Covid 19 coronavirus: Auckland, Waikato and Victoria universities plan voluntary layoffs due to border closure

Three universities are signaling possible voluntary layoffs next year if the New Zealand border remains closed to foreign students.

Neither has put figures on required staff losses yet, but two are looking to save tens of millions of dollars a year. Based on typical academic salaries of around $ 100,000 a year, that means several hundred jobs may disappear.

Foreign students paid the country’s eight universities $ 503 million in fees in 2018, representing 13 percent of total university revenues.

However, the proposed cuts at the universities of Auckland and Victoria account for only 4 to 5 percent of their 2018 revenue, suggesting that up to 1,000 of the 22,000 university sector jobs could be at risk.

The cuts may be less than implied by the universities’ financial dependence on foreign students, partly because many foreign students are still here, partly because large capital projects have been stopped to save money, and partly because it is expected that national registrations increase due to Covid. -19 recession.

University of Auckland Vice Chancellor Dawn Freshwater says the university projects a $ 7.5 million annual loss by 2023, a $ 48 million shortfall below its goal of returning to a 3% financial surplus from little more than $ 40 million by then.

She has offered permanent staff “a voluntary leave plan payment calculated on their layoff provisions with an additional salary improvement of 12 weeks.”

Foreign students pay around $ 37,000 a year in fees, but domestic students pay only around $ 6500.

Government grants round out the total funding for each national student at approximately $ 18,000 a year, but only for the number of students agreed upon by the Tertiary Education Commission (TEC).

Lisa Finucane, director of communications for the University of Auckland, said that increased reliance on domestic students, plus “an indication by the government of a cap on the growth of nationally funded places,” meant that revenues were forecast to Means per student would increase only 0.8% in a year from now. until 2023.

In the same period, costs are projected to increase by 2.2% per year, mainly due to agreements to grant staff salary increases of 2% per year until 2022.

“Our plans are to take a measured approach and aim for a return to a 3 percent surplus by 2023,” Finucane said.

“This allows time for the return of international students across the reopening of the borders and for the anticipated growth in domestic student enrollment during this period, and therefore substantially reduces the overall impact on staff positions.”

Victoria University Vice Chancellor Grant Guilford said its national enrollments jumped 7 percent for both July semester admission and upcoming summer courses as people who have lost their jobs seek retraining.

“There is a slightly higher percentage of adult students who already had a degree, people who have become unemployed due to Covid or who are returning from Australia or the UK because they have lost their jobs there,” he said.

He said it would be “optimistic” to expect such a big jump for the main intake in March next year, but Victoria was planning an increase of 3-4 percent.

However, he said Victoria expects to have a loss of $ 19 million this year and would lose another $ 33.5 million next year if no action is taken, based on signals from officials that only 1,800 to 2,000 foreign students could enter New Zealand next year across the industry.

He said the university council has asked him to reduce the loss next year to $ 5 million, implying the need to close the gap by $ 28.5 million.

“We expect to see an increase in national students, so it is in the order of the 23 million dollars that we anticipate that the costs will have to come out to try to rebalance,” he said.

“As we move into the latter part of this year, we will start to think about things like voluntary layoffs.

“Looking at that in early 2021, if we are not closing the gap yet and our revenue intentions have not paid off, then we would be looking at mandatory reductions in headcount. But we are very hopeful that some of the things we are doing on the income side it will pay off so we can avoid it. “

University of Waikato Vice Chancellor Neil Quigley told staff last week that he hopes to “set targets to reduce staffing by the end of the year” after signs that “as soon as we can expect the border to close. re-open for international students is June 2021. “

“We will be offering opportunities for retirement, reduced hours, unpaid leave and voluntary layoff,” he said.

He told the Herald that the university would have losses in 2021, but that it was aiming to return to the 3% surplus recommended by TEC “as soon as possible.”

“The surplus, plus depreciation and borrowing, funds all capital and strategic spending,” he said.

“National enrollments are expected to increase slightly in 2021 and may follow a higher rate through 2023. However, TEC has not increased the Waikato rate. [domestic students] target for 2021, nor have they committed to financing [domestic student] increases in future years. “

AUT University Vice Chancellor Derek McCormack said AUT would still achieve a small surplus this year after slashing spending on capital projects and operating costs.

National AUT student admission in July increased 1 to 2 percent from last year, and the university projects an increase of 4 to 5 percent next year, but with no certainty that TEC will fund the increase.

“We are looking for savings next year, which may or may not involve seeking a limited number of layoffs, but we do not have a position on this. We are not ruling it out,” he said.

A spokesman for Massey University said the university “is working collaboratively with staff to explore ideas and opportunities to manage financial challenges together.”

Canterbury University Finance Director Keith Longden said the university expected to have losses next year, but was “working on new solutions that will minimize impacts on the University of Canterbury, its staff and students.”

University of Otago chief strategy officer Peter Thomson said Otago was less affected than other universities due to a long-standing policy of limiting foreign students to no more than 15 percent of the list. In 2018 they accounted for just 7 percent of Otago’s revenue.

“We have no current plans for layoffs as a result of Covid-19,” he said.

TEC Deputy Executive Director Gillian Dudgeon said the commission had told tertiary institutions that they were not expected to achieve the usual 3% surplus this year.

Education Minister Chris Hipkins urged universities to “think hard” before cutting staff.

“Universities have cash reserves and loan facilities of up to about $ 1 billion,” he said.

“Staffing is a decision of the individual university and restructurings, for whatever reason, are up to the vice chancellor himself. However, I urge you to think carefully about whether you need to take steps to cut staffing at this stage. “