Restoring financial stability at UCT

Dear colleagues

The 2025 financial year saw the University of Cape Town (UCT) achieve a 1% surplus of approximately R50 million on its general operating budget (GOB), an achievement rendered even more important after the university endured three unprecedented years of budget deficits (R118 million in 2022, R350 million in 2023 and R193 million in 2024).

When I joined UCT in August 2024, I undertook to achieve a financial turnaround for UCT as part of the Council mandate to ensure the university's financial sustainability into the future.

In August 2024, we immediately implemented fiscal discipline measures that helped improve our financial status from a projected R270 million deficit to a deficit of R193 million, saving the university nearly R80 million.

For 2025, we planned for a cash neutral budget with a deficit of R64 million, approved by Council in December 2024. At the end of 2025, we were estimating a positive general operating balance of R50 million for the first time in four years. 

Indeed, the surplus of 1% was achieved through some difficult decisions by management, including suspension of staff performance bonuses, which should not be paid when the university is in a budget deficit, as per our finance policy.

I therefore wish to thank all decision-makers and budget-holders for not only supporting the ambition of turning our financial situation around in one financial year, but for also staying committed to all the measures and interventions put in place to turn this aspiration into a reality. We have accomplished this together, and I am very grateful to all of you.

I am also mindful that the pain was felt by all our staff members, and I also wish to thank all of you for your patience, understanding and cooperation. Together we are UCT, and the financial sustainability of this institution depends on all of us working together, all hands on deck, to ensure we don't only stay afloat but we thrive.

Understanding that UCT staff members are always high performing, in light of the improved financial outlook, we have had to find ways to recognise the excellence and innovation in the work that you do. We have therefore decided to bring back performance bonuses (Exceeds) in 2026, but only partially at 50%, with the hope of bringing them back fully in 2027 should our financial performance continue its positive trajectory.

In the wake of the anticipated budget deficit in 2022, UCT's Council approved what became known as the Financial Sustainability Plan (FSP) of the university, mandating management to reduce the salary bill of the university by R300 million (now about R340 million), an intervention yet to come into effect. What followed was further deterioration in the financial standing of the university's GOB for a period of three years.

In order to achieve further financial sustainability going forward, we need to deliver the R300 million salary bill reduction decided by Council in 2022. We plan to achieve this over a period of three years, such that we can fully return to the UCT finance policy target of 2–3% surplus on recurrent revenue annually. We hope to achieve this through a combination of policy changes, technology adoption, efficiency gains and ideally without any job losses, and this goal can only be realised if we carefully manage further growth of our salary bill, which includes managing the annual salary increases.

The prevailing pay policy at UCT requires that we 1) adjust salaries annually in line with the Consumer Price Index (CPI) to control for inflation, and 2) we benchmark salaries using ‘Remchannel' data to ensure sectoral alignment, at the 75th percentile for academic staff and 60th percentile of the national jobs market data for PASS staff. 

In 2024, the reference CPI was 4.6%, and we settled at 4.4% for the 2025 salary adjustments as we were still in the midst of budget deficits. In July 2025, the reference CPI was 3.5% and we proposed 3.5% for the 2026 salary adjustments, which will be implemented in February 2026, effective January 2026.

On RemChannel, the categories lagging behind the market data are senior lecturers, associate professors and full professors on the academic side, and PC5 on the PASS side. All these categories will receive additional adjustments in 2026 in an effort to correct the current lag.

We use RemChannel to benchmark salaries, with academics benchmarked against a comparator group of universities and PASS staff against national all jobs market. Remchannel is a salary benchmarking and remuneration survey service, which is a leading remuneration-data and reward-management system used by organisations to compare their pay and reward practices against the wider market. 

It is worth noting that salaries of PASS staff within the bargaining unit are above the 60th percentile RemChannel benchmark except PC5 and, in fact, our data shows that it is mostly PASS salaries that have been driving up the salary bill over the past 10 years.

In 2014, UCT's staffing costs were at 62% of the total operating income, and this rose to 72% in 2024. This number was reduced slightly to 69% in 2025, but we aim to keep it under 65%. Once again, any intervention to reduce the salary bill will require all of us to work together, so this objective can be achieved responsibly over time and without resorting to retrenchment and job losses.

I therefore wish to appeal to all of you as staff, both academic and PASS, to work cooperatively with us as management to ensure we achieve the financial sustainability of this institution. We value our staff immensely. We know that we cannot achieve the goal of financial sustainability without your support, understanding and cooperation.

Sincerely

Professor Mosa Moshabela
Vice-Chancellor

Read previous communications:

• From the UCT Executive
• Campus Announcements