Increasing costs without compensation hollow out education.

Eroded allocations threaten quality

Constantly increasing costs and no compensation for actual wage increases. This erodes basic education, which affects the quality of teaching. – It feels like being part of a Thelma & Louise film, where you accelerate towards an abyss at full speed, says Henrik Agndal, Head of the Department of Business Administration.

SINCE 2018, the LKP or lönekostnadspåslaget (social insurance contributions, insurance and pension payments) has increased every year and for 2022, a further increase of 1.5 percent was announced. The numbers speak for themselves. Between 2019 and 2020, salary costs at the University of Gothenburg increased by 3.7 percent – including contractual wage increases, new recruitments and promotions as well as increases in the LKP – but compensation from the state, i.e. what is called the wage and price appreciation, was only 1.72 percent. – Anyone can understand that this equation cannot be solved. The cost of each hour in the lecture hall is increasing more than the increase in funding. While industry can take into account increased costs by negotiating with subcontractors, we are in an impossible situation. What should we be negotiating? A reduction in administration or teaching? Nor can we keep expanding education forever. Year after year, teaching is depleted financially.

– THE CONSEQUENCES are that lecturers have less time for lecturing, supervision and providing feedback. A few percent here or there may not be that significant in a year’s time, but over time it will make a big difference.

Photo: CARINA GRAN

– We are seeing increased rates of sickness, and more and more people suffering from burn out. We are told that lecturing can be made more efficient. But there is also a limit to how far you can go before it affects the interaction between lecturer and student. It is that time we now have to reduce. We know that lecturers have professional pride and are very ambitious, but we cannot ask them to sponsor lecturing with their own personal time, that is unsustainable.

In addition to the contractual salary increases of around 2 percent annually, there are salary increases for new recruitment and not least promotions.

– We try to keep the annual salary increases in check, but have difficulties when it comes to promotions. Today, senior lecturers have the right to have their expertise assessed in order to become associate professors and then professors. Promotions are occurring at a younger age, the people being promoted are getting younger and younger at the same time as fewer people are retiring. You may need to change the system so that promotion is determined by organizational needs. That is not possible today. The consequence is that those who are promoted expect a higher salary. This is perfectly reasonable, otherwise we risk them leaving altogether. It is also a question of being able to retain staff.

NOWADAYS, professors are only recruited if there are external research grants. – Fortunately, we have had a favourable situation on the research side, where there is more capacity, but with more research, there are fewer people to lecture. We also operate in a competitive

The consequences are that lecturers have less time for lecturing, supervision and providing feedback.

HENRIK AGNDAL market where a new business graduate can often choose between a number of different employers. When we are recruiting, it is difficult to get skilled staff in certain areas. As an associate professor in Norway, you earn significantly more than as a professor in Sweden. We cannot match the salaries you see in industry and sometimes not even the colleges, but we can at best offer better opportunities for free research.

THE DEPARTMENT of Business Administration has a complex funding model for both research and lecturing, where every effective hour is counted. Each course has a budget with a certain number of hours. – Here, every lecturer knows how much lecturing time they can spend on a course. It can, of course, be unfair, some lecturers who have taught the courses for a long time may get away a little easier, while new lecturers have to work like slaves. But in the end, it should level off, that’s the point, says Anders Ahlin, who started as an

Henrik Agndal is Head of the Department of Business and Administration.

economist in 2019. When he started reviewing the course budgets, he discovered that something was wrong. No one had reviewed the course budgets in five years.

Revenues on the education side in 2016 were SEK 66.6 million and costs were 63.6 million. Three years later, revenues had increased by 2 million, but costs had skyrocketed by about 9 million.

ALL CALCULATIONS showed an escalating deficit in education.

In 2019, we slammed on the brakes, the budget for undergraduate education in 2020 was minus SEK 8 million. – It was really high time to act quickly but we could not change the model in the middle of the academic year, so we had to wait until the autumn of 2020. The head of department put a lot of work into getting buy-in for the proposal in all sections and asked if there were any other areas where we could economize. There weren’t any.

By cutting the course budgets, 10 percent in undergraduate education and 20 percent at master’s level, as well as reducing the number of external lecturers, it was possible to save around SEK 5 million in one go. – It was a drastic savings package but we had no other option. We had already saved money on the administration of the department.

Anders Ahlin feels that he can breathe a sigh of relief. – Now the figures are precisely balanced, a zero result for this year. We no longer have a knife to our throats, he says. But we don’t know what it will look like in a few years.

The fact that other departments are in the same position is no consolation for Henrik Agndal and his colleagues.

– WE HOPE TO obtain compensation for real wage increases, but it is not likely. We will solve it even if it results in less time for interaction with students, maybe more large lectures and larger class sizes. In part, we can certainly compensate for that with modern teaching methods, but what will happen in 10 or 20 years’ time?

Text: Allan Eriksson Photo: Johan Wingborg

FACTS

The LKP is the social in-

surance contributions, insurance and pension payments that employers pay for employees, but it is not visible on your salary slip. For the most part, it consists of employer contributions (social insurance contributions) and provisions for defined-benefit pensions. The fees vary and depend on the age of the employee. In addition, the holiday bonus of 1.28 percent is added. An example: A professor earns SEK 1 million in annual salary, which is multiplied by 1.5597 (the LKP including holiday bonus). The total cost for the University of Gothenburg will be just over SEK 1.5 million per year. As Sweden has a negative interest rate, the value of government bonds has fallen, which means that employers have to pay higher premiums in order for pensions not to decline in value. The compensation that the University of Gothenburg receives from the state is called “pris- och löneuppräkning”, PLO (price and wage appreciation). For 2021 it was 1.72 percent and next year it will be 1.06 percent. The University of Gothenburg then distributes the increased grant directly to the faculties without any deduction, but the distribution to the departments is determined by the faculty. The contractual salary increases at the University of Gothenburg (outcome RALS, full-time) were 2.01 percent in 2018 and 2.35 for 2019. The figures for 2020 were not ready at the time the magazine went to print.

Social LPK LKP incl. insurance holiday bonus

2022 55.50 57.49 2021 54.00 55.97 2019 52.00 53.20

2018 51.00 52.94

A growing challenge

That fact that the LKP is increasing every year is not the University of Gothenburg’s fault, CFO Peter Tellberg points out, but is due to the negative interest rate in Sweden. – It is a growing challenge for the entire higher education sector, and even greater for government agencies.

PETER TELLBERG

points out that it is the historically low interest rate in Sweden that means that pensions do not increase in value as they have done in the past. – Therefore, the costs of defined-benefit pensions must increase, and that is not something that we as an public body can afford.

Peter Tellberg thinks that the criticism concerning real wage increases not being compensated is justified. He believes that the government expects the universities to make efficiency gains. – What governs this appreciation is the wage increases for salaried employees in the industrial sector. Thereafter, the government makes a productivity deduction without further specification.

BUT ACCORDING TO Peter Tellberg, there is no great risk that we will end up in the same financial crisis as Chalmers, where they were forced to save SEK 250 million and get rid of 180 employees. – No, the reason is that Chalmers University of Technology, as a private foundation, has an even higher pension debt and manages it under its own auspices, unlike state universities. It is old pension commitments in combination with a historically low interest rate that are causing the deficit.