By Bianca de Haan, Brunel University
It’s that time of the year again: the HE pay negotiations are in full swing and the consultative ballot will open soon. The initial Universities & Colleges Employers Association (UCEA) pay offer was 1.7% (or £350 whichever is the greater), which fell just a tad short of the UCU pay claim of 7.5% (or £1500 whichever is the greater).
Following the last negotiation meeting at the 10th of May, UCEA’s final offer is now 2% for staff on spine point 16 and above, and £425 for staff on spine point 15 and below.
So should we be outraged?
At the very least, a pay offer should match inflation, keeping inflation-adjusted salaries constant. As such, UCU argues that existing salaries should at least be increased by the RPI measure of inflation (which in March 2018 stood at 3.3%). Additionally, UCU argues that our inflation-adjusted salaries (again using the RPI measure of inflation) have fallen by 17% since 2009. As such, an additional increase in pay is needed to start recouping this cumulative loss of inflation-adjusted pay since 2009. In this light, UCEA’s final offer of 2% would generally be considered cause for outrage.
However, UCU’s arguments contain several flaws: Firstly, the RPI measure of inflation UCU likes to use has been shown to systematically overestimate inflation. Secondly, using 2009 as a benchmark against which to measure today’s pay can be considered a bit unfair, as 2009 was characterised by an unusual increase in our inflation-adjusted salary. This was caused by a particularly generous pay increase of 5% in October 2008 combined with a period of deflation starting in the winter of 2008/2009 due to the financial crisis.
So how do things look when we use a better measure of inflation and a more reasonable benchmark year?
CPI remains the most popular measure of inflation (which in March 2018 stood at 2.5%). CPI, however, does not account for changes in housing costs, which is a large expense in a typical household. Thus, in 2015, the UK Statistics Authority introduced CPIH as a measure of inflation (which in March 2018 stood at 2.3%). CPIH, unlike CPI, takes into account housing costs and council tax. As such, this measure should most accurately (or least inaccurately) reflect changes in the cost of living (the potentially even better measure known as RPIJ has been proposed, but is currently not in widespread use). Thus, to match inflation (and not lose pay in real terms), our pay would need to increase by at least 2.3%.
And what about the cumulative loss of our inflation-adjusted salaries over the last 10 years? When using a more accurate measure of inflation and the more reasonable benchmark of January 2008, do we still see this cumulative loss in income? Fear not, for I have done these calculations, with the help of data made publically available by Michael Otsuka. These calculations are pegged to the average pay in the sector (which according to the most recent THES survey was £40,449 in 2015-16, corresponding to point 38, which is now £41,212). These calculations show that, since January 2008, our inflation-adjusted salaries have fallen by 7.1% when using CPI as a measure of inflation, and by 5.3% when using CPIH as a measure of inflation (compared to by 10.8% when using RPI as a measure of inflation and by 4.9% when using RPIJ as a measure of inflation). Thus, to both match inflation and recoup the cumulative loss of inflation-adjusted pay over the last 10 years, our pay would need to increase by at least 7.6% (when using the CPIH measure of inflation).
As such, even if we use a more accurate measure of inflation and a more reasonable benchmark year, UCEA’s pay offer of 2% still falls disappointingly short: it does not match inflation and does not address the cumulative loss of income we sustained over the last 10 years. Moreover, this pay offer comes at a time when universities are reporting record surpluses and while VCs and senior management salaries continue to rise well above inflation . We should indeed be outraged.
Branch Solidarity Network 