The JEP Report

The report of the Joint Expert Panel on USS was published on Thursday 13 September. The JEP’s report – agreed, as required by the Terms of Reference, by consensus among all six panel members and the independent chair – provides independent vindication of almost all of UCU’s criticisms of the 2017 valuation process. The widely-discussed and elaborately complex “Test 1” is found to have been both the central plank of the valuation and essentially unfit for that purpose; the nature of USS as a large, open, multi-employer scheme in a robust sector with a secure future to have been neglected by both the USS Trustee and the Pensions Regulator; and the September UUK consultation with employers to have been comprehensively mishandled. The early “de-risking” of the Scheme’s assets proposed in November is found to be unnecessary and damaging, offering little additional protection to the Scheme while substantially increasing its deficit and the cost of future benefits.

The overall picture presented is one of a valuation in which, as UCU has argued, caution was layered upon caution at every possible stage, with the cumulative effect of massively understating the financial health of USS. To give just two examples, between the 2014 and 2017 valuations:

  • the margin of prudence applied in setting the discount rate (i.e. the assumed future investment return) was increased from 15% to 17% above a 50/50 “best estimate” of expected returns;
  • the level of investment performance allowed in excess of the discount rate for setting deficit recovery contributions was reduced from halfway to best estimate to zero.

The latter change alone increased the contribution rate needed for deficit recovery by around 4% of total salaries, and the USS Trustee failed to provide an adequate rationale for either change in its submissions to the JEP.

The Panel’s view of the much-discussed Test 1 is damning, and concurs with the assessments of UCU members like Sam Marsh (now a UCU representative on the JNC). The Test is found to have been almost the sole determinant of the valuation result, and to have acted less as a true test of the scheme’s financial condition than as a driver of investment strategy which increased both the deficit and the cost of future provision. The Panel does not consider this to have been “helpful”. The Test itself, moreover, was so sensitive to “very subjective” input assumptions as to be capable of producing almost any result, depending on what was put in. The preoccupation with gilt rates which it involved also increased the chances of wild short-term fluctuations in the relation between assets and liabilities, when in a suitably diverse investment portfolio (i.e., one which is not “de-risked” into bonds) poor gilt yields will in practice be compensated for by improved performance in other investments.

A recurring theme throughout the report is that the Trustee’s supposed concern with USS’s long-term funding position disguised an irrationally short-term perspective, in which present economic conditions were considered in isolation from any reasonable judgements about long-term trends. Despite expecting gilt rates to revert to historic norms in the medium term, for example, the Trustee imposed the full cost of current, rock bottom rates on USS in this valuation. The general sensitivity of the valuation to short-term economic conditions is captured in the fact that merely updating the November valuation with March 2018 data would reduces the assessed deficit by nearly 50%. These problems were compounded by the self-perpetuating features of Test 1, whereby exceptionally low gilt rates increased the assessed deficit and reduced the Scheme’s assumed risk tolerance. This meant further de-risking into gilts, which increased the deficit further, locking USS into a vicious cycle and driving it into the worst-performing investments.

As Financial Times pensions correspondent Josephine Cumbo tweeted, the Report makes uncomfortable reading for the Pensions Regulator. There was “no evidence”, the JEP concludes, to support tPR’s suggestion – made to the Trustee in writing and forwarded to employers in the middle of the September employer consultation – that the USS covenant was less than “strong” (the highest of tPR’s four categories). On the contrary, the Panel agreed with the view of USS’s own expert advisers that the covenant provided to USS by the sponsoring employers was uniquely strong among DB schemes. Moreover, the Regulator’s pre-emptive interventions had the effect of “closing down options for discussion and negotiation and unduly influencing the outcome of consultations with employers”. This further pushed the Scheme into an inappropriately risk-averse investment strategy, depressing expected investment returns and forcing up both the deficit and the cost of providing benefits in the future.

The JEP report concludes with four recommendations for modifying the 2017 valuation. The cumulative effect of these is to reduce the total contribution rate required to fund status quo benefits and recover the Scheme deficit from the 37.4% of salaries given by the November valuation to 30.08% (or 29.18% without the 1% DC Match). In the JEP’s view, these four proposed adjustments are “consistent with the Trustee’s fiduciary duties and the objectives of the Regulator”. If all four changes are made to the 2017 valuation, and the cost shared in the 65:35 ratio agreed in the Scheme rules, status quo benefits (minus the Match) could be maintained until 2020 at a contribution rate of around 9.1% of salary for Scheme members and 20.1% for employers.

Given that the Panel endorses so many of UCU’s arguments about the 2017 USS valuation, it might seem that the end of the USS dispute is in sight, with all that remains being for its recommendations to be implemented, and the sharing of the 3.18% increase in total contributions to be ironed out. The problem remains, however, that the JEP still has no formal status within the constitutional structure of either USS or the regulatory regimesurrounding it. Despite its deliberately conciliatory tone, the report dissents sharply from the positions of the USS Trustee and tPR on the valuation process so far – but its conclusions can only be implemented with the consent of both. So the suggestion of the UUK actuarial advisers Aon, quoted in the final annex to the report, that delaying de-risking of the investment portfolio and increasing the reliance on the employer covenant “would be too much for tPR and the trustee to accept” is troubling. (For more thoughts in this area, see this useful Twitter thread by Mike Otsuka)

The JEP report provides powerful support for the position that UCU has taken throughout the USS dispute, and shows that we were unquestionably right to strike in defence of USS pensions earlier this year. All eyes must now be on the response of the USS Trustee.

– Sam James, Cambridge UCU Acting President

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USS update: Joint Expert Panel and cost sharing

The progress of the Joint Expert Panel

It is now two months since the Terms of Reference for the Joint Expert Panel (JEP) on USS were agreed, and a month since the first meeting of the Panel on May 31st. A website has now been set up on which are published regular updates from the Chair of the JEP, Joanne Segars, and details of both the UCU and UUK nominees to the Panel. The UCU nominees – Saul Jacka, Deborah Mabbet, and Catherine Donnelly — are all academics with relevant fields of expertise, while UUK has nominated three figures with backgrounds in pensions consultancy and policy-making. Joanne Segars, a joint appointment as independent chair, is the chair of LGPS Central Ltd, which pools the investments of a number of Midlands-based local government pension schemes. She is also a previous Head of Pensions at the TUC.

The JEP has now met four times, and a number of things are becoming clear. The most important is that the JEP’s remit is restricted to the valuation of the USS scheme in a pretty narrow sense. In particular, the JEP will make no recommendations on future benefits or contribution rates for either employers or employees. These will be left to the (unreformed) Joint Negotiating Committee (JNC) to decide after the JEP reports. The initial work of the JEP will be limited to assessing, first, whether the existing assets and liabilities of USS are in surplus or deficit, and by how much; and, second, what total contribution rate would be required going forward to pay for specified levels and types of benefit promises. There will thus remain a great deal to be negotiated between UCU and UUK even if both sides accept the conclusions of the JEP.

There is not yet any indication of what those conclusions are likely to be. It is, however, clear that the JEP is asking at least some of the right questions, and of the right people. The Panel is considering, for example, how important the three “tests” of adequate scheme funding used by USS — in particular the notorious but obscure Test 1 — were to the outcome of the 2017 valuation; whether alternative approaches were wrongly neglected; how appropriate the high bar of “self-sufficiency” is for assessing the state of a pension fund in the uniquely robust HE sector; how the “discount rate” (which determines the present cost of future benefits) should be calculated; and whether the employer covenant and associated risk budget of the scheme were appropriately evaluated. Evidence on these questions has so far been taken from USS executives, the Scheme Actuary Ali Tayyebi, representatives of the Pensions Regulator, and the actuaries for both UCU (First Actuarial) and UUK (Aon). Submissions from members and other USS stakeholders are still invited, and should be sent to submit@ussjep.org.uk.

Importantly, USS has committed “to provide the Panel with the information it needs” to satisfy its Terms of Reference, at least in the judgement of the JEP Chair. Evidence taken from First Actuarial, for UCU, and Aon, for UUK, has (unsurprisingly) produced a combination of shared and contrasting views on the valuation, but Joanne Segars notes that “there were a number of common points and views on certain key areas”. She thinks these will potentially be “helpful in developing the Panel’s assessment and recommendations”. Whether this is grounds for optimism or pessimism about what will emerge from the JEP when it reports, however, will only become clear in due course.

Cost sharing

In the meantime, USS itself has (as promised) proceeded with the implementation of “cost sharing” under the terms of the November valuation, as is its statutory obligation now that the June 30 deadline for completion of the 2017 valuation has passed. Cost sharing is the process under the Scheme Rules whereby, in the absence of a negotiated agreement on contributions and benefits following a revaluation of the Scheme, the trustee alters the level and structure of employer and employee contributions so as to continue to fund current benefits, and to recover any deficit in the funding of past accrual. According to the November valuation, the combined employer-employee contribution rate required to fund the current benefit structure is 37.4% of total salaries, an increase of 11.4 percentage points on the status quo.

The Scheme Rules (§§76.4 – 76.8) provide for this increase to be covered in three stages if the JNC fails to agree an alternative (as it has). First, the employer “Match” contribution to individual DC pots (a DC contribution from the employer matching the first 1% of salary an employee pays into the Investment Builder) is removed, and the money redirected into the DB fund. This happens automatically under the rules. Second, employer contributions to members’ DC pots above the DB salary threshold may be reduced below the current 12% of salary, so that more of the total 18% employer contribution may be directed to the DB fund. Any such redirection must be agreed by the JNC and passed through a statutory consultation with employees. Neither has yet happened, so we do not yet know what reduction may be made. Finally, if these redirected contributions do not together cover the shortfall in funding of the DB scheme, the total contribution rate is increased, with employers paying 65% of the increase and employees the remaining 35%.

What now for USS?

USS members should therefore anticipate two things. The first is a consultation at some point in the next six months or so on a reduction in the employer contribution to members’ DC pots above the salary threshold. The second is an increase in the employee contribution rate from 1 April 2019. If no reduction in the employer DC contribution above the salary threshold is agreed through the JNC and the increase is introduced all at once, the increase will be from 8% of salary to 11.71%. (At the same time, the employer contribution would increase from 18% to 24.89%.) In practice, the increase may be somewhat less, and is likely to be introduced gradually. USS promises to update scheme members in late July on the balance between reductions in DC contributions and increases in the overall contribution rate which has been settled upon, and presumably also on the planned phasing of increases.

It is important to stress that these increases are not expected to remain in place for the full 2017-2020 valuation cycle. Rather, once the JEP has reported in September or October, negotiations will resume at the JNC over reforms to contribution rates and/or the benefit structure of USS in light of the JEP’s report. Since we do not yet know what the JEP will conclude about the existence or scale of the existing scheme deficit or the cost of providing benefits in future, it is pointless to speculate on what these reforms might look like. Once agreed, they would be implemented as quickly as possible, since neither UCU nor the employers have an interest in sustaining the large contribution increases due to be imposed under cost sharing. In practice, though, implementation is unlikely to be possible much before the end of 2019, or even before the start of the 2020 tax year on 1 April. There can be no question that the USS dispute still has a long way to run, and that there remain considerable hurdles to be crossed before UCU members can be confident of a satisfactory resolution.

– Sam James, CUCU Vice President

Vote for action on workload

This post is based on the fourth and final in a series of emails sent by CUCU to members on the pay ballot that closes at noon on Wednesday June 27. We strongly recommend that all members vote to reject the pay offer and in favour of industrial action.

In previous communications on the ballot we looked at key elements of the national pay demand: the headline issue of pay, the gender pay gap and casualisation. This is our final explainer, on workload. The below draws upon two sources: the HE component of UCU’s 2016 National Workload Survey  (summary report here), which was based on 12,113 responses and includes a dataset from Cambridge, and the 2017 Times Higher Education survey to which around 1450 staff in UK HE responded.

Excessive workloads in HE: a growing problem

One of UCU’s demands this year is the creation of a national framework to reduce excessive workloads and properly compensate staff for excessive hours worked. To give you a sense of the scale of the problem, UCU’s 2016 survey found that academic staff worked an average of 50.9 hours per week, with 28.5% averaging more than 55 hours per week. Academic-related staff worked an average of 42.4 hours per week. These figures are in line with the THE survey, for which 71% of UK academic respondents worked 9 hours a day or more, and 15% worked 10 or more, with added hours at weekends. 

For Cambridge, the average across all staff was a 52.8 hour working week. Most contracts don’t specify work hours, but based on 0.5 FTE contracts we obtained, the normal expectation for a full-time working week is 37 hours. This amounts to three unpaid days of work a week.  

Nationwide, excessive working hours affect staff at all levels, with remarkable homogeneity between numbers reported by academic staff at different levels of seniority and across disciplines. The figures are worst for staff on fractional contracts: staff at 0.2 and 0.3 FTE work on average over 190% of their contracted hours. This particularly impacts precarious early career staff: 57.1% of teaching assistants are employed at 0.4 FTE or less, whereas across all staff, the figure is 3.5%. Workload is also a gendered issue: women who work part time with small fractions (0.2 to 0.3 FTE) have significantly longer FTE adjusted average weekly working hours than men (73.1 hours vs. 61.2 hours at 0.2 FTE, and 79.7 hours vs. 60.9 hours at 0.3 FTE).

‘Can’t switch off’: the personal toll of high workloads

Of all staff surveyed by UCU, 65.5% reported that their workload is unmanageable at least half of the time; for almost half of these, it is unmanageable all or most of the time. This tallies with THE’s findings: 38% of UK academics work more than five hours at the weekend, and 82% work while on holiday. Moreover, only 24% of academic-related staff switch off from work “often” or “always” when they are at home; for academics this drops to an alarmingly low 6.5%.

The toll on the health and personal life of staff is explored in the THE survey, which makes for depressingly familiar reading. Around a quarter of all staff report that work negatively affects their mental health “a lot”. Workloads interfere with caring responsibilities: 60% of academics, and 40% of academic-related staff, said that they believed that they would work at least five more hours a week if they did not have any dependents. Additionally, 43% of female academics who have children say that this holds back their career “significantly” or “a great deal”. More broadly, 65% of academic-related staff say that their partner regards the hours that they work as detrimental to a healthy family life, and 62% of academics say that their partner regards their academic careers as at least a little detrimental to the quality of their relationship.

Workload increases as job profiles shift

Staff widely reported an increase in both work-hours and the intensity of work in recent years. In the UCU survey, 83.1% of academic staff and 78.9% of academic related staff reported that the pace or intensity of work has increased over the previous three years. In the THE survey, 46% of UK respondents say their work hours had increased over the past three years. This matches the more detailed UCU figures, below, which also explore the causes of these increases.

Among academic-related staff, 24.4% reported a significant increase in working hours, and a further 36.8% a slight one, over the previous three years. The main cause is the widening range of duties considered to be within their remit. Notably, 30.7% of academic-related staff reported spending significant amounts of their time doing work that is not included in their job description.

Among academic staff, 47.2% of those engaged in teaching reported a significant increase in working hours (and a further 30.9% a slight one) over the previous three years, as did 22.9% of research-only staff. This is symptomatic of a shift in HE: nationwide, teaching and research staff now spend more than double the amount of time on teaching specific activities, including examining, than they do on research. Even more alarmingly, 82.7% of teaching and research staff saw their level of departmental and general admin increase over the previous three years. Staff listed this as the most major cause for increased workload.

You can see a detailed breakdown of workload components for Cambridge here. For teaching and research staff, roughly 37% of time is spent on teaching-related activities, 26% on research-related ones, and 36% on administration. The landscape of academia in Cambridge is changing rapidly: since 2002, according to the Reporter (see here and here), numbers of academic-related staff has increased by 131%. Academic staff numbers have increased by 8%, but their duties have clearly shifted, to manage a 34% increase in postgraduate student numbers (which contrasts with a 2% increase in the undergraduate body), and a 89% increase in the number of research staff.

Excessive workloads and the intensification of work are not unchangeable facts about our working lives, and as we build our workplace, departmental and college rep network over the coming year workload will be a key issue to campaign on. But for this issue to gain traction with senior management we need national recognition from the employers that the constant extension and intensification of work cannot continue. Vote to reject the pay offer and in favour of action on workload (and on pay, casualisation and the gender pay gap). And if you’re not a member of UCU, join now!

Vote for action on casualisation

This post is based on the third in a series of emails sent by Cambridge UCU to members on the consultative pay ballot that closes at noon on Wednesday June 27. Cambridge UCU strongly recommends that all members vote to reject the pay offer and in favour of industrial action.

What follows is the work of CUCU’s anti-casualisation working group.

The national picture

The transformation of funding and ongoing marketisation of UK higher education is driving universities to casualise their workforces in pursuit of flexibility. Management increasingly view permanent employment as costly and risky, and seek to offload that risk onto staff by creating a dizzying array of insecure, precarious contracts now take many forms: fixed-term, variable hours, hourly paid, zero-hours and agency contracts. The process is bad for staff, who have to deal with the uncertainty of insecure contracts; and it is bad for universities, undermining the conditions necessary that staff need to do decent work, whatever their area of employment.

According to Higher Education Statistics Agency (HESA) data, in 2016-17, of around 280,000 academic staff in the UK, around 137,000 (49% of the total) were on open-ended or permanent contracts.* Nearly 70,000, or 25%, were on fixed-term contracts, and almost 72,000 (26%) on so-called ‘atypical contracts’. The ‘atypical’ category (defined here under ‘terms of employment’) covers a narrow range of precarious contracts like zero-hours contracts and rolling lecturing contracts of less than a month (it also captures a few types of work, such as examining, where short-term contracts are desirable). Different institutions interpret ‘atypical’ differently, and many use accounting tricks to keep their numbers low, for example by issuing fixed-term contracts to staff who are paid by the hour (see FoI results on p.5 of this document). The size of the precarious workforce is therefore likely to be much higher than HESA’s 72 000 figure.

The impact of casualisation on staff members themselves hardly needs spelling out. Insecurity and uncertainty impacts heavily on the finances, family life, and health, including mental health, of staff. It is becoming increasingly clear that a precarious workforce is also false economy for employers: for instance, staff on fixed-term contracts often spend a significant fraction of their time looking for their next job. An extensive body of research on how casualisation worsens teaching performance at US institutions is collected here. Casualisation is also a gendered issue: men hold 27% more open-ended or permanent contracts than women (HESA, Fig. 3).

*Due to the limitations of HESA data, we do not have a picture of the intersection between casualisation and race and disability in the university workforce, nor do we have data for casualisation among academic-related staff.

The situation at Cambridge

As far as academic staff at Cambridge (excluding colleges) are concerned, a UCU FOI request in 2016 revealed the following distribution of contract categories across three different roles:

 

 
Teaching & research
Research-only
Teaching-only
Permanent staff
1571 (91.7%)
1936 (48.2%)
132 (62.9%)
Fixed-term staff
143 (8.3%)
2023 (50.4%)
76 (36.2%)
of which <1 year contract
19 (1.1%)
346 (8.6%)
24 (11.4%)
Hourly-paid staff
0 (0%)
55 (1.3%)
2 (0.9%)

The vast majority of temporary contracts are research-only, typically held by postdocs. Numbers of these are even higher than this table suggests: the most recent annual report of the Postdocs of Cambridge Society (PdOC) shows there are more than 4,000 postdocs associated with the University: Research Associates, Senior Research Associates, Junior Research Fellows and other categories. Their number has doubled over the last 15 years, now accounting for more than 35% of university staff. While such appointments are often prestigious, it is also clear that the nature of career trajectories they support is changing, with many early-career researchers in both STEM and Humanities & Social Sciences taking on a series of fixed-term appointments. Cambridge is at the forefront of the developing phenomenon of the serial or ‘precarious postdoc.

Our members and reps have also indicated that short fixed-term teaching and teaching and research fellowships to meet ongoing teaching needs are becoming more common at this institution. Oxford has been heading down this route for some time; we should not be following suit.

Cambridge: atypical contracts, ‘hidden’ college work, stagnating pay rates

On the surface, Cambridge seems to fare less badly than some other Russell group universities, with the Guardian reporting last year that 13.4% of Cambridge staff are on atypical contracts (staff on atypical contracts make up over 50% of the workforce in the Russell group overall). The figure for Cambridge, however, is artificially low: it doesn’t include the large volume of hourly-paid work performed for colleges. Oxford, the HE institution structurally most similar to us, reported 63.7% of staff on atypical contracts in 2016. College staff on fixed-term contracts are left out of Cambridge’s figures.

Our FoI requests suggest that a typical undergraduate college employs hundreds of different supervisors across a given academic year. The vast majority of them are paid the University’s standard rate (£35.18 for a pair). A great many of these supervisors do not rely on supervision for their primary income, but it is the case that pay for this work, which used to be pegged to the lecturer pay scale, has not kept pace with inflation, to the point where pay for supervision does adequately reflect preparation or marking time. This is particularly problematic for early-career academics (especially those on short-term contracts) and graduate students supervising topics for the first time. In fact a steep real terms decline in the value of pay affects all other forms of casual work in this University. Part of our local claims on casualisation will be directed towards reversing this decline.

Temporary Employment Service (TES) contracts in Cambridge

Due to data constraints we have focused mostly on the casualisation of academic staff. But it is clear that university managements exploit academic-related and support staff. Cambridge runs a Temporary Employment Service, an internal temp agency carefully set up to give staff as few benefits and employment rights as possible. Staff on TES contracts are considered workers rather than employees, but don’t even receive government-mandated agency worker rights, because TES isn’t considered a third-party service (HR statement here).

TES workers can be fired without notice. They are frequently not entitled to receive statutory sick pay, are enrolled in a worse pension scheme (UCRSS) than any University employee; they do not have access to any of the standard benefits for University employees. TES assignments last for a maximum to nine months, after which the worker must have a four week contract break before being allowed to apply for work again; the break aims to prevent the possibility of the worker accruing any additional employment rights through duration of employment. Sickeningly, this prevents TES workers from receiving Statutory Maternity Pay: to be eligible for SMP one has to have been working continuously for 26 weeks without a break.

The number of staff on TES contracts fluctuate. At the time UCU filed an FoI request last month, there were 281 TES contracts across the University and the colleges; 45 at the University Library alone, but there were at least a few in most departments. Some of these contracts are for genuinely temporary situations, but it is clear that they are used much more widely than is justifiable to cover ongoing needs that would support better contracts. The widespread use of TES contracts is not good for those not on them either, with high turnover of staff and constant interruption of work. But above all, these contracts are not good for those on them. Our anti-casualisation working group has already heard from several workers who received repeat 9-month TES contracts. Staff deserve better.

Casualisation is a dire threat to the working conditions of present and future university staff. It is already reshaping UK higher education in pernicious ways that resemble the US higher education landscape. We are fighting for a national framework to hold our employers to account and reverse this dismal trend. Vote to reject the employers’ pay offer and yes to action on casualisation, and if you’re not already a member of UCU, join now.

 

Vote for action on the gender pay gap

This post is based on the second in a series of emails sent by Cambridge UCU to members on the consultative pay ballot that closes at noon on Wednesday June 27. Cambridge UCU strongly recommends that all members vote to reject the pay offer and in favour of industrial action.

What follows is the work of CUCU’s Equalities and Diversity working group, which draws on Cambridge’s 2017 Interim Equal Pay Review. While it focuses on the situation at Cambridge, much of its analysis applies across UK HE, which at current rates, is predicted to take 40 years to close the GPG. What we need from the employers is less fluff and more action.

The gender pay gap: the basics

The employers 2% final pay offer will lead to lower salary uplifts for women because of the significant gender pay gap. 

At Cambridge, the GPG including additional payments (total pay) is 20.0%, and excluding additional payments (i.e. basic pay) is 18.3%. The primary factor for the GPG is clear: men significantly outnumber women at the highest grades by more than 4:1 at grade 12, and by more than 2:1 at grade 11. In turn, women heavily outnumber men at grades 6 and below (63.1% women to 36.9% men).

Moreover, while 51.3% of University of Cambridge employees overall are female, the proportion of women among academic staff is only 29.3%, and, broken down by staff category, the GPG is worst for academics, with a difference in average total pay of 14.2%, which is just over £10,000.

The GPG in Cambridge is compounded by disparities between bonus payments made to men and women. Broken down by grade, these are particularly egregious at grade 3, where total pay gap of 5.3%, and the average bonus payment to women is £61, and to men, £1,121; and at grade 12, where the total pay gap is 2.2%, and the average extra payment to men is over £2,000 more than to women.

It is worth remembering that because UCU negotiates jointly on pay with five other HE unions, what is at stake in this pay campaign are significant uplifts for staff on all grades, including the lowest.

Bonus payments: an alarming trend

A perverse side effect of the fact that ‘standard’ pay scale increases have not kept up with inflation is that in Cambridge there is an increased reliance on Additional Payments and Market Related Payments as part of pay packages. The average additional payment has risen from £273 in 2008 (adjusted to 2018 £) to £886. Notably, the total value of Market Related Payments has grown from £1,105,716 in 2008 (again adjusted to 2018 £) to £4,068,557. This is a major problem for several reasons:

  • Bonus payments disproportionately go to staff at the top of the pay scales. A ‘two-tier’ system has developed, whereby some staff can negotiate individually for pay uplifts beyond basic pay, and the majority – academic-related and assistant staff in particular – are by and large left behind as their pay depreciates in real terms.
  • Bonus payments worsen the GPG. While the GPG has been decreasing year-on-year since 2008, the share of the gap that is due to additional payments has grown: the difference between the basic and total pay gaps has gone from 0.6 percentage points (2008) to 1.7 percentage points (2017).

In 2016-17, bonus payments for women totalled £2,612,593. For men they totalled  £8,055,345. In particular, the total value of Market Related Payments made to men was 3.5 times more than to women; of these, payments for retention were given out to almost five times more men than women, and averaged more than twice as much. But disparities in bonus pay are not just a problem for those at the top of the pay scales: recall that at grade 3 the average extra payment to women is £61, and to men, £1,121.

Rising living costs: the case of childcare

The decrease in real terms pay, covered at length in our last email, is aggravated by rapidly rising costs of living that make it even harder to attract more women and minority groups to Cambridge. Housing is often mentioned in this regard, but the problems are just as great when it comes to childcare and nursery costs.

For instance, while the overall pay increase (for all but the lowest spine points) since 2011 is 8.05%, fees at the University Nursery have increased since 2011 by 28.67%. They are set to increase by a further 4.5% on August 1 this year. The University provides a salary sacrifice scheme to help offset the cost of childcare, but this scheme is regressive and thus further exacerbates the gender pay gap. The steepest discount on nursery fees is disproportionally enjoyed by men, since their income is more likely to be taxed at a higher rate.

National and local action is needed

It is not hard to imagine ways to tackle the inequities described above. But we cannot be sure that our employer, or any other, will go  beyond gathering data and hosting glossy events. Closing the gender pay gap in HE will require pushing the employers nationally as well as locally. Reject the employers’ pay offer and vote for action to secure equal pay, and if you’re not yet a member of UCU, join now!

 

Vote for action on pay

This post is based on the first in a series of emails sent by Cambridge UCU to members on the consultative pay ballot that closes at noon on Wednesday June 27. Cambridge UCU strongly recommends that all members vote to reject the pay offer and in favour of industrial action.

The university employers’ final pay offer to staff this year is a 2% increase on the pay spine – yet another real terms pay cut. This comes after a decade of pay decline; when pay settlements are cumulatively compared to rises in RPI, staff have lost around 21% in the value of their pay since 2010. Meanwhile our workplaces are host to mammoth gender pay gaps, spreading casualisation and chronic overwork. This is a choice on the part of the employers, not a necessity: vice-chancellors need to think again.

Staff pay: steep decline since 2009

Real terms pay for university staff has declined precipitously since 2009, regardless of which measure of inflation you use. Take a look at the graph below, which shows the decline for someone at spine point 51.

Pay Graph.jpg

Source: Mike Otsuka

The table below shows how much someone on the average sector pay (roughly equivalent to a lecturer’s starting salary) would be paid today had their salary kept pace with inflation (measured by four different indices) since January 2009.

Index used: RPI RPIJ CPI CPIH
Jan’ 09 pay in 2018 Prices £50,124 £47,190 £46,742 £45,868
2018 pay £41,212 £41,212 £41,212 £41,212
% drop 17.8% 12.7% 11.8% 10.2%

There are disagreements over which measure of inflation best reflects changes in the real cost of living. It is easy to see why the employers use CPIH (CPI plus owner-occupier housing costs), which many think routinely underestimates the true cost of increases in household expenses. But even by this measure, average pay has diminished by more than 10% in real terms since 2009. Someone in the middle of the pay distribution would today be paid £4,500 more per year had their pay kept pace with CPIH. If their pay had kept pace with RPI (which UUK regarded as a reasonable measure when discussing tuition fees last year) then her salary would be a staggering £9,000 higher than its present £41,000.

Lagging behind the rest of economy

While wage growth across the UK economy has been poor since 2009, the deterioration of pay in HE has been considerably worse than the national average. Since 2014 real wages elsewhere in the economy have recovered to their 2009 levels, while HE pay has stagnated. Today HE pay remains more than 10% below 2009 levels (by CPIH). The trend over the last year has been for the level of pay settlements in the rest of the economy to rise. This is expected to continue. So even leaving aside the steady decline of of HE salaries since 2008, the employers’ offer this year is unusually mean in comparison to the rest of the economy.

Can universities pay more?

Yes. The idea that universities cannot afford to remunerate staff is risible. As the table below shows, staff costs as a percentage of total income across HE have decreased every year but one since 2009, from 56.6% in 09/10 to 52.9% in 16/17: a 6.5% decrease in the proportion of the sector’s income being invested in its staff.Pay TableMeanwhile, total capital expenditure in Higher Education has increased by nearly 35% in the same period, to nearly £5bn per year, while annual surpluses have increased steadily from £0.82bn in 09/10 to £2.27bn in 16/17. The sector’s cash reserves have consequently ballooned, from £12bn in 09/10 to £44bn in 16/17: an increase of more than 250%.

The steady erosion of university staff pay in the last decade has been a choice, not necessity, as might be obvious from soaring remuneration for senior managers. Now, months after docking millions of pounds of pay from staff defending the right to a decent pension, the employers offer another real terms pay cut. It is time that they were made to reassess their priorities.

A recent survey shows that students overwhelmingly want universities to prioritise investment in staff over the construction of shiny buildings. We need to stop a rot that has seen us receive below-CPI pay ‘rises’ almost without exception, for almost a decade, and made UK Higher Education an increasingly unattractive to place to work in. Vote to reject the pay offer and for action, and if you are not a member of UCU, join now!

Join our casework team!

An important one this. If you have contacted Cambridge UCU of late for assistance with a problem at work, you may have noticed that our team of caseworkers is quite hard-pressed. With the branch having nearly doubled in size, the number of members coming to us with issues is increasing. So we need your help! Next Thursday lunchtime we’re holding a short Taster session for you to get a glimpse of what casework might involve, and decide if it’s something you might want to do.

Curious about Casework? Taster Session
24 May 11:30am – 1:00pm
Nihon Room, Pembroke College (map)

Lunch and refreshments provided

Our caseworkers are highly-valued union members who provide support on a voluntary basis to fellow members facing problems at work. This advice and support is one of the most important and basic forms of solidarity that the union provides, and offering it can be hugely rewarding. Casework also gives us a sense of what’s going wrong in a workplace and how we can change it. So it’s an important starting point for collective action to improve working conditions at our university.

This Taster session, open to all, is a chance to find out more about casework, with no obligations. Come see if you’d like to join our team.

Should you decide casework is for you, we’ll be running a further training session, after which you can take on a case. There’s absolutely no pressure to do so, and you’ll be supported all the way by us, shadowing or being shadowed until you feel comfortable. There are also further training sessions run by national UCU you can go on.

Please contact us as soon as possible if you’re interested in attending next week (this will help us sort catering out too).

How expert? How transparent? Thoughts on the JEP Terms of Reference and interim arrangements for USS

Last Friday, April 27, there were two important meetings for the future of the USS dispute. The first was a meeting of the Higher Education Committee (HEC) of UCU, at which were presented the draft Terms of Reference (ToR) for the Joint Expert Panel (JEP) convened to consider the USS valuation. The second was a meeting of the Joint Negotiating Committee of USS, which the trustee had required to confirm immediate instructions for the future of the scheme. Several of the same people from UCU were at both meetings.

It is clear that the HEC meeting was fractious. Rachel Cohen has reported that the ToR were only received by the members of HEC at the start of the meeting, and that only twenty minutes were made available to study them. Moreover, the Chair of HEC, Douglas Chalmers, ruled that the Report containing the ToR would be voted on before the numerous motions which had been proposed, and that if it was passed the majority of those motions would fall by default. As Adam Ozanne has described the meeting, these rulings were challenged at length, leaving little time to discuss the Report or the ToR themselves. These challenges failed, and eventually the Report was passed. Also passed were motions committing the JEP to robustly challenge the methodology of the current USS valuation; committing HEC to pursue changes in UK pension regulations; and demanding that the equality and diversity implications of any USS changes be adequately recognised.

How far do the ToR for the JEP offer encouragement that UCU members were right to vote to suspend strike action, and to place hope in the proposed Panel? There are some grounds for optimism. The six members of the JEP will only be able to reach conclusions by consensus, with no casting vote for the Panel chair. This ensures that the (5+1)/11 majority at the JNC, which has been so damaging to USS member interests the past, cannot be repeated at the JEP. It is also good to see it confirmed that the JEP will have access to a proper range of expert witnesses, from the Scheme actuary to the Pensions Regulator, so that it can do its work in a properly informed and authoritative way.

But the grounds for pessimism about the panel are more substantial. There is a lack of transparency in both the appointments process to the JEP and the proposed workings of the Panel. All matters concerning the JEP are to be delegated from HEC to the Superannuation Working Group (SWG) of UCU. SWG will select the three UCU members of the Panel at a meeting on 16 May, on the basis of submitted CVs and 500-word supporting statements from self-nominated applicants. This process offers little openness or democratic oversight, and the selection criteria, while reasonable, offer little scope for objectively determining the most appointable candidates.The whole approach seems recklessly casual, given the enormous influence the three appointees will have on the future of the USS scheme.

Equally serious is the near-complete secrecy which will surround the deliberations of the Panel itself. Both the contents of panel meetings and all the material provided to the panel will be confidential – available not even to the UCU leadership – and only “agreed action points” resulting from meetings will be published. It is very hard to see what the justification for this must be: the underlying data on USS members should be straightforward to anonymise, and none of the major participants has obviously legitimate commercial secrets. It is possible that the valuation work of the actuarial companies involved uses proprietary technical tools, but it seems extraordinary that such sweeping confidentiality has been agreed without a clear rationale. The purpose of the Panel is not only to produce a set of results, but to produce results in which USS and UCU members can feel confident. It is hard to see that the extreme degree of confidentiality proposed about evidence and reasoning is compatible with that. The UCU leadership owe members a better explanation of why they have agreed to it than either they or UUK have offered so far.

The panel aims to report on the 2017 valuation in September 2018, and some time thereafter on the USS valuation process generally. As we reported last week, this means that its recommendations are unlikely to be implemented until considerably later than April 2019. In light of that, we should welcome the fact that the JNC on Friday withdrew the January 23 proposal for a 100% Defined Contribution scheme to be imposed from that date. No alternative proposal was tabled, which means that as things stand there is no JNC decision for benefits and contributions for the three-year period beginning April 2019.

USS has now released a statement to say that (in line with its earlier statements) it will nonetheless begin completing the current valuation, simultaneously with the deliberations of the JEP. In practice this means preparing to increase both employee and employer contributions from April 2019 to the degree necessary to maintain current benefits under the November valuation. The additional costs implied will be shared between employers and employees in a 65:35 ratio, and it seems likely that the increases will be introduced progressively over a period of time. (See Mike Otsuka’s Twitter thread on this point.) The 1% employer “Match” of voluntary DC contributions will be removed from April 1 2019, to cover part of the increased cost of benefits since 2014, and there will likely be a reduction in the employer contribution to DC pots for those earning above the salary threshold for DB of £55,550. The balance between that reduction and increases in the overall contribution rate will be decided in due course by the JNC.

In the view of the CUCU branch committee, the move to cost-sharing from April 2019 remains the least bad of the possible short-term arrangements, for the reasons we gave in our report on the papers for last Friday’s JNC, and it is also appropriate to make some savings from employer DC contributions before increasing contribution rates. The worst short-term possibilities have therefore been avoided. But we remain a long way from an acceptable lasting settlement for the future of USS.  We hope therefore that the cloak of secrecy planned around the JEP will not prevent it from coming up with a much better long-term solution.

Solidarity with the McStrike 1st May 2018

Cambridge UCU stands in solidarity with Cambridge McDonald’s branch of BFAWU and their historic strike. Read about their last strike action here. Our letter:

Dear Cambridge McDonald’s branch of BFAWU,

Congratulations on your courageous and historic strike. Cambridge UCU, the trade union of academic and academic-related staff at the University of Cambridge, stands with you in your inspiring action in order to win simple demands which should be the right of every worker: Union recognition, a fair wage and an end to zero-hour contracts.

You have been subjected to the worst excesses of the rise of the so-called ‘gig economy’ and you have shown that this treatment is unacceptable.

Your fight for decent working rights is for the rights of all workers. You are at the forefront of a movement nationwide which is starting to reject widespread acceptance of these practices, demonstrating the power of workers who stand together to demand a basic standard of living and treatment at work.

It is all the more impressive that you have done this on very low and precarious income, with long hours and bad working conditions and in the face of appalling treatment by managers both against individuals at work, and against your union.

You will win, and force your employers to recognise your union, stopping the maltreatment of yourselves and your colleagues. By doing so, you will show the vital importance and urgency of unionisation in every workplace.

Thank you for your brave strike, your fight is our fight and we will stand with you until your demands are met.

In solidarity,

Cambridge UCU

 

What next for USS? Possible outcomes of the April 27 JNC

In the CUCU briefings on the consultative ballot on the March 23 UUK proposal, we advised members that regardless of the panel, both the Pensions Regulator and the USS trustee would likely require some changes to benefits and contributions to be agreed by the end of June, and that it would not be possible for the JEP to complete its work by then. We have now seen the papers for the USS JNC meeting happening today (April 27), which confirm that this is the case.

The JNC papers make clear the “surprise and disappointment” of the USS trustee at UUK’s failure formally to withdraw the January 23 proposal, despite Alastair Jarvis publicly saying several weeks ago that they “did not intend” to proceed with it. The papers also indicate an expectation shared by all parties that the JEP will not report until September or October, too late to affect the completion of the current valuation and probably too late for its recommendations to be implemented before April 2020. The valuation will therefore be completed on the basis of the November technical provisions, with proposed changes to benefits and contributions going out to statutory consultation by late June, well before the expected reporting date of the JEP, for implementation in April 2019.

So what happens at today’s JNC is important. The USS trustee has made clear that it will not proceed with the January 23 resolution for 100% DC without a further explicit instruction from the JNC to do so. If it receives no further instructions before the close of business on 30 April it will proceed to implement the contribution increases it deems necessary to fund status quo benefits under the November valuation (‘cost sharing’).  So there are three possible outcome from the JNC:

(i) The JNC decides to go ahead with the January all DC plan, if the independent chair votes with UUK to issue a fresh instruction to USS to that effect. All now seem agreed, however, that these proposals would — in the words of the chairman of the USS — be “significantly damaging for the sector”, so this seems an unlikely step.

(ii) The JNC makes an alternative proposal, costed to the November valuation, before April 30. This is a real possibility, since the March 12 Acas proposal would fit the bill from the UUK and USS perspective, and might well be supported by the JNC chair. An improvement on the March 12 Acas offer would depend upon the willingness of employers to increase contributions further, so is unlikely. It is also possible that Cubie might allow UUK to put through something worse than Acas so as to keep their contributions below even the 19.3% of the Acas agreement.

(iii) The JNC does nothing, and the USS trustee implements cost sharing. In our view, this would be the best outcome for USS members. The loss of c. 3-4% of pre-tax salary from take-home pay would be very unwelcome, but employer contributions would increase by nearly double that figure, giving cost-sharing the best ratio between member contributions and benefit levels than any other possibility. The size of the employer contribution involved would also give UUK a very strong incentive to negotiate seriously with us to make the JEP work effectively, in order to agree something to replace cost-sharing at the earliest possible date.

Which of these options is pursued will determine not only the likely shape of our USS pension arrangements in 2019-2020, but also the leverage which UUK and UCU respectively have at the JEP. So we should be watching what happens over the next few days (including what the USS trustee does around April 30) very closely.