Universities and higher education providers are considering whether to bring forward their next pay round in order to support staff as living costs rise, but admit there is limited room for manoeuvre on pay as they prepare for strike action this week.
As members of the University and College Union (UCU) at 150 universities plan to strike on 24, 25 and 30 November over pay, working conditions and changes to pensions, bodies representing universities have admitted that they are unlikely to be able to meet the union’s pay demands.
In a separate dispute organised by Unison, university staff including cleaners, security staff, librarians and catering workers went on strike yesterday over pay, with 19 institutions affected by industrial action.
Nearly one in three members of the University and Colleges Employers Association (UCEA) have a financial deficit, said professor George Boyne, chair of the UCEA board and principal and vice-Chancellor at the University of Aberdeen. He said those with a surplus cannot spend their reserves on pay, as union members have suggested, as much of this is ring-fenced for other things, such as infrastructure, specific projects that have been funded by donations, or to act as a buffer against external challenges.
Boyne said: “We recognise and sympathise with the difficulties that our colleagues across higher education are having with the rate of inflation and cost of living pressures.
Universities pay dispute
“Organisations in the private sector have the option of increasing their prices to try to get pay more closely aligned with the rate of inflation… but that isn’t an option for us.
“Our prices are set for this year and for the most part – in terms of international students – for next year. And there’s nothing we can do on the level of undergraduate fees in order to reset prices to try to get anywhere close to the inflation rate.”
One option the UCEA hopes would help end the dispute with the UCU, which it is currently discussing with members, is bringing forward the 2023/24 pay negotiations. However, Boyne said universities are unable to reopen pay discussions for the 2022/23 pay round as budgets have been agreed.
UCEA chief executive Raj Jethwa said the headline pay increase this year was 3%, which was “extremely challenging” for its members to implement. Staff on the lowest grades received a 9% pay uplift, and more than half have had an additional increase to take them further up the pay increments for their grade.
Future of collective bargaining
The UCEA has opened a consultation with its members on the long-term future of collective bargaining in the sector to maintain the “integrity” of the practice, Jethwa said.
“This is a sector that has rarely been able to conclude pay negotiations on time and often they’ve ended in dispute. There has to be a way of negotiating better with unions for the benefit of staff and for the benefit of institutions,” he said.
There has to be a way of negotiating better with unions for the benefit of staff and for the benefit of institutions” – Raj Jethwa, UCEA
Jethwa said the biggest sticking point in the current pay dispute with UCU has been the gap between what the union has asked for and what universities have been able to afford.
“That’s been more difficult this year with inflation climbing the way it has,” he said.
“Universities really do care about the impact of the cost of living, and what we haven’t had up until now is an understanding about what an acceptable outcome might look like, which involves the union departing from its stated claim.”
Reforms to the Universities Superannuation Scheme (USS), a defined benefit scheme, have also resulted in changes to members’ guaranteed annual pensions, which has been another facet of the dispute with the UCU.
The union has previously claimed that changes made to the pension scheme between 2011 to 2019 have meant that a typical member will be around £240,000 worse off when they retire.
We cannot deny the economic realities. Realities that mean only one in ten defined benefit schemes that guarantee pensions in the UK remain open to new members, and the USS is one of these,” – Prof Steve West, UUK
However, Professor Steve West, president of Universities UK and vice-chancellor of the University of the West of England, said these changes were made in order to guarantee the longevity of the scheme.
“Employers and UCU of course share a goal of creating secure, valuable and affordable retirement income for our staff,” he said. “But at the same time we cannot deny the economic realities. Realities that mean only one in ten defined benefit schemes that guarantee pensions in the UK remain open to new members, and the USS is one of these.”
West said the scheme’s employer contribution of 21.6% of salary is around three times higher than the average employer contribution rate among FTSE 250 companies. Employer contributions have risen by 54% since 2009, he claimed.
“There are over 340 employers in the scheme and many are not universities. They’re small charities and research institutes that could be crippled by such increases,” said West.
“It’s never an easy decision to change people’s pensions, but ignoring a problem and hoping it would go away was not the answer. Our proposals provided a viable and affordable solution to a difficult situation.”
He said universities wanted to work with the UCU to fast-track the scheme’s next valuation. UUK has also formed a technical forum that will consider the impact of rising interest rates on the scheme, while employers were considering how more flexibility could be built into the USS.
The UCU was unavailable to comment.