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Examining exorbitant pay for university elite

Many university staff have lost jobs, seen wage rises stalled or remain in insecure work but the penny-pinching doesn’t apply to the top tier, argues Barbara Pocock.

University of Adelaide. Photo supplied

University of Adelaide. Photo supplied

When I was an economics student at the University of Adelaide in the 1970s, I was taught by that physically diminutive but intellectually expansive professor, Geoff Harcourt.

Apart from famously playing Aussie rules for the Blacks well into his 50s, Geoff shaped generations of economists at both the University of Adelaide and Cambridge where he held joint appointments and, thereafter, at a range of other universities. His classrooms were lively, demanding places, packed with theory, history, real world problems and complex ideas. His lectures were peppered with footy references and commentary on the weekend’s games.

Sadly, Geoff left us last week at 90 years of age, a loss to the global history of economic thought and post-Keynesian economic theory.

University teachers can change their students’ lives and Geoff changed plenty. His lifelong opposition to poverty, unfairness and racism brought these questions to life in his classrooms.

Around this time, I was making my way to becoming a labour economist, fascinated by wage relativities and by the anomalies all around me: shearers paid less than clerks, car park attendants paid less than childcare workers, women paid less than men doing the same work, farmers who took enormous risks every year and sweated every day but often earned less than their desk-bound, risk-free bank manager. Who decided value? What was fair? How were wages fixed?

One day in 1978 Geoff said to our honours group that he found it puzzling that he was paid a great deal to do a job he loved, when so many others were paid much less to do those they hated, or found dangerous, or sweated over. He probably would have paid to work, he said. Why this yawning inequity? He saw this as wrong, as unfair.

What would he have made of universities and pay relativities today I wonder?

These days the inequities of the seventies have widened to a chasm we could not then have imagined. Executives in Australian companies are paid increasing multiples of the average worker. Between 1993 and 2009 the average earnings of ASX 100 executives grew from 17 times average earnings to 42 times, and that multiple has continued to increase – to outrageous levels in some cases: in 2019 the CEO of stock market darling CSL earned 380 times the average Australian wage. The top has run away from the bottom.

While CEOs and the top earners in our labour market have increased their incomes, average wages have remained stagnant for the past decade. As a result, the wages share of the national cake relative to the profit share is now back at the level of the 1950s.

This widening in inequality is obvious in many workplaces, not least the university sector.

Through the pandemic, the university sector is estimated to have lost 40,000 jobs and is increasingly characterised by insecure employment. Those at the top of university hierarchies are paid salaries that are many multiples of the average university worker, and much more than our national leaders. Not bad for a gig where a sizeable slab of revenue – between 40-60% in our three South Australian public universities – is guaranteed each year from the Commonwealth Government.

Over recent years, many universities have shifted their employment from tenured to insecure terms in pursuit of cost savings. Job insecurity has particular salience in South Australia, where two of our universities offer amongst the least secure terms to their staff: in 2019 Flinders University had the lowest rate of tenure out of 37 universities (with only 38% of staff in ongoing work) and the University of South Australia was not far behind at fourth out of 37 (43%).

At the same time many universities have understated the true duties of casual and contract staff to save on wages, denying pay to staff that are often both underpaid and overworked. A remarkable 21 of 40 Australian public universities are currently under investigation for wage theft. The latest casualty, RMIT, was recently required to make a $10 million dollar back payment. Others have been similarly penalised.

In contrast with stagnant wage growth, increasing insecurity and widespread wages theft, those at the top of the tree in our universities are paid at rates that are quite extraordinary – unmatched in the rest of the world’s universities. The average pay of Vice Chancellors in Australia in 2019 was estimated from university annual reports to be just under a million dollars, at $989,742. Some VCs took a pay cut under COVID, so that their average pay in 2020 was lower at $892,710.

In 2020 our state’s three universities the most senior officers (presumably Vice Chancellors) at the University of Adelaide, UniSA and Flinders were paid $932,500, $1,205,000, $1,225,000, respectively (assuming they are paid at the mid-point of published salary ranges.) That’s an average of $1,120,833. And for two of the three (UniSA and Flinders) it is considerably higher than the year before – during a pandemic.

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This is more than double that paid to the South Australian Premier ($418,000). It is about six times that paid to a university professor. It is 12 times that paid to a registered nurse. South Australia’s Vice Chancellors are not alone: a number of other senior staff are paid more than our Premier in each of our state’s universities.

Some shareholder organisations around the world are using the multiple of CEO pay to average employee pay as an indicator of inflated executive pay. They argue for the publication of this multiple in annual reports, and for caps on CEO pay that keep it reasonable. In this spirit, Rob Simms MLC recently introduced a private members bill into the South Australian parliament to cap Vice Chancellors salaries at the level of the Premier.

Something is not right in the state of the academy. At a time when students – domestic or foreign – have never paid more for their enrolment, when staff pay is stalled and a shrinking fraction of that paid to senior managers, when 40,000 people in the sector have lost their jobs, our state’s university leaders are being paid twice the level of our Prime Minister, who receives around $550,000.

Many of those who do the core work of teaching, administration and research in our universities live with both growing employment insecurity and the risk of underpayment.

The challenges facing our universities go well beyond that of overpaid senior executives: ask our lecturers who face growing class sizes with increasingly complex learning needs. Ask also the many researchers who will spend the coming summer sweating over grant applications to compete for a bucket of research funds that is way too small for the talented research proposals they will hatch. Their efforts will meet a 20 percent chance of success. Our country must increase funding available for research and for quality teaching.

Beyond this, the treatment of universities by the Morrison Government through the pandemic has been extreme in its hostility. Despite extraordinary job losses, public universities were specifically excluded from Jobkeeper. The Morrison Government spent $70 billion on Jobkeeper – with $27 billion of that going to companies that didn’t meet the reduced turnover characteristics, and no requirement that they pay it back. What is different about university workers? They deserve support just like retail, health and mining employees.

It is impossible to look at this exclusion and not see it as political and ideological. In the same way that conservatives have worked to undermine the institutions of the ABC and unions, they now – under cover of COVID – have had a chance to land a powerful blow against universities.

This has particular consequences in our state. South Australia’s universities are vital to our community. They educate our citizens of the future. International education earnings are increasingly important to our economy: in 2019 they made up the highest sector of export earnings in the state, generating $2.15 billion in gross state product. Employment in the sector is also very significant. Investing in education is a win-win-win – we create jobs, educate the next generation and research solutions to some of the massive challenges we are facing, like climate change and growing inequality.

I wonder what Geoff Harcourt would have made of all this.

When I studied under Geoff in an honours group of less than ten, no fees were payable. I went on to enjoy secure, decently paid work in the Reserve Bank, in the public sector, and in universities. I was able to put together a house deposit as I began my family. The young people around me – including those who work in universities – do not enjoy these certainties.

We need to fund our universities appropriately. We need to make university study accessible to all. And we need to end exorbitant senior salaries and find wage justice within our universities – including appropriate relativities, secure pay and an end to wage theft, so that the students of the future can enjoy their own quotient of Geoff Harcourt-like education from teachers and researchers who are as good as he was: funny, demanding, inspired, brilliant, generous, mind-changing.

Who knows, some might even go on to become the next generation of teachers and researchers who, like Geoff, improve the world as they change students’ minds.

Barbara Pocock is Emeritus Professor in the Business School at the University of South Australia. She is also the lead Greens Senate candidate for South Australia in the next election.

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