HE pay - employers impose 1.2% real terms pay cut

22 August 2018

Following the line of the employer's organisation UCEA, UCL have decided to impose a pay offer on staff which is a real-terms pay cut of 1.

HE sector pay vs RPI and CPI 2008-17 2% against national RPI inflation (this does not include London regional inflation costs).
  • This real-terms pay cut comes on top of a 14% real-terms pay cut over the last decade. It is an attack on all those working hard contributing to UCL and Higher Education more broadly. This is in a sector that is richer than it has ever been (with over £2 billion in annual surpluses), in which salaries at the top have increased by extraordinary amounts (and at UCL, these increases have included Senior Management bonuses).
  • The Week at UCL tries to paper over this by misrepresenting pay increments as if they were part of the pay "rise" (thereby a 3.5% increase). Half of UCL staff do not receive automatic increments (professors, and staff at the top of their grade). But in any case, that entire argument rests on a fallacy (see fact sheet link below). Worse, the implication is that management now consider annual increments to be a bargaining chip. We are well aware that new members of staff at the start of their careers struggle to pay rent. What does this say about UCL's loyalty towards the lowest paid?
  • Over the last decade University leaders gave themselves pay rises of 41%, including instituting bonuses for Senior Managers at UCL, whilst our pay has been cut in real-terms by 14% because of below-inflation pay increases. At the same time the workforce is overworked, underpaid, and suffering from systemic bullying (see last UCL staff survey results).
  • In separate indicative ballots, UCU and UNISON members have now voted by more than 2:1 to reject this offer and take strike action. A formal, paper ballot for industrial action is about to go out to members. We encourage members to vote against this pay cut and in favour of action to force the employers to stop the downward spiral of pay cuts, and pay staff properly.
  • We have laid out the facts on this real-terms pay cut below.

    In UCU's recent e-consultation 80% of members voted to reject the UCEA pay cut and vote by 2/3 to strike. We were then joined by UNISON members, who voted by 2/3 to reject and strike.

    It is not surprising that members of all unions feel squeezed and see through the complacent statements of the employers. 

    Our sector is booming with surpluses in the last three years soaring to over £2 billion a year, more than ten times their level a decade ago. There is no austerity in Higher Education. At the same time staffing levels have not kept up with increased numbers of students and staff costs continue to fall as a percentage of employers' expenditure. We are being taken for a ride.

    At the same time the University workforce is overworked, sees itself as underpaid, and as significantly suffering from bullying (as confirmed by the last UCL Staff Survey).

    To put our pay decline in a meaningful context, pay fell in real terms by some 14% between August 2008 and August 2017. 

    Our pay offer is for a further real-terms cut. The Office for National Statistics (ONS) prediction for RPI in August 2018 is 3.2%, meaning that this year's pay offer is a further 1.2% cut. 

    Even if you took the employers preferred measure (because it tends to be lower) of CPI, our salaries would be cut by 10% since 2008 and this year would be a 0.2% cut. However using CPI is obviously intellectually dishonest unless you expect your staff to have no housing costs!

    The following graph plots pay in real terms (100%=Aug 2008) against RPI and CPI. It also includes the additional cost to the employers (which we did not receive) of the March 2016 USS increase.

    The area above the line to 100% is what we might call "stolen wages", which is getting on for a year's salary over the decade. This is the cost that we are living with for not fighting over pay during the years following the crash, when we were all told that we had to 'tighten our belts'.

    These figures are of course national averages and do not take into account London inflation costs, mostly in housing and transport. The ONS does not keep reliable statistics on these. One study into the feasibility of regional CPI measures (excluding housing costs) seems to put London inflation at 1% pa over the rest of the country.

    Regional measures of inflation - 2010-17

    Finally, this offer does not take into account the 3.7% pay cut that the employers are may going to impose on us through additional USS contributions, unless the projected deficit is ruled to be an artefact of a misguided valuation method (which we believe it is but the employers have chosen to believe is not).

    For these reasons, we are calling on our members to participate fully in the UCU ballot on industrial action that will open on the 30 August and to vote for industrial action. The employers have repeatedly made up faulty excuses to suppress our pay whilst reaping the rewards in massive surpluses.  Enough is enough.

    Appendix: "Trick" of including increments in pay rise percentage based on a fallacy!

    Including increments is an old argument. But it is a dishonest trick that relies on a mathematical fallacy.

    First, the employers accept the graded rate for the job is the top of the scale, not the bottom. The premise of increments is experience based, ie that staff learning the role can be paid less. 

    Second, many staff do not get increments. They are stuck at the top of the scale. This leaves around half of staff in a given year who are progressing, which is where the 1.5% figure comes from. (A salary increment is around 3%.)

    But it is a mathematical fallacy to argue that this represents an increase in pay cost, or is in any other sense like pay increases. 

    For a start, it does not increase the pay bill. 

    Over time, higher paid staff are replaced with lower paid staff. In a given year, if exiting staff roughly equal new entrants, we can expect approximately constant numbers on each salary point, even as individuals are incremented.

    In a situation of growth (like now), new entrants tend to outweigh exiting staff. Result: the mean salary per employee tends to fall as the employer grows.

    There is high turnover in certain groups, e.g. among the 3,500 research staff on temporary contracts (also, paying private sector rents because they have no choice), who tend not to survive more than three years or so, where UCL replaces higher paid staff with lower paid ones regularly. At the other end of the spectrum, over a longer period, when profs retire, new lecturers are recruited. 

    The fallacy lies in the difference between the mean of the group and the position of an individual within it. The fact that individuals might be incremented within a group does not mean the average in the staff group increases.

    There is thus no additional recurring cost of increments to the employer, and to present the data like this is mathematically incompetent. (Fail.)

    Of course they could save money and gain the whip hand over staff by abolishing automatic increments. This leads to a final point.

    Where this argument has some "commonsense" resonance is often among new starters who don't expect to ever get to the top of the scale. They may be in line for a five percent increase next year. That seems good. But it ignores that when they get to the top of their pay scale they will be stuck with pay cuts indefinitely.

    But think also about the further implications of the UCEA argument here. If they were serious about increments being a result of the employers' generosity there is only one implication we should draw: left to their own devices they would like to abolish automatic increments - attacking the lowest paid by keeping them where they currently are.