Several hundred jobs to go at University of Otago as student numbers plunge

Several hundred staff will lose their jobs at the University of Otago after falling student numbers means it needs to slash around $60 million from its budget.

Applications for voluntary redundancies open on Monday and close on June 2, staff were told after 2pm on Thursday. Both academic and backroom roles are on the chopping block, though what subjects and areas will be affected is yet to be determined.

A further round of redundancies is expected to follow, with “several hundred” roles expected to be affected, the university said.

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The university's cost-cutting will also affect capital projects, and future paper and programme offerings. Asset sales are also on the cards.

Staff have been left “distraught” and shocked by the news.

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Student numbers falling

While international students are up by about 495, domestic students are down by about 670, compared to 2022.

The university had 19,174 equivalent full-time students in 2022, and a spokesperson said it expects to end 2023 with 18,993.

This year has seen an overall drop in enrolments at the country’s eight universities of around 3%, according to Universities New Zealand. Enrolments were up at three – Waikato, Canterbury and Lincoln – but down at five, giving them a real drop in income.

The University of Canterbury saw a record 21,361 students enrolled as of late March, up from 20,223 at the same time last year.

“Otago started this year in a challenging financial position with an expected deficit budget that required substantial savings to achieve,” acting vice chancellor Helen Nicholson said.

“Student enrolment numbers for 2023 are now clear and they are down on what we had budgeted for.

“Overall, our enrolments are down by 0.9% on last year, but we were forecasting growth of 4.9%.”

Nicholson said the reasons for the domestic drop include:

• Fewer domestic students gaining university entrance nationwide.
• Many choosing to enter the workforce or take a gap year instead of study.
• An unexpected drop in domestic student retention, likely caused by factors including the cumulative impact of Covid-19 disruption, the rising cost of study and a buoyant job market.

“This means our domestic pipeline for students over the next three years will be worse than we projected, with associated effects on our bottom line,” she said.

She also blamed external forces, such as “successive years of below-inflation funding rate increases from government”.

It was too soon to say what capital projects or assets could be affected by the cost cuts.

The university’s current capital projects include a reportedly $220m redevelopment of its Christchurch Campus, which includes a new Oxford Tce building and a redevelopment of its building at Christchurch Hospital.

It is also embarking on a $44m refurbishment of the food science department at the Dunedin campus; a new 450-bed residential college; and a $4.4m reconfiguration of a library to create a sciences divisional office.

Staff ‘completely destroyed’

Tertiary Education Union (TEU) organiser Phil Edwards said the announcement was delivered to staff inside a packed auditorium and online.

People were left stunned by the news, with the mood “very sombre”. “People were very shocked.”

One academic said people, many of whom had been through previous cuts involving professional staff, were “distraught”.

A PhD student said getting an email about the plans made their “heart sink”.

“I’ve spent the last few years watching continued staffing cuts take very real tolls on the remaining staff in our department whose responsibilities have all increased to cover the staff shortages.

“Academic staff are noticeably struggling, mentally and emotionally. It makes me sick.”

Edwards said it appeared the university was being punished for ever-shifting financial benchmarks.

“We never manage to change the co-ordinates that keep veering towards crisis.”

Edwards said staff were yet to find out who would lose their jobs. “No one is directly affected yet, because it is only people who want to go.”

But those voluntary redundancies were likely to lead to an “erosion of knowledge and experience and academic capacity across the organisation”.

The union would prefer if the approach was targeted, Edwards said, and areas with stronger student numbers were likely in a better position.

The announcement enforced the idea that the country’s oldest tertiary institution and one of its largest tertiary could not “weather the financial storm”.

“People are just completely destroyed by this continual chipping away of the university,” Edwards said.

Chris Whelan, chief executive of Universities New Zealand, said “all our universities are seeing tough times ahead”.

“University leaders are being forced to make difficult decisions to ensure their institutions can navigate the coming years, while facing the same financial headwinds as every other part of the economy,” he said.

“We know these decisions will deeply affect our staff, their families and the local community.

“But while people are a university’s greatest asset, they also make up the highest cost component of its budget, typically just under 60%.”

Education Minister Jan Tinetti said universities have “the autonomy to determine how they manage their financial performance, course offerings, and organisational structures”.

“As minister, I do not get involved in any such decisions. These processes are not easy for anyone involved.”

Dunedin mayor Jules Radich said the city would “do whatever we can” to support those affected by the redundancies, but addd that it was important for the university to position itself for success both now and in the future.

“The university is at the heart of our city, and the town-gown link is one of the things that makes Dunedin unique.

“However, there comes a time when difficult decisions have to be made and I truly feel for those decision-makers and everyone affected.”

What happens next

Another all-staff forum will be held in about six weeks to outline the plan, decisions and next steps.

That will cover how the university will increase revenue and cut costs, including possible asset sales.

“If we do nothing, and even if our enrolments recover more quickly than we expect, at our current rate, we will still have a budget in the red for several years. That is not tenable,” Nicholson said.

“We need to reduce our annual operating budget by about $60m, and salary savings will need to be a significant component of this.”

Students could complete the qualification and papers they were currently enrolled in, “even if there are future changes to the papers and programmes we offer”, a spokesperson said.

The situation at other universities

Auckland University of Technology (AUT) suspended planned redundancies in December 2022. The TEU took legal action against AUT after it tried to make at least 170 people redundant.

University of Waikato warned staff to prepare for job losses across the board in September 2020 to combat a multimillion-dollar deficit.

Massey University staff were shocked at a proposal to disestablish about 150 jobs in general administration and finance, announced in August 2022.

Victoria University Wellington - Te Herenga Waka said it voided large-scale compulsory redundancies in May 2021, after months of uncertainty faced by staff.

Lincoln University announced redundancies in October 2020, in the wake of the Covid-19 travel ban. It aimed to cut staff numbers by 5% in 2021, to “budget to a maximum loss of $3.5m or less”.