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A more structured lens needed to evaluate VCs ‘runaway train’ salaries

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University of Johannesburg’s former vice-chancellor and principal, Professor Ihron Rensburg – who has overseen an amalgamation of three institutions, then passed the baton to Professor Tshilidzi Marwala, who in turn successfully handed over the reins to Professor Letlhokwa George Mpedi – can take pride in UJ being among the finest universities on the Continent, the writer says. – Picture: Itumeleng English / Independent Media

By Edwin Naidu

Thirty years of democracy has not dimmed the recurring narrative over exorbitant vice-chancellors’ salaries. The ongoing issue over high salaries should not mask the country’s education failures.

While one gets a narrative that the glass is always half full, it begs whether the country is getting a return on its massive education investment.

It’s a crisis. South Africa’s education system is in dire straits. The schooling system churns out matriculants who are ill-equipped for the future. Since democracy, 300,000 failed learners have joined the ranks of the unemployed annually. For many, matric is a route to unemployment, and skills programmes have yet to show they are working.

Worse, the alarming statistics around university outputs show that despite massive investment again, only 15 percent of undergraduate students pass, just 20 percent of master’s students complete their degree, and doctoral students have a dire 12 percent success rate to show for their success.

It’s a stark contrast. On the one hand, we see South Africa’s vice-chancellors being handsomely paid, while on the other, our universities struggle to deliver. The issue of vice-chancellors’ salaries is not new. In February, the Council on Higher Education (CHE) presented its long-awaited study on vice-chancellor and executive remuneration in the ivory towers of learning.

Let’s delve into the numbers. According to a report on the respected University World News (UWN), vice-chancellors’ salaries were likened to a runaway train. The 2019 figures show that the university vice-chancellors’ average annual total cost to company (TCC), which is the total package, was about R4.130 million. The university with the highest TCC was the University of Johannesburg (R7.167 million), and the vice-chancellor (VC) with the lowest TCC was the University of Venda (R3.034 million).

The CHE inquiry found that some but not all VCs and senior executives enjoyed fringe benefits – not always declared – such as university houses, vehicles, drivers, security, and cleaning staff. In certain instances, universities paid housing fringe benefit taxes on behalf of their VCs. An allegation raises serious governance concerns about taxes being collected and not being paid to the South African Revenue. Why was SARS silent?

Four months after the report was published last week, a local media outlet reported on the R55 million allegedly earned by former University of Johannesburg vice-chancellor Professor Ihron Rensburg over five years.

However, the university’s annual reports show that the Professor pocketed R40 million in that period, including bonuses of R15 million and fringe benefits taxes for using a university residence worth R5 million. It’s worth noting that for these five years, excluding bonuses and use of university residence, the average TCTI was R4 million, excluding bonuses and R7 million, including bonuses.

But why let the facts get in the way of a good scandal when one picks up stompies thrown in Parliament and published by the UWN?

It would have been welcome if there were a new angle or solution, but the story brings focus, albeit using incorrect statistics concerning Rensburg, to create a wrong perception. In fairness, Rensburg, the former respected civil servant and committed activist, is not alone and should not be highlighted as the only example.

Nor is he on his own among high earners who used their salaries to spread some love. Rensburg contributed more than R200,000 of his pay towards the varsity student food programme and R350,000 towards the wages of a post-doctoral fellow.

To its credit, and underscoring the work done by Rensburg, Marwala, and now by Mpedi, according to the Department of Higher Education and Training, UJ is the highest producer of research output and is a transformed institution with a large enrolment of 50,000 students.

One can argue that there is little to separate R55 million from the R40 million Rensburg received. But R15 million is not inconsequential — if only it were as reported. The question is whether UJ received value for its money. The DHET endorsement speaks volumes.

In 2019, the average basic salary of VCs was R2.913 million. Stellenbosch University had the highest basic wage (about R4.2 million), and Vaal University of Technology had the lowest (about R1.9 million).

Every vice-chancellor should be scrutinised swiftly while on the job to assess the delivery of critical outputs when they get the job. In the case of Rensburg, overseeing an amalgamation of three institutions, then passing the baton of the vital institution to Professor Tshilidzi Marwala, who in turn successfully handed over the reins to Professor Letlhokwa George Mpedi can take pride in UJ being among the finest universities on the Continent.

The issue of what they earned on the job must be compared against what they have done to make the university successful. On a broader scale, how do the salaries of vice-chancellors compare to the chief executives in the private sector?

The CHE probe found no “clear and definitive correlations between a vice-chancellor’s basic salary and the financial management and health of their university”. There was no link between pay and delivery of key outputs, such as the number of research publications and master’s and doctoral graduates.

According to recruitment firm Glassdoor, the estimated total pay for a CEO in the private sector in South Africa is R2,233,500 per year, with an average salary of R1,733,500 per year. These numbers represent the median, the midpoint of the ranges from its proprietary total pay estimate model and are based on user salaries. The estimated additional pay is R500,000 per year. Additional pay could include cash bonuses, commissions, tips, and profit sharing.

Another survey by professional services firm PwC on South African executive directors for 2023 highlights how much top management earned for leading companies listed on the Johannesburg Stock Exchange (JSE) from March 1, 2022, to February 28, 2023.

The total guaranteed package paid across the JSE shows that the average salary for chief executive officers (CEOs) was R9.36 million.

While I do not advocate more increases for vice-chancellors, the time is right to consider equal pay for equal work within a more structured lens. Indeed, it must be based on delivery and meeting the country’s needs.

This becomes critical if one wants to assess whether the investment in education is providing a bang for the buck that the government consistently funnels into it.

If one considers that at least half of the first-year students drop out in the first year, one gets a sense of a tertiary system crisis. The picture worsens because of the much-vaunted technical and vocational education and training (TVET) colleges. For a nation pumping billions into the tertiary sector, obtaining data is painfully slow, even with the advent of artificial intelligence tools.

For example, in the 2016 academic year 88,771 students enrolled for the NC(V) Level 2 programme. In 2018, only 8,135 students of this cohort completed the NCV Level 4. TVET colleges with the highest throughput rate for the 2016 NCV Level 2 cohort were Gert Sibande TVET College (20.7 percent), Letaba TVET College (17.7 percent), Umfolozi TVET College (15.8 percent) and Waterberg TVET College (15.2 percent).

TVET colleges with the lowest throughput rate for the 2016 NC(V) Level 2 cohort were Central Johannesburg TVET College (1.5 percent), Flavius TVET College (3.7 percent) and Western TVET College (3.9 percent). We have not yet seen the types of salaries given out in the TVET sector, but on the delivery evidence, one is not optimistic.

There is no clear-cut answer, but there needs to be a more significant link between the job and delivering to the country’s needs, like the UJ example highlighted.

However, there is a clear need for discussion and direction on varsity heads pay. Compared to universities in Britain, Australia, or Europe, South Africa’s vice-chancellors would cry that they are underpaid.

Varsity heads must be paid for what they deliver, and those deliverables must form part of the country plan. Without deliverables to which one is accountable, the current system that continues to fail the nation will reward both excellence and mediocrity.

* Edwin Naidu is a communications professional and editor of Inside Education

* The views expressed do not necessarily reflect the views of The African