What UNSW’s job cuts mean for the higher education sector

The University of NSW (UNSW) has announced it will be cutting nearly 500 jobs, in the latest sign of the carnage inflicted on the higher education sector by the pandemic.

Facing a budget shortfall of $370 million, vice-chancellor Ian Jacobs said that despite cutting discretionary spending and some management salaries, the university still had to find further savings. UNSW will lose about 7.5% of its academic staff, and merge three faculties, in what could be a sign of things to come for universities. 

Why are universities struggling?

For years, Australian universities had become increasingly dependent on international students, mostly from China.

Alarm bells started ringing when the first travel restrictions started popping up in January. By the time the global economy had ground to a coronavirus-induced standstill, Australian universities had been hit earlier and harder than almost any other sector of the economy.

Universities are bracing themselves for a revenue shortfall of up to $16 billion by 2023, and 30,000 job losses.

But everyone in the sector, from management to the unions, agree that universities have been seriously short-changed by the federal government.

By tinkering with the JobKeeper eligibility rules three times, the government effectively locked universities out of access to the scheme.

Some private universities, meanwhile, were able to get JobKeeper. A $18 billion rescue package for universities announced by the government in April has been condemned by Labor as a “fraud.”

On top of that, Education Minister Dan Tehan recently announced a suite of higher education “reforms” which, beyond jacking up the price of an arts degree, also represented the Commonwealth essentially lowering its contribution to the sector. 

Why is UNSW hit so hard?

UNSW tried to squeeze the international student cash cow more than most — those fees account for 33% of its total revenue. Now, the university is paying the price.

According to a report by the University of Melbourne’s Ian Marshman and Frank Larkins, UNSW was among the top five institutions in the country by overseas revenue. But the report also rated UNSW “medium risk” in managing COVID-related fee losses. 

But Jacobs has certainly staked a lot of his ambition for the university — in particular to rise up the international rankings — to a flow of students from Asia. The latest cuts also come against a backdrop of increasing dissatisfaction at the university. 

Last year, UNSW embarked on a radical shift to a three trimester academic year, a plan intended in part to bring in more students from Asia. But trimesters were widely despised by staff and students — the university now has the lowest satisfaction rate in the country. 

Still, UNSW’s struggles are far from unique. According to Group of Eight chief executive Vicki Thompson, the latest cuts are just the tip of the iceberg for the sector.

Already, Deakin University has said it plans to cut 400 jobs. Hundreds more are on the cards at regional universities across the country. And La Trobe recently revealed its dire financial situation. 

Are there other alternatives?

But UNSW’s proposed job cuts are still the biggest we’ve seen at an Australian university so far. Just how necessary were they?

UNSW’s most recent annual report indicates it had reserves of more than $1 billion before the pandemic. In 2019, it spent $500 million on construction, building a series of shiny new white elephants for a surge of international students who might never come. 

And although Jacobs says it’s tried to trim fat where possible, management has also rejected potential alternatives.

In April, the National Tertiary Education Union made a deal with some vice-chancellors, whereby enterprise agreements would be varied to allow a temporary 15% wage cut, in return for saving 12,000 jobs. But that plan fell apart, partly due to a rank and file revolt, but also because vice-chancellors like Jacobs went cold on it.

Jacobs said the framework, which also forced management to open its books to the union and show they’d cut executive salaries before laying off employees, constrained the university’s ability to make decisions.

Those constraints might well have stopped UNSW cutting 500 jobs.