference is their revenue is actually relatively stable.”
Hipkins had been asked to comment on claims by Victoria University of Wellington vice-chancellor Grant Guilford that job losses and cuts to staff salaries would be needed to deal with a projected $50 million drop in income.
“We’re looking at a raft of different things, from a 20 per cent-type pay cut across the board to a four-day working week, to voluntary reassignments, different approaches to leave balances, employee giving programmes, early retirement programmes and, if need be, compulsory or voluntary redundancies is our last option,” Guilford said.
However, Hipkins said the university was “being a little bit premature if they’re making these kinds of moves”.
“I think some of the alarmist comments being made are not backed up by evidence,” he said.
“The universities won’t have lost a significant portion of their revenue at this point. They’re still getting all the government subsidies that they usually get, they’re still getting the student fee revenue that they would have got and in fact their enrolments are likely to go up because we know that in times of higher unemployment, participation in higher education increases.”
Hipkins said a decline in the number of international students would have an impact but would not “spell financial ruin” for NZ universities.
Tertiary Education Union president Michael Gilchrist told Radio NZ that universities were likely to lose up to 30 per cent of their income in 2020 but should not be asking staff to take a pay cut.
“All of these universities have strong balance sheets. They all do have surpluses accumulated in earlier years and the purpose of those of course is to offset the shocks in other years,” he said.
“We are advising our members not to enter into any kind of negotiations to make pay cuts at the moment.”