By Adam Strømme
Editor-in-Chief, Economics and International Relations Student
The story which has bought St Andrews to strike action, alongside 60 other universities, is defined by a confusing melange of apparent contradiction, cohabiting alongside outright absurdity. To get the facts straight is, then, a crucially important task. At present, most of the student body is vaguely aware that there is a strike, they might know it involves pensions, and it might mean that they don’t have class. What they don’t know is that the lead up to this stand-off is years in the making, it comes in response to an aggressive attack on faculty pensions, and that it is widely expected to be “the most extensive strike action ever seen on UK campuses”.
This article hopes to set the record straight on this critically important issue.
Who are the players?
The main actors involved are the University and College Union (UCU), the union responsible for collective bargaining on behalf of over 120,000 university employees across the UK, the Universities United Kingdom (UUK) a board of 24 members, of whom our very own Principal Sally Mapstone is a member, responsible for bargaining on behalf of 136 universities, and the university pension, known as the Universities Superannuation Scheme (USS), which has over 184,000 contributors.
What is the problem?
Arguably, there are three problems. The first, which largely goes unstated, is that the real wages of professors and staff have been cut by almost 20% in the last decade. This has taken place despite rising revenues for universities across the UK, especially in St Andrews (see page 8 of their FY2017 financial state), largely financed by increases in tuition rates. This disconnect between teacher remuneration and tuition can be traced to the increasing commodification of higher education to attract students, which has seen universities investing in flashy new attractions over the less-than-flashy principle of proper remuneration of staff. Here St Andrews leads the charge, having found £10 million for a new aquarium, while also leading the charge against pensions, to be discussed below.
This disconnect between teacher remuneration and tuition can be traced to the increasing commodification of higher education to attract students.
The second problem, connected to the first, is the rise of zero-hour contracts within academia. The British economy has developed a particular taste for them in the last few years, expanding more than 20% across the UK economy since 2015 alone, and within St Andrews University zero hour contracts are the rule for perhaps 40% of the teaching-only staff and a third of the research staff. In the context of academia, where connection to an institution is vital, this has led to increasing demands on teachers above and beyond what is formally required. For example, teachers in St Andrews are paid the equivalent of a mere 20 minutes for each 2,000 word essay they grade, and an hours wages for the preparations they put into each tutorial. This, quite frankly, is ludicrous, and it is difficult to imagine it even remotely resembles the reality. As a result, negotiations made by the UCU have sought to reduce this practice and give all academic staff the security of a fixed contract.
The UUK has done its best to ignore them.
The final problem, which understandably proved the last straw for the UCU, was pensions. Crucially, the issue around pensions has been subject to an incredible amount of distortion, which has left many students understandably confused or driven to apathy. Perhaps the greatest distortion to be addressed is the idea that the pensions are in a state of crisis at all. In particular, those who oppose the strikes often do so because of a statistic touted by the UUK which claims that the funds assets, despite having grown by over £9 billion in 2016 alone, are still nonetheless £17.5 billion short of their liabilities. Curious, then, that by the UUK’s numbers (and, tellingly, nobody else’s) a £60 billion pension could have accrued £26.5 billion in new obligations in the span of a few short years. These two statistics sitting side by side ought already prove a cause for suspicion, but on this front there is even more cause for confusion.
First, USS pensions have already been cut twice in the last decade alone— first in 2013, and again in 2016— in order to shore up the presumed long-run structural deficit. Second, notwithstanding the grossly misleading email circulated by the university claiming that the funds “investments have fared badly” having suffered “a series of crises”, the pension has actually outperformed projections to the tune of over £1.1 billion last year, suggesting that the “deficit” is perhaps not as cut and dry of a fact as the UUK (and St Andrews) claims. In fact, the deficit statistic of £17.5 billion, so often used to bemoan the status of the funds, does not exist— rather, they reflect projections which the UCU has consistently argued, and the record since 2008 has vindicated, are far too pessimistic.
This brings us to the source of the misinformation campaign. The university has claimed that in order to make the pension ‘sustainable’, two things need to happen. The first involves ‘de-risking’, seeking to move the USS away from supposedly “high risk” investments into safer, but lower return ones, while the second involves changing the payout structure. But here’s the kicker: the UUK’s constant pursuit of ‘de-risking’ is in fact the single greatest factor driving the pension towards a deficit.
So why do it? Simple. It lets universities reduce their commitments to their workers retirements by making them entirely depend upon their investments to the stock market. The result is a drastic reduction in benefits: 40% to be exact, penny pinching from workers’ retirements to the tune of £200,000 each. At the same time, de-risking the fund ensures that universities can set adrift their remaining financial obligations for older employees by tying up USS assets in funds that are guaranteed to deliver, albeit significantly less, and which make the USS look increasingly untenable in its existing form.
Absent these prerogative, it is inexplicable what would be driving one half of the negotiating table to so aggressively pursue policies which hurt the long term financial stability of the fund. How else could one explain St Andrews’ ‘concern’ for the deficit when its own pursuit of de-risking alongside the UUK is estimated to cost the fund £11 billion over the next 20 years? And how else is one to believe St Andrews’ claim that the fund is “not sustainable” when the USS’ assets have grown 12% per annum over the last five years, have assets to match 114% of its entire outstanding liabilities, can pay out pensions for the next 40 years even in the absence of any more investments, and are likely to be £6 billion in surplus in 2037 absent another round of ‘de-risking’? Truly, it is the UUK’s ‘de-risking’ which is the risky move, and it stands to gain substantially from doing so.
Truly, it is the UUK’s ‘de-risking’ which is the risky move, and it stands to gain substantially from doing so.
Another of the UUK’s brilliant policies to make the pension ‘sustainable’ involves moving the USS from being a collectively-based defined benefit system— in which all beneficiaries agree to pay in 8% of their annual salary, to which the university matches 18%, in exchange for a guaranteed fixed income upon retirement— to an individually-based defined contribution plan, in which teachers are “free” to contribute as much or as little to their pensions as they want, with no minimum contribution required. This in effect shifts the burden (and all of the risk) of financing the pension onto workers, encouraging the increasingly cash-strapped teachers to privilege present spending over the health of the fund, while also reducing the health of the fund by constraining the flow of investable funds for the future. If the UUK is ostensibly trying to protect the USS, which is only as good as the benefits it can provide, then moving to cap the flow of investable funds into the fund by turning it into a defined contribution scheme is perhaps the most bizarre move possible.
So, let’s review the game plan. First, push for yet another round of ‘derisking’ on an already highly hedged portfolio in order to put pressure on its returns, claiming the USS is making bad investments with peoples’ futures. Then, when the returns fall, point to the rising ‘deficit’ projection as a sign the system is ‘unsustainable’ and in need of reform. Finally, assuming the weakness of the UCU or the apathy of the general population, gut the entire scheme by turning it into an individually-based 401K with no fixed obligation from the university to provide a secure retirement to its employees, correctly predicting that the same pressure being put on wages will reduce their ability to invest in their own retirement, and by extension the university’s obligation to their own employees.
Voila, you’ve managed to shirk a £200,000 promise to every single beneficiary of you workforce. Profit.
What can I do?
Here in St Andrews over 90% of teachers who voted voted in favour of strike action. If the above has not conveyed the full extent of the problem, contact the UCU or even your own lecturers to learn more. This affects them directly and substantially, so to plead, as the University has in its recent email, “that our colleagues who decide to take part in this national action are able to exercise their rights in ways which minimise any disruption to you, our students” is an incredibly belittling gesture. It also sidesteps St Andrews’ own role in this ongoing problem by trying to paint it as a ‘national’ problem: as if the local is somehow not a part of the national. Ultimately, the point of a strike is to force the administration to sit up and take notice, not to mumble with placards while life goes on as usual. Conversely, to argue that students should seek reimbursement, as some have done, is noble to the extent that it gets the university back to the table, but absent that suggests a strikingly self-centered indifference to the problem. A strike is always a matter of last resort, so in looking for a culprit, look to those sending out polished emails, not those desperately defending their futures out on the streets.
A strike is always a matter of last resort, so in looking for a culprit, look to those sending out polished emails, not those desperately defending their futures out on the streets.
Other actions which can be taken include staying out of public spaces like the library on strike days, contacting your lecturers to let them know you support them, joining them on the picket, donating to the strike fund, and writing (physically as well as by email) to Sally Mapstone, demanding she get the UUK back to the table with the UCU.
Fight for a fair future. Defend your teachers. Support the strike.
Featured image and map by UCU.org