91ÇÑ×Ó University of Otago is to lose 89 staff through voluntary redundancies this year as it grapples with a projected NZ$7 million (Pounds 3 million) budget deficit.

The job losses are the result of a one-off enhanced early retirement and voluntary severance offer, and cover administration, information services, commerce, health sciences, humanities and sciences.

Graeme Fogelberg, the vice chancellor, said the university could not sustain such a high deficit without putting the university's long-term viability at risk.

The university is getting less government funding next year than it budgeted for. It estimates the net cost of the severance package will be NZ$4.6 million, with recurring net savings of NZ$3.2 million annually.

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However, there have not been enough savings made in the humanities division, which is likely to have a net deficit of about NZ$230,000 next year.

To solve the problem, the division had either to cut its costs or increase its student fees, Dr Fogelberg said. That could mean further redundancies.

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Morale among university staff has been low for some time, with the humanities staff, particularly those in European languages, feeling under threat.