No plans to cut jobs despite hit

THE University of Otago has taken a $10 million hit because of Covid19 but unlike other universities is not planning job cuts to make up for those losses.

Auckland, Victoria and Waikato universities have all signalled voluntary redundancies are likely as they face having to make up for the loss of international students.

Overseas students paid the country’s eight universities $503 million in fees in 2018, making up 13% of the universities’ total revenue.

However, the University of Otago said while it was looking to cut costs there were no plans for job cuts.

Otago University strategy director David Thomson said it was affected less than other universities because of a longstanding policy of limiting overseas students to no more than 15% of the roll.

In 2018 they accounted for only 7% of Otago’s revenue.

‘‘We have no current plans for redundancies as a result of Covid19,’’ he said.

That did not mean Otago had not taken a significant hit because of the pandemic.

This year alone the university estimated it would lose out on $8 million in international fees and $2 million in student accommodation income.

Mr Thomson said it was expecting a further significant reduction in income from international student fees next year.

It was likely this would be partially offset by a modest increase in domestic students, which generally trended upwards during recessions and when unemployment was high.

‘‘There is too much uncertainty about the global situation to make any robust assumptions about international enrolments beyond 2021 other than to note that once travel restrictions do ease both to New Zealand and more generally, there is potential for a steady recovery in international enrolments.’’

To cut costs the university had introduced restrictions on workrelated travel, which was already limited by the pandemic. This had saved it millions. Spending on construction projects was also below budget this year and it was now reviewing its capital works programme with a view to slowing it.

The university, as previously reported by the ODT, failed in its bid for ‘‘shovelready’’ funding from the Government for five of its capital projects.

Tertiary Education Commission deputy chief executive Gillian Dudgeon said the TEC had told tertiary institutions they were not expected to achieve the usual 3% surplus this year.

Education Minister Chris Hipkins urged universities to ‘‘think carefully’’ before cutting staff.

‘‘Staffing is a decision for the individual university and restructures for any reason are the vicechancellors’ own business to manage. I would, however, urge them to think carefully about whether they need to be making moves to make staffing cuts at this stage.’’

Cuts proposed at Auckland and Victoria universities amount to 4% to 5% of their 2018 revenue, suggesting up to 1000 of the university sector’s 22,000 jobs could be at risk.

The cuts may be less than implied by the universities’ financial dependence on foreign students partly because many overseas students are still here, partly because big capital projects have been halted to save money and partly because domestic enrolments are expected to jump because of the Covid19 recession.

University of Auckland vicechancellor Dawn Freshwater has offered permanent staff ‘‘a voluntary leaving scheme payment calculated on their redundancy provisions with an enhancement of an ‘additional’ 12 weeks’ pay on top’’.

Victoria University vicechancellor Grant Guilford said Victoria expected to make a $19 million loss this year and would lose another $33.5 million next year if no action was taken, based on signals from officials that only 1800 to 2000 overseas students might be let into New Zealand next year across the whole sector.

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

‘‘As we head into the latter part of this year, we’ll start to think about things like voluntary redundancies.

‘‘Looking at that out to the early part of 2021, if we are still not bridging the gap and our revenue intentions haven’t paid off, then we’d be looking at compulsory headcount reductions.’’

Waikato University vicechancellor Neil Quigley told staff last month he expected to ‘‘set targets to reduce staff numbers by the end of the year’’ after signals ‘‘the earliest we can expect the border to reopen to international students is June 2021’’.

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

‘‘We are looking at savings next year which may or may not involve seeking some limited numbers of redundancies, but we have no position on it.’’

Massey and Canterbury universities were still working out how they would be affected. — Additional reporting The New Zealand Herald

❛ We have no current plans for redundancies as a result of Covid19