Coronavirus: Victoria University considering 20 percent pay cuts due to COVID-19 losses

By John Gerritsen of RNZ

Victoria University is considering slashing staff pay by a fifth or moving them to a four-day week to help it cope with a forecast $50 million drop in income.

Meanwhile, Lincoln University has asked its staff to volunteer for a 5 percent pay cut.

Both universities are hard hit by the COVID-19 pandemic, which has reduced foreign student enrolments as well as income from research and investments.

Victoria University vice-chancellor Grant Guilford said it had moved from a forecast surplus of about $14 million to a forecast loss of up to $40m.

"So it's about a $50 million swing on a $500 million turnover," he said.

"Most New Zealand universities have got a similar challenge on their hands."

He said the university had just started talking to staff about options for reducing the deficit, which he said would be a two-year process.

"We're looking at a raft of different things from a 20 percent-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," he said.

Guilford said reducing staff pay would help the university cope with this year's cut in income and prepare for next year.

"By taking a pay cut of that order for a period of time, such as a year or six months, whatever we might agree, we buy ourselves some time to be more careful in the way we go about any changes we may want to make."

Guilford said the university could dip into its reserves, but not for long.

"We can spend more than we earn briefly, because we have the balance sheet to do that, but if we continue to do that year after year without making sure that our costs are matched by our revenues then ultimately we undermine the future of the university".

Guilford said the financial impact of the pandemic was likely be worse next year.

"The international student programmes steadily empty out as different cohorts graduate each year and if you can't fill the pipeline with a new cohort because the borders are still closed you progressively end up with fewer and fewer international students in your classes.

"With government talking about the borders staying closed for a long time we're expecting it to get a lot worse in 2021 and potentially worse again in 2022 if we haven't managed to make the necessary changes."

Pay cuts, shorter hours possible at Lincoln University

The acting vice-chancellor of Lincoln University, Bruce McKenzie, said the university had been expecting 48 percent of its students would come from overseas this year.

He said because of the pandemic the number was lower and the university was facing an $11m fall in income.

The university had already taken a range of cost-cutting measures, but it was now introducing more.

McKenzie said he had cut his pay by ten percent for six months, no senior managers were accepting a pay rise or bonus, and staff had been asked to consider contributing too.

"Staff have been asked to consider taking a temporary five percent pay reduction, or to work a nine-day fortnight for six months," he said.

"We've got probably ten people who have so far said 'yep, I'm up for this, I'm happy with this'. We've had some people say, 'hey I can't afford it, but I'll work a day for free for you'."

Union opposes pay cuts

The president of the Tertiary Education Union, Michael Gilchrist, said universities were losing 20 to 30 percent of their income this year but they should not be asking staff to cut their pay.

"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."

Gilchrist said different universities were taking different approaches and the union wanted them to develop a national strategy with the Government.

No other universities admitted to considering staff pay cuts.

The University of Waikato said it was expecting a deficit of $5m-$10m.

AUT said its income would be down by tens of millions of dollars. It had already frozen recruitment and was considering "a range of options".

The University of Otago said none of its financial forecasts included a surplus this year. It said it was not considering pay cuts or reduced hours for staff.

Massey University said it was in a strong position, but as the situation was changing rapidly it could not provide an estimate for this year's financial result.