WORLD TRADE  
ORGANIZATION  RESTRICTED  
 WT/BFA/W/100  
12 May 2003  
 
 (03-2511)  
  Committee on Budget, Finance and Administration   
 
 
 
 
WTO SALARY METHODOLO GY 
 
 
1. Further to the decision by the General Council of 13 December 2002 (document 
WT/GC/M/77), the Committee on Budget, Finance and Administration has discussed extensively the 
methodology to be adopted by the WTO for future salary adjustments.  
2. In examining this question, the Committee took account of all relevant factors and 
documents1 referred to in t hat decision and the elements listed in the statement by the General Council 
Chairman on 13 December, in order to provide WTO staff with salaries, benefits and other conditions 
sufficiently competitive internationally to attract and retain a highly skilled  and motivated staff.  The 
Committee examined a wide range of information on recruitment and retention of staff, and the 
organisations and sectors between which there was the greatest movement of personnel to and from 
WTO.  The Committee was assisted by a consultant, who advised, and provided a great deal of 
technical information, on various ways of constructing a salary methodology and choosing 
appropriate comparators.  
3. The Committee subsequently looked at a number of approaches, mindful of the need for a 
methodology which could provide for a smooth and predictable adjustment mechanism which could 
be implemented fully and in good faith on an annual basis.  
4. The Committee invited the Staff Council to present their views to it on a regular basis, and 
took carefu l note of their comments and papers presented by the staff.  The Chairman and individual 
members of the Committee also had frequent consultations with staff.  
5. The Committee examined three broad options:  
 1) A selection of intergovernmental organisations to represent broadly the market in 
which the WTO competes for staff, weighted to reflect the relative influence on that 
market of each of the organisations in question;  
 
 2) A basket of the salary levels of a number of national civil services, including an 
appropriate adjustment for expatriation;  and  
 
 3) Using parity with the UN as a baseline for annual adjustments in line either  with real 
pay increases granted by five national civil services currently used for the annual 
cost-of-living adjustments under Sta ff Regulation 6.2, or a revised adjustment to 
reflect the real cost -of-living changes in Geneva, including a more representative 
element for housing costs.  
 
6. In the course of discussions, it became apparent that Option 2 , while attractive in principle, 
woul d not be viable in practical terms, as the appropriate data were not readily available on an annual 
basis.  Option 3  attracted support from some delegations, but others felt that it did not create the basis 
for a durable system, as it did not, after year 1 , relate directly to actual salary levels, and would need a 
                                                      
1 Documents WT/ BFA/W/80, WT/L/282 & 269.  WT/BFA/W/100  
Page 2 
 
 
regular review which might not meet the requirement for a smooth and predictable adjustment 
mechanism.  
7. Under Option 1 , delegations looked at a range of possible comparators including those set out  
in the Survey of Salaries and Allowances (document WT/BFA/W/80).  Delegations considered each 
of these with a view to arriving at a weighting of the organisations according to their relevance to, and 
perceived impact on, the WTO’s ability to compete for h ighly skilled staff.  In considering these 
comparators, the Committee noted that the organisations in question based their own methodology on 
direct study of national civil services.  As comparators, those organisations would thus provide the 
WTO with a pr oxy for the national civil services concerned.  In summary, the Committee concluded 
as follows:  
A. UN 
8. Delegations felt that the UN common system warranted a substantial weighting in any basket 
of comparators for the following reasons:  
 - The UN system was by far the largest employer in Geneva, and, in turn, Geneva had the 
largest number of international civil servants in the world.  
 
 - The organisations within the UN common system were the largest source of recruitment 
from, and destination of those staff leav ing for, other intergovernmental organisations 
since 2000.  
 
 - Geneva -based international organisations, notably UNCTAD, had had a sustained level 
of contact, and carried out activities closely related to the WTO’s work and that of the 
GATT before it.  The  widened mandate of the WTO since 1994 has meant an expanding 
level of cooperation and contact with a larger number of UN bodies (e.g.  WIPO, UNEP, 
WHO).   
 
 - The 1998 decision on staff pay made direct reference to UN salary scales in terms of cost 
neutra lity. 
 
 - UN professional salary scales were based on actual salaries in what was judged to be the 
highest paid national civil service with a relevant expatriation element and cost -of-living 
adjustment for Geneva;  UN support staff salaries were based on t he best prevailing local 
conditions (Government, parastatal and private sector salaries).  
 
 - Against this, the WTO had left the UN common system in 1998, and WTO pay scales 
and benefits had been adjusted accordingly.  Many delegations were therefore final ly 
willing to accept that the UN should not be the only comparator.  
 
B. OECD  AND OTHER COORDINATED ORGANISATIONS  
9. Delegations considered that the OECD and other Coordinated Organisations (CO)2 were 
relevant to the WTO, but with some reservations:  
 - The CO cov ered a wide range of activities and functions, some of which were closely, 
but others which were clearly not, related to the WTO’s functions.  
 
                                                      
2 NATO, Council of Europe, WEU, ESA, European Centre for Mediu m Range Weather Forecasts 
(ECMWF)   WT/BF A/W/100  
 Page 3 
 
 
 - Of these, OECD was an organisation engaged in discussion and analysis of economic 
issues, many of which were d irectly or indirectly related to trade.  
 - Many of the functions of OECD staff could easily be correlated to those of WTO staff.  
 
 - The CO methodology reflected civil service salary scales in seven European Member 
States, and thus provided a useful refere nce back to current public service salaries and 
expatriation elements.  
 
 - CO produced published information on those national salary scales.  
 
 - But even OECD was engaged in many activities different from those of the WTO, with a 
greater emphasis on econo mic and statistical analysis, less rule -making, and no binding 
adjudication mechanism.  
 
 - OECD limited recruitment to nationals of its members.  It had a smaller membership than 
the WTO, and therefore could draw only from a more limited potential labour p ool than 
the WTO.  This meant that not all those eligible for WTO jobs could apply to OECD.  
 
C. EU 
10. Delegations felt that the EU's relevance to WTO pay levels was rather limited, and had a 
number of difficulties attached to it:  
 - The EU was a body based, like  the WTO, in Europe, engaged in part, but not exclusively, 
in economic regulation.  
 
 - It had easily identifiable grade levels, but the relationship between grade and function 
was not always clear.  
 
 - As a body with extensive executive powers (sole right to initiate and enforce legislation, 
right to take legal action and sanctions against Member States, even physical entry to 
company premises) under the EU treaties, the European Commission has a rather 
different set of functions from those of the WTO Secre tariat.  
 
 - Recruitment to the EU Commission and Council Secretariat was limited to nationals of 
the 15 (soon 25) Member States of the EU.  Thus, the majority of candidates from the 
146 countries who were eligible for jobs in the WTO Secretariat are not ab le to work for 
the EU.  The movement of staff between WTO and EU was consequently on a relatively 
small scale.  
 
 - EU salary scales were based on comparisons with national civil service pay scales in 
eight EU Member States, with an adjustment to reflect th e international nature of the 
organisation. Unfortunately, neither the identity of the eight Member States in question, 
nor the formula applied to their salary scales, was available even within the EU.  This 
made it more difficult to judge the relevance of  these salary scales to the “market” the 
WTO was seeking to address.  The non -transparency also cast doubts on the suitability of 
the EU as a comparator in any open and transparent salary adjustment methodology.  
 
D. IMF 
11. Most delegations felt that the IMF had no, or very little, relevance to the recruitment of staff 
to the WTO:  WT/BFA/W/100  
Page 4 
 
 
 - They recognised that staff had left the WTO for the IMF, but, despite a major difference 
in salary scales, only one WTO staff member had resigned to join the IMF since 1999.  
The rela tive number of macroeconomists (the main class of IMF employee) in the WTO 
was very small compared with the IMF.  
 
 - The IMF drew all the resources for its regular budget from interest income from 
sovereign loans provided to national governments and its de alings in currencies.  
 
 - The IMF was engaged in economic analysis and policy actions which might impact on 
the international trading system.  This was recognised in cooperation (also with 
UNCTAD and World Bank) under e.g. the Integrated Framework and the coherence 
agenda;  
 
 - But this important cooperative relationship recognised that the two organisations’ 
functions were complementary, and that each had its own role, responsibilities and 
expertise.  This relationship was limited to a small area of the IMF ’s work, which 
included many other activities e.g. extensive economic and fiscal analysis, and the 
granting of major capital loans to sovereign States.  
 
 - Its recruitment thus targeted not only (as does the WTO) economists and lawyers/public 
sector admini strators but also the private banking sector in order to gain the financial and 
currency dealing expertise it needed.  The WTO did not.  The Committee thus concluded 
that the IMF salary scale had no real impact on the market for WTO posts.  
 
E. PROPOSED WAY FO RWARD ON COMPARATORS  
12. After thorough examination of these options, and the variations on them, members were able 
to agree to the following approach to salary methodology to be applied from 1 January 2004:  
 Use, on an annual basis, of comparator salary scale s in the UN and CO, weighted to 
reflect the considerations above as  
 
 UN – 70%  
 CO – 30%  
 
 Members further considered whether it would be necessary to adjust the pensionable part of 
WTO staff remuneration to reflect the non -pensionable nature of expatriati on allowances in 
the CO.  After due consideration of the arguments for and against such an adjustment, 
members decided that it would not be necessary to make such an adjustment.  
 
13. The Committee noted that this option would involve the WTO adopting a differe nt method of 
setting pay from most international organisations, in not basing its salary scales directly on 
comparisons with national civil services.  Nonetheless, it considered that the international 
organisations provided both a useful comparator in thei r own right, and gave an approximate, but 
acceptable proxy for those national pay comparators.  
14. The Committee also sought the advice of the consulting actuary of the WTO Pension Plan on 
the implications of the proposed methodology for the future financing o f the Pension Plan.  The 
consulting actuary reported that the proposed salary adjustments would not require any change in the 
current rate of contribution to the Pension Plan.   WT/BF A/W/100  
 Page 5 
 
 
F. MEASUREMENT OF COMPAR ATOR SALARY SCALES  
15. The Committee examined in depth the argu ments in document WT/BFA/W/80 between 
measuring salary comparisons at the minimum  and mid-point  (average of minimum and maximum) of 
the relevant salary scales.  It concluded that, as a more accurate and equitable measure of the salaries 
actually paid to st aff, and as a more predictable indication of the budgetary impact:  
 The salary comparisons should be based on measurement of salary scales of the 
comparators in question at the mid -point of those scales.  
 
16. As part of the introduction of performance -related pay, the Committee recommends that the 
Organization undertake further work with a view to adopting the system, as recommended in 
document WT/BFA/W/80, of mid -point control as a method for determining the fair level of 
salary adjustment for WTO staff.  
17. The c omparison of UN and WTO salaries in document WT/BFA/W/80 was found to be based 
on the false assumption that, as in the UN, Grade 6 staff were equally divided between support and 
professional grades (G6/P1).  Due to the lack of correlation between UN G and P grade salary scales, 
this led to an exaggeration of the discrepancy between UN and WTO staff at this level.  This was 
corrected in the comparisons used for the calculation of salary adjustments needed to implement the 
methodology in Option 1.  
18. The Committ ee also examined what method might be most appropriate for adjusting the 
purchasing power of CO salary scales to reflect living costs in Geneva:  
 It concluded that, as recommended in Document WT/BFA/W/80, the CO salary scales 
should be adjusted using a com bination of 50% Parity of Purchasing Power (PPP) and 
50% Nominal Exchange Rates (NER).   
 
G. ADJUSTMENT FOR INFLAT ION 
19. Since the pay comparisons and adjustments will be carried out on an annual basis against 
actual salary levels in the two comparators mentione d;  since these comparators adjust their salary 
levels annually for inflation, and since they conduct regular reviews of comparability, the Committee 
considered that a separate adjustment for inflation would not be necessary.  
20. It therefore recommends that : 
 Given the reflection in this methodology of adjustments for inflation and pay reviews 
conducted in the comparators, no additional annual adjustment for inflation is 
necessary; and that Regulation 6.2 and Annex B of the Staff Regulations be amended 
accordi ngly.  
 
H. REVIEW  
21. The decision of the General Council and the statement of the General Council Chairman in 
December 2002 called for a predictable and smooth evolution in salary levels.  
22. In the light of this, the Committee examined the question of how the Genera l Council should 
deal with the review and possible adjustment of the methodology set out above to ensure that the 
system in place fulfilled the objectives of the methodology and the overall compensation philosophy 
set out in Annex 2 of document WT/L/282 (C onditions of Service Applicable to the Staff of the WTO 
Secretariat).  WT/BFA/W/100  
Page 6 
 
 
23. It considered it important, in the interests of both the staff and Members, to provide for 
predictability and stability for a period after the salary methodology was applied.  It was als o 
important to allow for the interaction between this methodology and the introduction of performance -
related pay to become clearer.  
24. It further considered that, as there would be regular pay reviews in the comparators , the 
WTO salary methodology, applied annually, would reflect the dynamics of pay developments in that 
wider community of international organisations.  
25. On that basis, the Committee considered that, for a reasonable initial period, the methodology 
should be applied without review.  Thereafter it  might be most appropriate to allow the General 
Council, on the recommendation of the Committee on Budget, Finance and Administration to trigger 
such a review, but not to stipulate in the Staff Regulations any set periodicity for such a review, and to 
recommend:  
 That the salary methodology adopted should be implemented in such a way as to create 
a smooth and predictable evolution of staff pay and benefits.  After 31 December 2006, it 
would be open to the Committee on Budget, Finance and Administration, to advise the 
General Council on whether circumstances rendered it necessary for that Committee to 
undertake a review of, and submit recommendations to the General Council on, the 
continued appropriateness of the salary methodology to the needs of the organis ation in 
line with the compensation philosophy set out in document WT/L/282.  
 
 Periodically, the Committee on Budget, Finance and Administration may review the 
need for any minor technical adjustments (e.g. to grade equivalences) and submit its 
recommendat ions to the General Council.  
 
26. Annexed to these recommendations is a set of specific amendments to the Staff Regulations 
to implement the salary methodology set out above.  
_______________  
 
  WT/BF A/W/100  
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DRAFT AMENDMENTS TO THE STAFF REGULATION S 
 
 
 
SALARIES AND BENEFITS  
 
 
Regulation 6.1 :  Unchanged  
 
Regulation 6.2 :  The WTO shall establish a salary scale which shall be adjusted annually according to 
the method described in Annex B of the Staff Regulations .   
 
Regulation 6.3 :  Unchanged   
 
Regulation 6.4 :  Unchanged    
 
Regulation 6.5 :  Unchanged   
 
Regulation 6.6 :  Unchanged   
 
Regulation 6.7 :  Unchanged   
 
Regulation 6.8 :  Unchanged   
 
Regulation 6.9 : Unchanged  
 
Regulation 6.10 : Unchanged  WT/BFA/W/100  
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ANNEX B  
 
WTO SALARY SCALE – METHOD OF ANNUAL ADJUSTMENT  
 
 Pursuant to Staff Regulation 6 .2, the WTO salary scale shall be adjusted according to the 
following method:  
 
The WTO salary scale shall be adjusted annually on 1 January through a comparison of WTO 
international salaries with the salary scales effective on 1 January in a basket of comp arators.  
The comparators shall be the United Nations Office in Geneva (UNOG) and the Coordinated 
Organisations1 (CO).  The relative weighting of the comparators shall be 70% for the United 
Nations and 30% for the Coordinated Organisations.  
 
The salaries o f the comparators shall be measured at the mid -point of each of the grades that 
have been determined by the Director -General, and reported to the Committee on Budget, 
Finance and Administration and the General Council, to be equivalent to grades 1 through 12, 
ADG and DDG in the WTO.   
 
The international salary scales of the Coordinated Organisations shall be converted to a 
Geneva base using a 50/50 mix of Purchasing Power Parities (PPP) and one -year average of 
Nominal Exchange rates (NER).  For UNOG, the Sw iss franc salary scales (P and GS) shall 
be used.  PPP/NER data used for the purposes of the comparison shall be the most recent data 
available.  
 
The grade -weighted average difference between the WTO salary scale and the comparator 
salary scales shall then  be determined2, and the WTO salary scale adjusted on average 
accordingly, provided that the resulting overall payroll increase shall not exceed the 
corresponding payroll -weighted average difference between the WTO salary scale and 
comparator salary scales .  In applying the adjustment, the Director -General shall take account 
of the need to maintain competitiveness of all grades with the salaries in the comparators and 
shall report his decision to the Committee on Budget, Finance and Administration.  
 
Data so urces  
 
Comparator salary scales  Salary scales for UNOG (Swiss franc salaries for UN staff in Geneva) 
and the Coordinated Organisations effective 1 January for the year in 
question.  
Purchasing Power Parities 
(PPP)  PPP provided by the Coordinated Organisati ons for the adjustment of 
salaries of international staff.  
Nominal Exchange Rate 
(NER)  One-year average of UN operational exchange rates  
 
__________  
 
                                                      
1 The Coordinated Organisations comprise the following international organizations :  North Atlantic 
Treaty Organization ( NATO), Council of Europe, Western European Union (WEU), European Space Agency 
(ESA), European Centre for Medium Range Weather Forecasts (ECMWF) and the OECD.  
 
2 The grade -weighted average refers to the average difference in salaries weighted by the percentage of 
WTO staff in grades 1 to 12, ADG and DDG.