Ministers’ Deputies
CM Documents
CM(2002)138 (restricted) 3 October 2002
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818 Meeting, 26-28 November 2002
11 Administration and logistics
11.2 Co-ordinating Committee on Remuneration (CCR)
Remuneration of the Staff of the Co-ordinated Organisations: General Review -
139th report – Report by the CCR Chairman
To be prepared by the GR-AB
The Secretary General herewith submits to the Committee of Ministers the 139th report of the Co-ordinating Committee on Remuneration (CCR/R(2002)3), together with the letter of the Chairman of the CCR to Permanent Representatives/national Delegates and his letter to the Secretary General.
CO-ORDINATING COMMITTEE ON REMUNERATION
Council of Europe / Organisation for Economic Cooperation and Development
North Atlantic Treaty Organisation / Western European Union
European Space Agency/ European Centre for Medium-range Weather forecasts
The Chairman Secretariat
OECD/IOS
2, rue André Pascal
75775 Paris Cedex 16
Tél.: 33 1 45 24 83 41
Fax: 33 1 45 24 82 29
CCR/P(2002)6 Paris, 12 July21/09/95 2:54 PM 2002
Dear Permanent Representative/National delegate,
Background
When I was elected Chairman of the CCR by national delegates in June 1999, I accepted the conditions laid down by the CCR and by the Regulations concerning the co-ordination system that came into force in 1991 in all six Co-ordinated Organisations. Among these, Article 2(c) defines my responsibility as Chairman of both the CCR and of the tripartite process.
Following the CCR’s failure last month to reach a consensus on one of its most basic responsibilities, namely the production of the remuneration adjustment method to be applied for the 15,000 active and retired staff of the six Co-ordinated Organisations, Article 5(h) of the Regulations concerning the co-ordination system requires me to produce a Chairman’s Report, which I have now issued.
It may help Councils if I set out my views on how and why we had reached this impasse. The failure to reach consensus was not simply due to lack of time. Our Report should have been produced last year. That deadline was not kept because we could not reach consensus, so the previous method was extended for a further year of discussion. However, despite over two years of meetings - in separate committees, bilaterally, jointly, and in studies groups - all efforts failed. The best we can say is that we did much constructive and useful preparatory work, particularly the exterior market comparisons of salary levels (which culminated in the CCR’s 128th Report), a tripartite study of the use of purchasing power parities in co-ordinated remuneration (which produced the CCR’s 115th Report), and an extensive study on improving the index of civil service pay.
Process
The CCR decides on recommendations by consensus. As impartial Chairman, I have watched with growing frustration the failure to achieve consensus on the method. In part, this is implicit in a dialogue where each of the three colleges – the CCR (representing the member states as paymasters of the organisations), the CRSG (representing the Secretaries-General, the management), and the CRP (the staff representatives) – has its own clear interests to defend. As budgets have come under growing pressure, and as external management cultures evolve, the difficulty has grown. Indeed, attitudes have become more adversarial than might be expected in a process which should benefit all.
CCR members come mainly from capitals and usually have a primary brief to contain costs. This sometimes leads to a dialogue of the deaf with the CRSG when the latter propose changes to the remuneration package offered by their organisations, which imply new expenditures. This is especially true when the CRSG believe that some member states take more accommodating positions in the Councils of each organisation than do the same member states’ representatives in the CCR, or when the real financial impact seems minimal. The CRSG also believe that the representatives in CCR who come from capitals do not understand the reality of managing international organisations and have only budgetary concerns in mind. But the CRSG has also erred by not spelling out what they need from the CCR and by not producing convincing evidence to support their case. For its part, the CRP claims to feel very much the junior partner with no voice, faced time after time with faits accomplis rather than with debate.
Only a dozen countries of the 53 member countries of the Co-ordinated Organisations send delegates to the CCR. Of these, some belong to only one organisation but influence decisions that impact on other organisations. This asymmetry needs addressing. All parties are frustrated by the slow pace of business and by the lack of substantive dialogue. This frustration is also reflected in the consequent failure to seize the opportunity for constructive debate on any change in remuneration of the Co-ordinated Organisations. I also regret that our process is not as transparent as I would wish.
Co-ordination
The OECD has already begun to review the utility and relevance of the present co-ordination system. Others may do likewise. While it is encouraging that in early discussions the parties proclaim a commitment in principle to the co-ordination process, it must be right that a hard look be taken at whether the current system needs improvement, especially in view of the present failure to reach agreement on the four-yearly salary adjustment method.
Some critics point, reasonably, to multiple asymmetries within co-ordination: the organisations have different memberships, their functions differ widely, and their recruitment needs are different. But that was largely true even when co-ordination was established. Others argue that remuneration co-ordination made sense in the different world decades ago but is no longer practical. That argument does not seem to be deployed in the other major families of organisations (the UN and the EU) who are perhaps more tightly co-ordinated. What is true is that the specific problems of one of the Co-ordinated Organisations (the OECD), particularly the application of the affordability clause, have complicated and soured the wider co-ordination process. De facto, co-ordination is being eroded as some remuneration questions shift back from the CCR to Councils.
Costs/Benefits
The co-ordination process involves five tripartite meetings a year with 60 participants, lasting two and a half days each. Excluding direct expenditure by member governments for their representation, the secretariat of the meetings (the Inter-Organisations Section, IOS) estimates the all-in cost of these meetings at €150,000 each, or an annual cost of €750,000. When shared among the six organisations this would seem a modest price, provided the process does what it is intended to by sparing Councils technical and labour-related discussions and by enabling Councils to avoid having to conduct the same tripartite discussions in each organisation.
After three years as Chairman, I can report that the main debates in CCR have been aimed at agreeing a new annual salary adjustment method based on two key elements which both originate from national sources: the national consumer price index in each duty station country, and the real trend in net civil service pay in seven reference countries. Marginal changes to this formula have been made, often after heated debate, over the past twenty years. Other remuneration topics handled in the co‑ordination process are pensions and a range of allowances. Most allowances are a simple percentage of base salary, and others result from applying an agreed formula based on national data. All this points to a fairly automatic remuneration procedure in the Co-ordinated Organisations and calls into question the need for five meetings on co-ordination per year.
Pensions, again, are addressed as the need arises, but it looks increasingly as though each Co‑ordinated Organisation will have its own pension arrangements for new staff, rather than a single co-ordinated scheme as in the past. Therefore it seems inevitable that this process is taking the future pension arrangements at the six Organisations back to the respective Councils.
Conclusion
I believe that for many years the CCR has done what Councils wanted of it, by providing clear recommendations on issues of remuneration and related labour matters and moreover recommendations which had already been processed through the social partners. This left Councils free to focus on the major issues with which their organisations deal. And all this was achieved at a modest price.
The present situation has posed the question in some quarters of whether co-ordination is moribund. There will be a range of responses. My personal view is that co-ordination is still relevant and can and should be made to work better. The remedy rests both with the parties and the process itself. If member states can operate on the basis of more coherence (i.e. ensure better dialogue between CCR delegates and their delegations in the organisations so that states take the same stance in the CCR as in individual Councils), if there can be less suspicion and a greater willingness by all three parties to listen and to respond to what the others are saying, if the lowest common denominator can cease to be the norm for decision making, and if all parties recognise that their objective is not to fight off change but rather to work towards a compromise to enable the organisations to function more effectively, then there is still a future for co-ordination. It follows that I would welcome moves to improve the co-ordination process.
Yours sincerely,
David Brighty
Chairman of the CCR
COVER NOTE TO THE CCR CHAIRMAN'S REPORT
This Report is highly unusual. For the first time in its history, the CCR have failed to reach consensus on such a central issue as recommending a new salary adjustment method. In consequence, I have issued a Chairman's Report in compliance with Article 5(h) of the Regulations concerning the co‑ordination system.
The Chairman’s Report is separated into two parts: 1) the body of the Report and 2) its Rules. The body of the Report contains a description of events leading up to this Report and reflects the positions of CCR delegations on the various Rules in the Annex to the Report. The most contentious article, on the issue of affordability, is less a technical element necessary for calculating salary adjustments than a tool to be used by Councils in exceptional budgetary difficulties. This is dealt with in detail in the body of the Report. I have also commented separately in the Report on two other points: continuation of the four-yearly studies of the Co-ordinated Organisations’ recruitment markets and the introduction of flexible pay in the Co-ordinated Organisations. The Annex to the Report defines the new adjustment method. This has met with the approval of the majority of the delegations, and can also be broadly accepted by the two other colleges of co-ordination, namely the management and staff. The positions of these two colleges on the new adjustment method are shown in the body of the Chairman’s Report.
I regret that this failure to reach consensus will mean that the different Councils must make what amounts to political decisions on certain points, particularly on whether or in what form they wish to adopt an affordability clause in their own Organisation. I enclose a Chairman’s Report with its Annex and, because this is an unprecedented situation, I am also setting out in a separate letter addressed to Councils my personal reflections on how and why this has come about.
REMUNERATION OF THE STAFF OF THE CO-ORDINATED ORGANISATIONS: GENERAL REVIEW
139th REPORT
Report by the CCR Chairman
1. Introduction
1.1 Institutional framework
The recommendation (paragraph 5) in the Regulations defining the remuneration adjustment procedure in force [127th Report of the Co-ordinating Committee on Remuneration (CCR)] stipulates that the remuneration procedure for the staff of the Co-ordinated Organisations, as set out in the Annex to the 80th Report and as applicable to the year 2001, shall remain in force until 31 December 2002.
1.2 Deadline for completion of work
In line with the provisions of Article 1 of the Annex to their 80th Report, the CCR undertook at the beginning of 2001 a formal review of the remuneration adjustment procedure applied to the staff of the six Co‑ordinated Organisations. In July 2001, the CCR decided (in its 127th Report) to extend by one year the 80th Report Rules, to give more time for agreeing on the new adjustment procedure. That extension required the CCR to reach clear agreement at their meeting held on 12 - 14 June 2002. I must now record that no consensus was reached among the national delegates on the new salary adjustment method within this time frame.
1.3 Submission of revision proposals
1.3.1 In the absence of a consensus, the CCR Chairman is required, by Article 1.3 of the Annex to the CCR’s 80th Report, to submit his own report to Councils on the different views expressed in the CCR, outlining, as far as possible, the broad lines of consensus, in accordance with Article 5(h) of the Regulations concerning the co‑ordination system, by 31 July 2002 at the latest.
1.3.2 This will thus be a report by me as CCR Chairman, which will be the first of its kind. I personally regret that no consensus could be reached in the time provided, despite numerous discussions within the CCR and with the other committees.
2. General context
2.1 As stipulated in the 80th Report, a series of studies were commissioned to serve as background information for the review of the adjustment method, and the reports of these studies were discussed in the CCR. They covered a wide range of subjects including: (i) the purchasing power parities to be used in the adjustment method, which resulted in the CCR’s 115th Report in August 2000; and (ii) salary level comparisons between jobs in the Co-ordinated Organisations and salaries paid for what have been identified as the same kind of jobs in the public, private and international organisations sectors. This latter exercise resulted in the CCR’s 128th Report in July 2001. Late in 2001, an additional study was made by a tripartite group to propose ways to improve the civil service reference index, following a request for guidance from the Inter-Organisations Section.
2.2 Work on the review began with informal brainstorming from September 2000. Early 2001 saw a proposal by the Committee of Representatives of the Secretaries/Directors General (CRSG) and a position paper tabled by the Committee of Staff Representatives (CRP).
2.3 The CRSG proposal included, with reference to the CCR’s 128th Report, what they saw as two important innovations to the co-ordinated remuneration adjustment system. First, they proposed that a new "composite index"(an annual reference to salaries paid by the national civil services, the private sector and by other international organisations, with appropriate weighting) would replace the single reference to the public sectors of seven European countries which had been followed since the mid 1970’s. Second, the CRSG recognised that this change might exert upward pressure on co-ordinated remuneration, so the CRSG simultaneously proposed an affordability clause that would allow the governing bodies of the six Co-ordinated Organisations much greater flexibility in deciding how and when to adjust salaries on the basis of the results of this "composite index”.
2.4 The CRP position paper appeared to be more akin to a proposal to return to the adjustment method in force from 1993 until 1997 in application of the CCR’s 22nd Report to Councils.
2.5 After long and thorough discussions in the CCR, the Committee agreed that it could follow neither the CRSG proposal nor the CRP position paper. Instead, CCR made a number of changes to the Rules proposed by the CRSG and presented them for discussion with the other committees.
2.6 After noting in March 2002 that the CCR was having difficulty agreeing on a new affordability clause, the CRSG made a further proposal to try to bring the different positions closer together. This proposal was based on another innovation, a sort of special deduction in exceptional circumstances. This mechanism would allow Councils faced with unexpected budgetary difficulties to suspend the budget effects of recommended increases for periods exceeding one year, while making more transparent the real losses incurred by staff. It would also allow salary scales to remain on a co-ordinated basis. The CRSG proposal also incorporated an element of a proposal presented by the United States’ delegate in the March 2002 meeting.
2.7 Adjustment procedure proposals covered a range of issues such as: (i) the programme of studies to be carried out during the application period of the procedure; (ii) the length of the procedure itself and how to amend it; (iii) measures for duty station countries where consumer price inflation is very high; (iv) special measures in countries where very few staff members are on duty; (v) authorisation for flexible management of salary scales under certain circumstances; (vi) reductions in salaries; and (vii) adjustments of allowances paid with the salaries. Understandably, the focus of discussions has been on the affordability clause and the review of the reference index, leaving little time for work on these other issues. They were nevertheless finally discussed in the June meeting (see various positions in paragraph 3 below).
2.8 The largest share of the Committees’ time and the most difficult discussions have concerned the issue of affordability. This implies returning to Councils the responsibility, previously delegated to the CCR, for determining in consultation with the staff and management of the six Co-ordinated Organisations, when and by how much to adjust remuneration each year.
2.9 It is now my task to try and inform Councils of the views expressed by CCR delegates on all these topics. At the outset, I should make clear that a broad consensus was reached on the technical articles of the adjustment method. Where we clearly failed to get near consensus was in relation to the more "political" articles such as Article 8 on affordability.
3. Various positions of the CCR delegates
3.1 The text below records, for the more important articles of the Rules, the views sent in written form to the Secretariat (the Inter-Organisations Section) by various delegations at the request of the Chairman following an informal meeting on the subject on 29 April 2002, as well as views expressed and recorded in approved minutes of the past meetings of the CCR (through March 2002) and CCR discussions in June 2002.
3.2 Articles not specifically mentioned below were not contested and, after discussion at the June meeting, Article 4 on definitions can be said to represent a near consensus of CCR delegates. On the other hand, discussions on Articles 8 on affordability, 10 on studies and 12 on flexible management of salary scales did not lead to consensus, but majority views are reflected below.
Article 4: Definitions
3.3 The CCR acknowledged that in the past the current reference index had failed to reflect the real trend in salaries in the majority of national civil services of the reference countries (principle of parallelism). To address this, the proposal was made that the calculation of the reference index should be based not on the net remuneration of comparable grades in national civil services, but on the net remuneration paid for selected jobs. At the same time there was a need to capture more accurately the complete contents of the salary package, so as better to reflect the changes which had taken place in the last ten years in the remuneration system of most national civil services.
3.4 A great majority of CCR delegates supported this idea. Initially three disagreed, but a compromise was found, whereby those reference countries which had not yet agreed to furnish annual data on selected jobs would continue to provide the information for comparable grades. One delegation objected (Russia).
Article 8: Affordability
3.5 As indicated above, the bone of contention was the affordability clause whose purpose is to allow Councils, in case of budgetary difficulties, not to grant the full remuneration adjustment at the date recommended by the CCR.
3.6 Opinions were divided on three main points: a) Should budgetary difficulties be defined? b) Could a Council grant no adjustment at all? c) Should there be an obligation to catch up at the end of the year?
3.7 After nearly two years of discussions, no consensus seemed to emerge. In an attempt to find a way out, the United States delegation made a compromise proposal in March 2002, which was based on a minimum award of cost of living (CPI). On 13 June the United States' delegate provided a new, more precise variant proposal. This gave Councils the right to limit the annual adjustment to the increase in duty station country’s CPI, but if the CPI was higher than the adjustment recommended by the CCR, to award the recommended adjustment. This amount could be phased in or postponed until later in the year. The proposal did not provide for automatic catch-up. In a bilateral meeting with the CRSG, a tour de table of CCR delegates showed support from eleven delegations with one delegation objecting. However, after further discussions within CCR, it emerged that there was still no consensus. In a final attempt to find a solution, a further proposal was put on the table by the Japanese delegation, which read as follows:
To be included in the Annex to the Report "Article 8: In case of budgetary difficulties in an Organisation, the Council of that Organisation has the right to reduce the annual adjustment (the real increase awarded to national civil services) recommended by the CCR to the rise in national consumer price index for the relevant host country. Moreover, the amount awarded may be phased in or postponed until later in the calendar year. Councils also maintain the right to implement an adjustment superior to the one recommended by the CCR."
To be included in the CCR’s Recommendation: "The Co-ordinating Committee on Remuneration accordingly invites Councils to adopt paragraphs (a) and (b) below and, if they consider it more appropriate to the specific situation of their Organisation, to adopt paragraph (c) below."
(c) The following paragraph is added to Article 8 in the Annex: "In case of exceptional budgetary circumstances in an Organisation, the Council of that Organisation has the right to decide that the annual adjustment recommended by the CCR be awarded in part or not at all.”
3.8 This proposal means that, in case of budgetary difficulties, a Council could reduce the adjustment recommended by the CCR to the relevant country’s CPI, and could phase in or postpone the award until later in the year. In addition, it gave Councils the option to adopt an additional provision, which would then become part of the adjustment method, if Councils so decided. It would thus permit Councils, in exceptional circumstances, to decide to grant the adjustment in part or not at all.
3.9 The first part of this proposal (i.e. under the Annex, Article 8) received majority support from CCR delegations, but four (the United States with support from three other delegations) could not accept the second part of the proposal (i.e. under the Recommendation) which would allow Councils to give no adjustment at all. Three other delegations maintained that Councils should have full freedom for granting salary adjustments or not, and could therefore not accept the first part of the proposal without the second. The remaining delegates seemed willing to join any compromise.
3.10 In view of the above, and given that this issue is more political than technical, no proposal appears under Article 8 in the Rules at Annex. I have no option but to leave it to each Council to decide, in the light of the specific situation in its Organisation, on the appropriate form of an affordability clause when adopting the new salary adjustment method.
Article 10: Studies
3.11 The previous salary adjustment methods (22nd and 80th Reports) provided for a four-yearly comparative study of salary levels with the private and the public sectors and of international organisations, but in fact a first such study was made before the 22nd Report. A clear majority of CCR delegates expressed the wish to discontinue the comparative studies with the private sector, because they considered them irrelevant on the grounds that the Co-ordinated Organisations' main recruitment market, and therefore main point of comparison, was the national civil services. However, three delegations supported comparative studies that include the private sector, so no consensus emerged.
3.12 CCR majority opposition to the comparative studies with the private sector may be motivated in part by a belief that such studies represent a back-door attempt by other colleges to keep alive the prospect of a composite index. It is true that the CRSG and the CRP favour these studies. Their arguments, supported by the technical secretariat, the IOS, are that some 40% of staff in Co-ordinated Organisations are recruited from the private sector, and that Councils need a full and general overview of developments in their recruitment markets when they consider remuneration policies. I note that Councils welcomed the CCR’s 128th Report on salary level studies, which included comparative studies of the private sector, and my personal view is that it makes sense to continue the private sector comparisons which form part of the full set of comparative studies, the better to keep Councils informed of changes in pay in comparable labour markets.
Article 12: Flexible management of salary scales
3.13 Several Co-ordinated Organisations had indicated that they were in the process of modernising their salary management. Most CCR delegates expressed the wish to be actively involved in the implementation of changes, and a majority of delegates asked that projects concerning the introduction of flexible management of salary scales in an Organisation should be examined by the CCR before being submitted to a Council. However, no consensus emerged from discussions. Three delegations were of the opinion that CCR involvement in these projects should remain limited. The CRSG reacted strongly in defence of flexible management of salary scales, because it could not accept that the CCR should become a barrier between the Councils and their management. The CRSG argued that Councils would object to having the CCR infringe on their prerogatives, since CCR’s mandate is limited to remuneration matters and does not cover salary policy questions in the individual Organisations.
3.14 In an effort to find a pragmatic solution, I make the personal suggestion that management of flexible salary scales should be discussed and examined in the CCR after initial presentation to the relevant Councils.
4. Conclusions
4.1 Position of the CRSG
1. The CRSG regrets the failure of the CCR to reach a consensus on a recommendation to the Councils of the six Co-ordinated Organisations on the salary policy to be followed for the next four years. The CCR has within the last three years finished discussions on the two key elements of staff compensation and benefit policy – the salary adjustment procedure and pension policy – and in both cases failed to recommend acceptable policies. The CRSG considers that, as a result, Councils should examine the relevance of the Co-ordination system for their respective Organisations. In this respect the CRSG offers the following comments for Councils.
2. The CRSG considers that the wage policy of the Co-ordinated Organisations should track those in member states. The CRSG notes from the Report that the CCR has failed to find agreement on three Articles in the procedure which deal with the relationship of salaries in the Organisations with those in the outside world as follows:
- Article 8 ("Affordability"), concerning a Council's ability to deviate from tracking wage policy in member states.
- Article 10, concerning the need of the Organisations to monitor salary levels in their main recruitment markets in member states.
- Article 12, concerning the desire of individual Organisations to bring their salary policy into line with modern developments in wage policy in member states.
3. The CRSG regrets that the position of certain delegations in the CCR should thus be to isolate the Organisations from developments in member states.
4. The CRSG has made considerable efforts to aid delegations to find a compromise on Article 8 acceptable to all the parties. The CRSG was surprised that the CCR initially refused to discuss the CRSG proposal with its authors and should finally reject it after only brief discussion with them and no satisfactory explanation. Furthermore the CRSG was unaware of the divisions among CCR delegations on Articles 10 and 12 because these too were not discussed with them.
5. The CRSG regrets that the CCR has not chosen to discuss with the managers of the Organisations and should thus also isolate itself from the realities of the Organisations themselves.
6. The CRSG notes that the Chairman of the CCR invites Councils to decide individually on Articles 8, 10 and 12 on which consensus has been unable to be found. The Secretaries-General will therefore make any further comments to their individual Councils.
4.2 Position of the CRP
1. The CCR’s inability to adopt a method for adjusting the remuneration of the staff of the Co-ordinated Organisations as from 1 January 2003 jeopardises the very survival of the Co-ordination system. The questions still unresolved which the Chairman’s Report puts to the Councils cannot be dealt with within each Organisation by the three parties concerned (member states, Director/Secretary-General, staff representatives), without reopening a "political"debate. Yet the Co-ordination system was set up precisely in order to avoid debates of this kind within each Organisation, as they would be a constant source of tension between member states, the Secretary/Director General and the staff and jeopardise good labour relations.
2. As regards affordability, the CRP is of the opinion that the CCR Chairman’s Report requires Councils to make a decision that will be crucial for the role and future of the Co‑ordination system. If the Councils wish to avoid the risks outlined above by treating all Co-ordinated Organisations’ staffs fairly and equally, they must at the very least adopt an "affordability"clause (Article 8) that is not inconsistent with this objective. The CRP considers that any Council that adopted the text giving itself complete freedom to fix salaries – which certain delegations would like to see included in the CCR’s recommendation – would place itself outside the
system and sound the death knell of co-ordination. As regards the proposal in paragraph 3.7 of the CCR Chairman’s Report, the CRP cannot accept that the Councils of the Co-ordinated Organisations should have the possibility of applying total affordability to such part of an adjustment as exceeds the consumer price index. At most the payment of this part of an adjustment could, if necessary, be deferred until later in the year.
3. The CRP would also point out that it sets great store by further reliable and objective comparative studies of salary levels in the three recruitment markets. It would draw the Councils’ attention to the fact that a divergent choice as regards the options proposed in this respect (Article 10) would make it purely and simply impossible to have comparative studies for the next revision of the remuneration system.
4. Lastly, the Chairman’s Report shows that the CRP has been gradually sidelined during the discussions. It mentions the CRP only in paragraph 2.4, and then to sum up its proposed method – which, like the CRSG’s, included a composite index – in a manner so oversimplified as to verge on parody.
5. Recommendation
There was consensus in CCR on most of the Rules attached at Annex, but not all. Accordingly, as Chairman of the CCR, I propose that Councils adopt paragraphs (a), (b) and (c) below:
(a) the remuneration adjustment procedure for the staff of the Co-ordinated Organisations, set out in the Annex [see (b) below] and its relevant appendices, should replace the current procedure;
(b) Councils should individually decide on the contents of Articles 8, 10 and 12 in the Rules of the Annex, which do not directly affect the calculation of the salary adjustment;
(c) this procedure shall come into force on 1 January 2003.
ANNEX
RULES ON THE REMUNERATION ADJUSTMENT PROCEDURE
OF THE CO-ORDINATED ORGANISATIONS
CHAPTER I: GENERAL PROVISIONS
Article 1: Duration of validity of and subsequent amendments to the rules
1.1 These rules shall determine the remuneration adjustment procedure for the four-year period from 1 January 2003 to 31 December 2006. Should any amendments be made subsequently to these rules, no provision which ceases to apply shall give rise to vested rights.
1.2 Proposals to amend these rules as from 1 January 2007 shall be submitted for examination by the Co‑ordinating Committee on Remuneration (CCR) by 1 January 2006.
1.3 In the absence of any recommendation by the CCR, made by 1 November 2006 at the latest, either to prolong or amend these rules with effect from 1 January 2007, the present method, as applicable in year 2006, shall be prolonged until 31 December 2007. In the event that no consensus has been reached by 31 August 2007, the Chairman shall submit his report to governing bodies on the different views expressed in the CCR, outlining, as far as possible, the broad lines of consensus, in accordance with Article 5(h) of the Regulations concerning the co-ordination system by 30 September 2007 at the latest.
Article 2: Frequency of adjustments
2.1 Salary scales shall be adjusted annually at 1 January subject to the provisions in Article 8.
2.2 Special adjustments may be made in accordance with the provisions in Article 7.
Article 3: Procedure
3.1 Dossier for annual reviews
3.1.1 Every year the CCR shall examine the proposals for remuneration adjustment submitted by the Secretaries/Directors General in accordance with these rules. These proposals shall be accompanied by tables giving an estimate of their budgetary impact as a percentage of total salary costs and in monetary terms, both overall and for each Organisation. They shall also be accompanied by tables giving an estimate of the budgetary impact of these proposals on pension costs foreseen for each Organisation for the following year.
3.1.2 When presenting reports on adjustment of remuneration, the Secretaries/Directors General shall inform their decision-making bodies of the financial consequences for the respective budgets which result from CCR recommendations.
3.2 Recommendations
The CCR shall formulate the recommendations necessary for the application of the present regulations in accordance with sub-paragraphs (e), (g) and (h) of Article 5 of the Regulations concerning the co-ordination system. Recommendations concerning the adjustment of remuneration at 1 January shall be made not later than 30 November of the preceding year.
CHAPTER II: DEFINITIONS
Article 4: Definitions
For the purposes of the calculations provided for in these rules:
4.1 For the staff of the Co-ordinated Organisations:
remuneration comprises, for the whole staff of the Co-ordinated Organisations, the following elements:
-- basic salary,
-- expatriation allowance,
-- household allowance,
-- dependent persons allowances.
4.2 For the "reference index" shall be calculated:
the weighted average of the percentage changes from 1 July of the preceding year to 1 July of the current year in real terms, in the net remuneration of selected jobs in the national civil services of the reference countries, or of the comparable grades in the national civil services of the reference countries where the national remuneration system is not yet based on jobs;
4.2.1 "Selected jobs" shall mean those jobs of officials in national civil services of the reference countries whose functions are representative in the national civil services and which have been selected among co-ordinated jobs by those national civil services for use by the Inter-Organisations Section (IOS) in salary surveys of the reference index [see Appendix 3];
4.2.2 "Comparable grades" shall mean those grades of officials of national civil servants in the reference countries whose functions can be matched with the jobs selected among co-ordinated jobs [see Appendix 3];
4.2.3 "the national civil services of the reference countries" shall mean central government of the following countries: Belgium, France, Germany, Italy, Luxembourg, the Netherlands and the United Kingdom [see Appendix 1];
4.2.3.1 "net remuneration"shall mean the average of the gross minimum and gross maximum salary which can be reached by an official without changing jobs (top of automatic career development). To these shall be added all the other elements making up the remuneration of unmarried officials in the job in question in the national civil service. From these are deducted the amount of income tax levied by the central authorities on unmarried officials as calculated without taking into account of non-automatic personal allowances. Also shall be taken into account all other financial and non-financial changes to national civil service terms and conditions as well as compulsory social deductions. This constitutes the "relevant remuneration”;
4.2.3.2 the effect of variations from one year to another in a specific compulsory deduction made from the salaries of officials in the national civil services shall be neutralised in order to avoid double counting of these variations against the corresponding deduction in Co-ordinated Organisations' staff salaries;
4.2.3.3 deductions from national civil service salaries for benefits not granted to staff of Co-ordinated Organisations shall not be taken into account;
4.2.4 "the weighted average of percentage changes in real terms"shall mean the percentage arrived at after:
4.2.4.1 first, calculating for each selected job or comparable grade in each national civil service in the reference countries, the changes in real terms of the relevant remuneration [see sub-paragraphs 4.2.3.1, 4.2.3.2 and 4.2.3.3 above] by deflating the index for the trend in net nominal salaries by the national consumer price index [see paragraph 4.3 and Appendix 2 below], the indices being brought back to base 100 at the date of effect of the last review;
4.2.4.2 second, calculating for each country an index of average changes in real terms for all selected jobs or comparable grades;
4.2.4.3 third, and finally, calculating for all seven reference countries, the average percentage change by giving the index data for each country considered the following weights: 9.6 for Belgium, 19.1 for France, 23.6 for Germany, 14.2 for Italy, 7.2 for Luxembourg, 10.2 for the Netherlands and 16.1 for the United Kingdom.
4.3 For the national consumer price indices
The consumer price indices to be used for the purposes of these rules shall be as indicated in Appendix 2.
4.4 For the purchasing power parities
The purchasing power parities to be used in implementing these rules shall be those defined in Appendix 2.
CHAPTER III: ANNUAL ADJUSTMENTS
OF BASIC SALARIES
Article 5: Annual adjustments of basic salaries
5.1 Belgian salary scales
5.1.1 The basic salaries of category A, L, B and C staff posted in Belgium shall be adjusted at 1 January of the year in question (year n), subject to the provisions in Article 8. The amount of this adjustment shall be equivalent to the percentage change over the preceding 12-month period from 1 July of year n-2 to 1 July of year n-1, resulting from the product of the reference index as set out in Article 4.2 and the appropriate national consumer price index as set out in Appendix 2. The percentage adjustment in basic salaries for staff serving in Luxembourg shall be the same as for staff serving in Belgium.
5.1.2 These percentage adjustments shall apply to basic salaries in force at 31 December of the preceding year.
5.1.3 Any special adjustment made following a change in the national consumer price index during the 12‑month period referred to in paragraph 5.1.1 above shall be deducted from the annual adjustment.
5.2 Salary scales for other countries
5.2.1 For A and L category staff posted in the other countries, the basic salaries shall be adjusted annually at 1st January by the salary adjustment calculated on the basis of the national consumer price index and the reference index and by the purchasing power parities as set out in Appendix 2, in order to guarantee a relative equivalency of purchasing power between the scales of the countries concerned.
5.2.2 Basic salaries of B and C category staff shall be subject to an adjustment equal to the percentage determined for A and L grade staff of that country.
CHAPTER IV: ANNUAL ADJUSTMENTS OF ALLOWANCES FIXED
IN ABSOLUTE VALUE
Article 6: Annual adjustments of allowances fixed in absolute value
6.1 With effect from 1 January of the year in question (year n) allowances fixed in absolute value shall be adjusted annually by the product of the reference index and the percentage change in the national consumer price index as well as the purchasing power parities, where applicable, over the 12‑month period, from 1 July of year n-2 to 1 July of year n-1.
6.2 These adjustments shall apply to the amounts in force at 31 December of the preceding year.
CHAPTER V: SPECIAL ADJUSTMENTS OF REMUNERATION
Article 7: Special adjustments of remuneration
7.1 When the national consumer price index in a country, as defined in paragraph 4.3 of Article 4, since the date of effect of the last adjustment of remuneration shows an increase of at least 5%, the Chairman, on behalf of CCR, may send to Councils recommendations providing for a special adjustment of remuneration as soon as he has been informed thereof by the Head of the IOS. The published report will serve as notification to the CCR.
7.2 Any special adjustment made following a change in the national consumer price indices during the 12‑month period referred to in paragraph 6.1 shall be deducted from the annual adjustment.
CHAPTER VI: AFFORDABILITY
Article 8: Affordability
Each Council must make a decision on the contents of Article 8 in the light of the comments by the Chairman of the CCR in the Report, paragraphs 3.5 to 3.10.
CHAPTER VII: INTERMEDIATE STUDIES AND MONITORING
Article 9: Reference data
The IOS shall keep itself informed about any changes in all the components of the various reference indices referred to in Article 4.
Article 10: Studies
10.1 The Chairman shall in June, after consultation with the Chairman of the CRSG, propose to the CCR an annual programme of studies for the following year. Such studies are intended to inform the CCR and the joint meetings about questions within their terms of reference. The programme shall be adopted by the CCR by a two-thirds majority.
10.2 A Studies Committee, comprising the Chairman and a Vice-Chairman of the CCR, of the Committee of Representatives of the Secretaries/Directors General (CRSG) and of the Committee of Staff Representatives (CRP) and one delegate of each Committee shall be set up. It shall be chaired by the Chairman of the CCR.
10.3 This Committee shall determine the timetable and procedures for the studies. The Studies Committee may create a steering committee to guide a particular study. Its membership shall be decided by consensus of the members of the Studies committee, failing which the Chairman of the CCR shall decide.
10.4 The following study shall be undertaken during the duration of the method:
updating, before July 2005, comparative studies of salary levels of A and B grade staff with the remuneration of the private and public sectors and of international organisations on the basis of a limited representative sample of benchmark jobs. [Please see comments by the Chairman of the CCR in the Report, paragraphs 3.11 and 3.12.]
CHAPTER VIII: OTHER ARRANGEMENTS
Article 11 : Reductions of scales
In the event of a reduction in the salary scales following the application of Article 5, the CCR may recommend suspending the negative effect of Article 5 in order to maintain the salary scales at their current level until the following adjustment.
Article 12: Flexible management of salary scales
Projects concerning the introduction of flexible management of salary scales in the Organisations may be examined by the CCR after being submitted to the respective Councils. [Please see comments by the Chairman of the CCR in the Report, paragraphs 3.13 and 3.14.]
Article 13: Measures to apply in duty countries where small numbers of staff are assigned
Notwithstanding Article 5, in countries where less than fifty persons are assigned by one or more Co‑ordinated Organisations, the Secretary/Director General concerned may, after consulting with the IOS, propose appropriate remuneration measures to his governing body in order to take account of recruitment and retention difficulties specific to his Organisation. The Head of the IOS shall annually inform the CCR Chairman of any changes in these measures.
APPENDICES
APPENDIX 1: Definition of the notion "central government"
APPENDIX 2: Purchasing power parities and national consumer price indices
APPENDIX 3: Jobs/grades selected for the reference civil service surveys
APPENDIX 1
DEFINITION OF THE NOTION "CENTRAL GOVERNMENT"
1. General definition: that used in the Standard System of National Accounts.
2. Precise definition for the following countries:
Belgium: civil servants in Federal Ministries
Germany: civil servants in Federal Ministries
Italy: civil servants of the ministries of the Republic
Netherlands: civil servants in ministries and higher Councils of State
United Kingdom: civil servants in government departments which comprise the Ministry of Defence, the Treasury and the Foreign and Commonwealth Office. Data is supplied by the Cabinet Office for jobs in the Senior Civil Service.
APPENDIX 2
PURCHASING POWER PARITIES AND NATIONAL CONSUMER PRICE INDICES
1. Purchasing Power Parities (PPP)
1.1 Application of the PPP adjustment
The adjustment by the PPP will be put into force only if the results obtained by application of the salary adjustment method fall outside the limits of a "reference curve of purchasing power"fixed at more or less 2% around the results of the calculation of the adjustment of the PPP provided for in the paragraph below. In such case, the adjustment will be equal to the value equivalent to the upper or the lower limit of the reference curve.
1.2 Calculation of the PPP
1.2.1 The PPP referred to in Article 5.2 of the Annex, are approved by the Councils on proposal of the CCR based on the calculations by the IOS in co-operation with the Statistical Office of the European Communities (Eurostat) with reference to Brussels, and in accordance with the formulae referred to hereafter.
1.2.2 The consumption weights used for the calculations of the economic parities in June 2002 should be left unchanged throughout the lifetime of the method in order to minimise unexpected jumps in the results.
1.2.3 The results of the established PPP calculations constitute the central reference of the curve of purchasing power referred to in the 115th Report by the CCR [CCR/R(2000)4] to be calculated every year. This reference curve is obtained by enlarging the results of the PPP calculations by plus or minus 2%, margins believed to include any "statistical error", while guaranteeing a relative equality of purchasing power between duty stations. Adjustments by the method referred to in Article 5.2 are only corrected if they fall outside this reference curve.
1.2.4 A result of the salary adjustment based on the method described in Article 5.2 of the Annex which lies above the reference curve would lead to a downward adjustment to the plus 2% border of the reference curve, which means lowering the result produced by this method. A result below the reference curve would lead to an upward adjustment to the minus 2% border of the reference curve and consequently to an increase of the result reached by the method. The starting point for calculating a new salary adjustment (national CPI x reference index) will be re-based after each application.
1.3 Update of initial parities
The indices to be used to update the initial parities are the harmonised consumer price indices used by Eurostat, insofar as they are available. Failing that, the national consumer price indices will be used.
1.4 Reference towns
1.4.1 As a general rule the parity used for the country as a whole is that calculated for the capital.
1.4.2 The parities for Germany, the Netherlands and the United Kingdom are exceptions to this rule, since they are calculated by reference to Munich, The Hague and Reading respectively.
1.4.3 If, after consulting the national Statistical Institute concerned, the Secretaries/Directors General of the Co‑ordinated Organisations are of the opinion that prices in another duty station in the country in question – in which a sufficient number of international civil servants is posted – differ from those in the reference town by more than 6%, a study may be undertaken to determine whether adjustments should be made to take account of relative prices levels.
2. National consumer price indices
2.1 For the seven reference countries cited below the national consumer price indices for the whole country will apply in the context of Article 4.3 of these Rules:
-- Belgium: Indice des prix à la consommation
-- Germany: Preisindex für die Lebenshaltung - Alle privaten Haushalte
-- France: Indice des prix à la consommation - Ensemble des ménages
-- Italy: Indice nazionale dei prezzi al consumo per l’intera collettività nazionale
-- Luxembourg: Indice des prix à la consommation
-- Netherlands: Prijsindexcijfers van de gezinsconsumptie - reeks voor de totale bevolking
-- United Kingdom: General retail price index
2.2 For other countries, national consumer price indices for the whole country shall be used, except for Switzerland, where the Geneva consumer price index shall be used. Other specific indices shall be used in any other country where another index has been recommended by the National Statistical Office.
APPENDIX 3
JOBS SELECTED FOR THE REFERENCE CIVIL SERVICE SURVEYS
|
CO-ORDINATED ORGANISATIONS |
C.O. grades |
BELGIUM * |
FRANCE |
GERMANY ** |
|
Management and Direction level |
||||
|
1. Chief Executive Officer |
A7 |
Directeur d'administration centrale |
||
|
2. Manager of Information & Press Activities |
A7 |
Ministre plénipotentiaire 1ère classe |
||
|
3. Head of Automation & Informatics Department |
A6 |
Chef de service |
||
|
4. Legal Adviser |
A6 |
Maître des requêtes au Conseil d'Etat 8ème échelon |
||
|
5. Head Computer & Telecommunications Service |
A5 |
Ingénieur en Chef des Télécom. 2è éch à ingénieur général 2è cl |
||
|
6. Head Automatic Data Processing Staff Officer |
A5 |
Ingénieur de l'armement en chef 2è éch à ingénieur général 2è cl |
||
|
7. Head of Division (Development Aid) |
A5 |
Sous-Directeur admin. centrale |
||
|
Professional specialists and administrators |
||||
|
8. Principal Scientist (Operations & Logistics) |
A4 |
Ingénieur en Chef de l'armement |
||
|
9. Assistant Legal Adviser |
A4 |
Maître des requêtes au Conseil d'Etat 1er à 7ème échelon |
||
|
10. Principal Economist |
A4 |
Administrateur INSEE hors classe |
||
|
11. Principal Internal Auditor |
A4 |
Conseiller référendaire 2ème classe à 1ère classe 3è éch |
||
|
12. Principal Programme Administrator |
A4 |
Administrateur INSEE hors classe |
||
|
13. Press Attaché (Administrative Officer) |
A3 |
Attaché principal 2ème classe |
||
|
14. Chief of Section (Budget & Cost Analysis) |
A3 |
Ingénieur de l'armement |
||
|
15. Database Administrator |
A3 |
Attaché d'administration centrale |
||
|
16. Senior Officer (Procurement) |
A3 |
Attaché principal 2ème classe |
||
|
17. Scientist |
A2 |
Ingénieur météorologie 2ème classe |
||
|
18. Accounting Officer |
A2 |
Inspecteur du trésor |
||
|
Secretariat |
||||
|
19. Secretary |
B2/B3 |
Adjoint administratif principal 2ème et 1ère classe |
||
|
20. Executive Secretary/Assistant |
B4/B5 |
Secrétaire administratif cn |
||
|
Accounts |
||||
|
21. Accountant |
B3/B4 |
Adjoint administratif |
||
|
22. Principal Accountant - Head of Section |
B5/B6 |
Attaché d'administration centrale |
||
|
General administration |
||||
|
23. Senior Clerk |
B3/B4 |
Secrétaire administratif cn |
||
|
24. Administrative Assistant |
B5 |
Secrétaire administratif ce |
||
|
25. Principal Admin. Assistant (Personnel/Organisation) |
B6 |
Attaché principal |
* Restructuration in progress. Information will be made available as soon as possible. ** Has been removed at the German delegation’s request.
|
CO-ORDINATED ORGANISATIONS |
C.O. grades |
BELGIUM * |
FRANCE |
GERMANY ** |
|
Information technology |
||||
|
26. Programmer |
B4/B5 |
Secrétaire systèmes info.et communication |
||
|
27. Analyst/Programmer |
B5/B6 |
Attaché systèmes info. et communication |
||
|
Procurement/Contracts |
||||
|
28. Procurement Officer |
B4/B5 |
Secrétaire administratif cn |
||
|
29. Head of Procurement/Contracts Unit |
B6 |
Attaché d'administration centrale |
* Restructuration in progress. Information will be made available as soon as possible. ** Has been removed at the German delegation’s request.
JOBS SELECTED FOR THE REFERENCE CIVIL SERVICE SURVEYS
|
CO-ORDINATED ORGANISATIONS |
C.O. grades |
ITALY * |
LUXEMBOURG * |
NETHERLANDS |
UNITED KINGDOM * |
|
Management and Direction level |
|||||
|
1. Chief Executive Officer |
A7 |
Dirigente I fascia |
18 |
18 |
Band 7 - 9 |
|
2. Manager of Information & Press Activities |
A7 |
" |
17 |
16 |
Band 7 - 9 |
|
3. Head of Automation & Informatics Department |
A6 |
Dirigente II fascia a |
16 bis |
16 |
Band 5 |
|
4. Legal Adviser |
A6 |
" |
15 |
15/16 |
Band 5 |
|
5. Head Computer & Telecommunications Service |
A5 |
Dirigente II fascia b |
15 |
16 |
Band 1 - 2 |
|
6. Head Automatic Data Processing Staff Officer |
A5 |
" |
15 |
16 |
Band 1 - 2 |
|
7. Head of Division (Development Aid) |
A5 |
" |
15 |
14 |
Band 1 - 2 |
|
Professional specialists and administrators |
|||||
|
8. Principal Scientist (Operations & Logistics) |
A4 |
Area C/3 |
14 |
14 |
B1/B2 |
|
9. Assistant Legal Adviser |
A4 |
" |
14 |
12/14 |
B1/B2 |
|
10. Principal Economist |
A4 |
" |
14 (15) |
14 |
B1/B2 |
|
11. Principal Internal Auditor |
A4 |
" |
14 |
14 |
B1/B2 |
|
12. Principal Programme Administrator |
A4 |
" |
14 |
14 |
B1/B2 |
|
13. Press Attaché (Administrative Officer) |
A3 |
Area C/2 |
13 |
12 |
B2/C1 |
|
14. Chief of Section (Budget & Cost Analysis) |
A3 |
" |
13 |
13 |
B2/C1 |
|
15. Database Administrator |
A3 |
" |
13 |
10 |
B2/C1 |
|
16. Senior Officer (Procurement) |
A3 |
" |
13 |
12 |
B2/C1 |
|
17. Scientist |
A2 |
Area C/1 |
13 |
11/12 |
C2 |
|
18. Accounting Officer |
A2 |
" |
13 |
12 |
C2 |
|
Secretariat |
|||||
|
19. Secretary |
B2/B3 |
Area B/2 |
4 - 13 bis |
5 |
E1/E2 |
|
20. Executive Secretary/Assistant |
B4/B5 |
Area B/3 |
7 - 13 bis |
6/7 |
D |
|
Accounts |
|||||
|
21. Accountant |
B3/B4 |
Area B/2 |
7 - 13 bis |
10/12 |
E1/D |
|
22. Principal Accountant - Head of Section |
B5/B6 |
Area B/3 |
7 - 13 bis |
13 |
C2 |
|
General administration |
|||||
|
23. Senior Clerk |
B3/B4 |
Area B/2 |
7 - 13 bis |
5/6 |
E1/D |
|
24. Administrative Assistant |
B5 |
Area B/3 |
7 - 13 bis |
6 |
D/C2 |
|
25. Principal Admin. Assistant (Personnel/Organisation) |
B6 |
Area C/1 |
7 - 13 bis |
9/10 |
B2/C1 |
|
Information technology |
|||||
|
26. Programmer |
B4/B5 |
Area B/3 |
4 - 13 bis |
– |
D/C2 |
|
27. Analyst/Programmer |
B5/B6 |
Area C/1 |
7 - 13 bis |
– |
B2/C1 |
|
Procurement/Contracts |
|||||
|
28. Procurement Officer |
B4/B5 |
Area B/3 |
– |
7/8 |
D/C2 |
|
29. Head of Procurement/Contracts Unit |
B6 |
Area C/1 |
– |
9 |
B2/C1 |
* To be confirmed