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Nat to cut 37 million kroner in costs – mass layoffs may be on the table

The Faculty of Natural Sciences has to make major budget cuts. To balance its budget, the faculty has to cut DKK 37 million annually, and the dean admits that mass layoffs may be on the table. The cuts will hit some departments hard – others, not at all.

"I understand that no one thinks this is pleasant, and that no one thinks the demands being made on them are reasonable," says Dean Kristian Pedersen. Photo: Ida Jensen

The Faculty of Natural Sciences is potentially facing mass layoffs due to a major structural budget deficit. The faculty is being forced to cut its annual budget by DKK 37 million.

The budget reduction will be phased in over the next two years; starting in 2025, the faculty’s annual budget will have shrunk by DKK 37 million. In 2023, Nat expects to realize DKK 16 million in cutbacks, and up to DKK 25 million in 2024, before reaching the full level of required cost reductions – DKK 37 million annually – in 2025.

And according to Dean Kristian Pedersen, layoffs are unavoidable when cuts this deep have to be made:

“Given that we have to find cutbacks of this magnitude – 37 million kroner annually – this is not a minor adjustment,” he said. “So I don’t believe we can get around the fact that we will have to say farewell to some of our great employees.”

He is not yet in a position to say how many staff will have to be let go. However, the regional labour market council has already been advised of the process and can be involved. Employers with over 300 employees who intend to fire at least 30 of them – in other words, in the event of a mass layoff – are required by law to involve the council.

“I don’t know whether we’ll end up above or below that figure,” the dean said. “The reason we’ve included them in the process is that it would be lousy to get moving on this and then discover that it’s more than 30, and that we need to have the council on board. That’s why they’re involved from the start. We’re within the formal scenario where mass layoffs are a possibility.”

Dean Pedersen: Voluntary resignations can realize significant savings

March 13 was the deadline for staff at Nat to apply for voluntary resignation; they were informed about this option in late February. According to Pedersen, while the faculty hopes that the savings realized through voluntary resignations can reduce the number of layoffs necessary, it’s to early to say how many staff will be able to take advantage of the offer – but the number is significant. The dean said:

“We are in the process of looking at what’s possible. Who will say yes, when do they want to resign, and what financial consequences will that have? Presumably, we will be able to find a significant proportion of the 37 million kroner in this way.

But of course, I also know that these financial challenges aren’t new to us, and for that reason the departments have been exercising restraint to begin with. Some staff have already retired, so it’s difficult to to evaluate how much potential there is for finding additional cost reductions in this unfortunate situation.”

At the end of April, the faculty management team will announce how many jobs will be cut, broken down by voluntary resignations and layoffs, according to the faculty’s budget reduction plan.

Molecular biology and Genetics hardest hit

How the budget reduction plan will impact each of the faculty’s departments is described in a February 10 memo from the dean, ‘Financial adjustments at Natural Sciences 2023-2025’. According to the memo, some departments and centers will be hit harder than others, while one department will be completed unaffected.

Three departments are facing the deepest cuts: the Department of Molecular Biology and Genetics, the Department of Physics and Astronomy and the Department of Biology. They have been tasked with cutting their annual budgets by DKK 10, 7.5 and 8 million respectively. Geoscience, Chemistry and the Nat-Tech administrative center will have to cut between DKK 2 and 4 million, while the Department of Mathematics’ budget will not be cut.

Pedersen explained that the departments at Nat are so different that making sweeping cuts across the board would be counterproductive. For example, some departments have degree programs with the potential to admit more students, which means they will need more teaching staff. This applies to both the Department of Computer Science and the Department of Mathematics, he said. Other departments have shrunk as a result of the government’s ‘rightsizing’ initiatives, which means they will be admitting fewer students in coming years and generating less revenue as a consequence. Some departments have the potential to cover more of their costs with grant funding, others do not. This is why Nat refers to the current process in terms of ‘adaptation’ and not ‘cutbacks’: not all of the budget reductions will be achieved through budget cuts. In other words, the faculty is engaged in a difficult balancing act between which activities can generate revenue, and which must be cut back.

“I have taken the situation at the individual department into account, instead of mechanically cutting 5% of the departments’ budgets across the board,” the dean said. “So there are differences in how hard they’ll be hit.”

Dean Pedersen: The budget reduction plan is even-handed

According to Pedersen, the plan can be characterized as “even-handed”. But not everyone agrees. For example, at a local liaison committee meeting, staff representatives from the Department of Molecular Biology and Genetics, the departments on which the deepest cuts are being imposed, expressed bafflement about the distribution of the budget cuts across the faculties and questioned the imposition of extra costs on the department once again, according to the minutes of the meeting.

The department has been tasked with reining in spending to the tune of DKK 10 million; it has been estimated that these cutbacks will reduce the department’s budget shortfall by DKK 6.5 million in 2026. The remaining DKK 3.5 million is a challenge, and the gap can only be closed by “reducing payroll costs by this amount”, according to the department.

But Pedersen still insisted that the budget cuts have been spread out across the faculty at least somewhat equitably:

“If we just mechanically used key stats, for example that we’re going to lose a third of our biology students due to rightsizing, then clearly, you’d just cut back by a third there,” he said. “That’s not what we’re proposing to do. If there was no equity at all in this process, and we just used key stats, the differences would be much greater. What’s going to happen at the departments that have to make cuts isn’t as drastic as it could have been – but of course, it’s still a relatively large amount of money for the individual departments that will be hit hardest.”

Why the Department of Natural Sciences needs to shave DKK 37 million off its budget

According to Dean Kristian Pedersen, three factors are forcing the department to make budget cutbacks:

First, admissions to the faculty’s degree programmes are falling, and the rightsizing of degree programmes imposed by the government means that admissions will fall even more drastically. As a result, revenues are shrinking. Funding for education from the government is thus expected to fall by DKK 12 million toward 2026, over 2021 levels.

Second, revenue from basic funding is also shrinking; the faculty will lose over DKK 20 million over the same period. This is because 2% of the total basic funding appropriated by the state to the universities is recalculated every year, resulting in a redistribution that shifts funding away from Nat.

Thirdly, AU’s financial reserves have shrunk due to the war in Ukraine, which has resulted in rising costs and losses on financial items. And as Pedersen put it, Nat must do its part in replenishing these reserves. Towards 2026, Nat must contribute DKK 5 million annually to help top up AU’s financial reserves.

Source: Memo of 10 February from Dean Kristian Pedersen ”Økonomisk tilpasning på Natural Sciences 2023-25”

Union representative: Staff are dismayed

There’s an apprehensive atmosphere among academic staff members at the faculty right now, according to Olav W. Bertelsen, joint union representative for academic staff, who is himself an associate professor at the Department of Computer Science and a member of Nat’s liaison committee. He said:

“Staff are generally speaking dismayed and apprehensive. In some places, people have experience with mass layoffs, for example at Molecular Biology and Genetics and at Biology, from not that many years ago. These are places with degree programmes that have been rightsized, so the things that are happening now are coming on top of an already depressing situation.

We’re all very surprised that the Department of Physics has to make such big cutbacks, pretty much out of the blue. When I meet people from the departments that have to cut their budgets, they’re depressed, disillusioned, sad, and they’ll need some time to get on top of this.”

Dean Pedersen understands that people are critical of the cutbacks, he said: 

“I understand that no one thinks this is pleasant, and that no one thinks the demands being made on them are reasonable. I really do. But the problem is just that we have a pretty big challenge to deal with, and so it’s my thankless task to weigh the arguments against each other and find the least bad solution.”

Other faculties also forced to slash costs

The Faculty of Natural Sciences is not the only faculty being forced to reduce costs: the Faculty of Arts is in the same boat.

Arts must cut costs by DKK 48 million through payroll cost reductions, according to the minutes of a meeting of the faculty’s liaison committee on March 9. Arts has already made some of the necessary adjustments: for example at DPU, the Danish School of Education, where 8 staff were terminated in December, and 11 accepted voluntary resignation.

One faculty that will not be asked to make cutbacks this time is Tech. Tech made drastic cutbacks in 2021, when 80 positions were cut through a combination of terminations and voluntary redundancies.

Translated by Lenore Messick.