Pay ratios point to massive inequality

Cut wages at top to underwrite living wage to all, say Young Greens

October 17, 2013

Source: Getty

Worth their weight in gold? The Young Greens want small pay cuts for university managers to ensure living wage for all employees

Pay in higher education is more unequal than previously thought, according to a report, and only a “small handful” of universities know how much their outsourced staff are being paid.

The Fair Pay Campus Report, released on 17 October, is based on the responses of 113 universities to Freedom of Information requests made by the Young Greens, the Green Party’s youth and student branch.

It finds that in 2012, the average pay differential between the highest- and lowest-paid university workers was 18.6:1, with huge variations between universities, ranging from more than 60:1 at some institutions when apprentice pay is included to 10.5:1 at Soas, University of London.

This average is substantially higher than the 15.4:1 differential for 2008 uncovered by the government-commissioned Hutton review of fair pay in the public sector, which reported in 2010 and 2011.

The Hutton review found that vice-chancellors earned substantially more than leaders in the public sector, including four-star generals, permanent secretaries of the Civil Service, and NHS and local authority chief executives.

Unlike the Young Greens report, which takes into account the salaries of all employees in the 113 universities surveyed, the Hutton review only measured from the bottom of the Universities and Colleges Employers Association’s pay spine, which could explain the difference.

Duncan Exley, executive director of campaign group the Equality Trust, said that since the Hutton review reported, local authorities had “picked up the ball” on pay differentials, a trend supported by the 2011 Localism Act, which requires them to make their pay ratios public.

A report last year by the trust, Leading the Way on Fair Pay, found that more than 10 per cent of local authorities had set targets to reduce pay inequalities. But universities had not responded in the same way, Mr Exley continued, adding that the academy remained a “fairly unexamined corner” of the publicly funded sector, not subject to the same media pressure over high pay.

“People in local authorities have felt some pressure from local taxpayers to be seen to be doing the right thing,” he said, whereas universities “haven’t seen this as a big PR imperative”.

He said that questions remained over why vice-chancellors’ salaries were much higher than those of local authority chief executives when only the latter faced the risk “that you could have another Baby P incident on your watch”.

But the Equality Trust report shows universities are more in line with the public sector when it comes to the ratio between highest and median salaries: at universities the figure is 7.2:1, according to the Young Greens report, whereas at local authorities it is 7:1.

The Young Greens are using their study to argue that relatively small cuts to the pay packets at the top of the UK’s universities could allow all employees to be paid the living wage of £7.45 an hour (£8.55 in London), which campaigners say reflects the real cost of living and would boost staff performance.

In 2012, there were 11,641 university employees earning less than the living wage, while 1,633 staff took home more than £140,000 a year, according to the report.

But “only a small handful” of universities surveyed knew how many outsourced employees were paid below the living wage, it adds, suggesting that the institutions were moving “low pay problems out of sight and out of mind”.

A spokesman for Ucea said that heads of UK higher education institutions “continue to show restraint” in terms of their own pay.

Meanwhile, a spokeswoman for Universities UK added: “Salaries of university heads in the UK are comparable with those in competitor countries and also with heads of other organisations of a similar size.”

But a spokesman for the University and College Union said that the “widening gap between the big earners and the rest” explained why its members had voted to strike over this year’s 1 per cent pay offer from employers.

david.matthews@tsleducation.com

Highest-lowest salary ratios

InstitutionRatio
* includes apprentices
University of Surrey*75:1
University of Exeter*61:1
University of Bristol34.7:1
University of Warwick34:1
London Business School32.5:1
University of Cambridge31.2:1
Aberystwyth University29.8:1
University of Nottingham29:1
University of Birmingham28:1
University of Bath:1

 

Top employers of minimum-wage staff

InstitutionRatio
Source: Young Greens, Fair Pay Campus Report
University of Bath1,125
University of Kent867
Sheffield Hallam University848
University of Lincoln708
University of Manchester500
University for the Creative Arts174
University of Hertfordshire159
University of Reading146
Aberystwyth University100
Bangor University67

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Reader's comments (2)

The Fair Pay Campus Report simply cannot be compared to the Hutton Review of Fair Pay as it does not use the same methodology when calculating pay ratio figures. The Hutton Review used the ratio between bottom pay spine point and median VC pay. The most recent pay ratio using this methodology is 16.3:1, the same as it was in 2007/08 and in line with a decade of consistency in relation to the top to bottom ratio. In fact, Will Hutton’s final report recommended using a ratio between median pay and top pay – another consistent ratio in HE at 6:1 for the past decade. Hutton explained that the bottom to top pay ratio is not an appropriate measure of fairness, would create perverse incentives for outsourcing, could impact on recruitment and retention of senior staff, and fails to reflect the distribution of pay in a workforce as the ratio as this is determined by two individual earnings - the lowest paid person and the highest paid person (often not the VC) irrespective of the size of the organisation. Finally, the Young Greens report only compares the pay of senior staff in universities to the public sector and moves the goal posts by including apprentices in its HE data but not in others. Why do they choose to disregard that universities are not part of the public sector – they are highly complex not-for-profit institutions which are autonomous from government (and increasingly more so) and operate in a highly competitive and internationalised environment – and not to use more appropriate comparisons?
The highest-to-lowest metric may not be the most robust, but as a snapshot the Young Greens' findings are revealing. The final comment from UCEA2 above is perhaps even more revealing, however. Universities are indeed "highly complex", "autonomous from government" and "operate in a highly competitive and internationalised environment" - but why might this justify massive pay ratios, on any metric? In view of precisely these factors, might we not hope for UK universities to be at the forefront of recognising the value of all workers and reflecting this in their pay scales?

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