RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/BFA/64 
15 May 2003  
 
(03-2606) 
Committee on Budget, Finance and Administration  
 
 
 
REPORT ON  WTO SALARY METHODOLOGY 
  
1. Further to the decision by the Genera l Council of 13 December 2002 (document 
WT/GC/M/77), the Committee on Budget, Finance a nd 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 
documents
1 referred to in that decision and the elements  listed in the statemen t by the General Council 
Chairman on 13 December, in order to provide WTO st aff with salaries, benefits and other conditions 
sufficiently competitive internationally to attract a nd 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 consulta nt, 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 careful note of their comments and papers presen ted 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 base line for annual adjustments in line either
 with real 
pay increases granted by five national civ il services currently used for the annual 
cost-of-living adjustments under Staff 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, 
would not be viable in practical terms, as the appr opriate data were not read ily 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, rela te directly to actual salary levels, and would need a 
                                                      
1 Documents WT/ BFA/W/80, WT/L/282 & 269. WT/BFA/64 
Page 2  
 
regular review which might not meet the require ment 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 (documen t 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 highly skilled staff.  In considering these 
comparators, the Committee noted that the organisa tions in question based their own methodology on 
direct study of national civil services.  As compar ators, those organisations  would thus provide the 
WTO with a proxy for the national civil services co ncerned.  In summary, the Committee concluded 
as follows: 
A. UN 
8. Delegations felt that the UN common system warra nted a substantial weighting in any basket 
of comparators for the following reasons: 
 - The UN system was by far the largest employ er in Geneva, and, in turn, Geneva had the 
largest number of international civil servants in the world. 
 
 - The organisations within the UN common syst em were the largest source of recruitment 
from, and destination of those staff leaving for, other intergovernmental organisations 
since 2000. 
 
 - Geneva-based international organisations , notably UNCTAD, had had a sustained level 
of contact, and carried out activities closely re lated 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 larg er 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 
neutrality. 
 
 - UN professional salary scales were based on actual salaries in what was judged to be the 
highest paid national civil service with a rele vant expatriation element and cost-of-living 
adjustment for Geneva;  UN support staff salar ies were based on the 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 finally 
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 covered 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 Me dium Range Weather Forecasts 
(ECMWF)  WT/BFA/64 
 Page 3 
 
 
 - Of these, OECD was an organisation enga ged in discussion and analysis of economic 
issues, many of which were directly or indirectly related to trade. 
  - Many of the functions of OECD staff coul d easily be correlated to those of WTO staff. 
 
 - The CO methodology reflected civil servi ce salary scales in seven European Member 
States, and thus provided a useful reference 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 activ ities different from those of the WTO, with a 
greater emphasis on economic 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 pool than the WTO.  This meant that not all those e ligible for WTO jobs could apply to OECD. 
 C. EU 
10. Delegations felt that the EU's relevance to WT O pay levels was rather limited, and had a 
number of difficulties attached to it: 
 - The EU was a body based, like the WTO, in Eu rope, 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 agai nst 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 Secretariat. 
 
 - Recruitment to the EU Commission and Counc il 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 th e WTO Secretariat are not able to work for 
the EU.  The movement of staff between WT O 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 the 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-trans parency also cast doubts on the suitability of 
the EU as a comparator in any open and tr ansparent 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/64 
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 relative 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 governm ents and its dealings 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 In tegrated Framework and the coherence 
agenda; 
  - But this important cooperative relationshi p 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 administrators but also the private banki ng 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. P
ROPOSED WAY FORWARD 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 scales 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-pensio nable nature of expatriation allowances in 
the CO.  After due consideration of the argum ents for and against such an adjustment, 
members decided that it would not be ne cessary to make such an adjustment. 
 
13. The Committee noted that this option would involve the WTO adopting a different method of 
setting pay from most international organisations, in not basing its salary scales directly on comparisons with national civil services.  None theless, it considered that the international 
organisations provided both a useful comparator in their 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 th e future financing of 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/BFA/64 
 Page 5 
 
 
F. MEASUREMENT OF COMPARATOR SALARY SCALES  
15. The Committee examined in depth the arguments 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 staff, and as a more pred ictable 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 pe rformance-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 comparison 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 be tween 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 Committee 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 Docu ment WT/BFA/W/80, the CO salary scales 
should be adjusted using a combination of 50% Parity of Purchasing Power (PPP) and 
50% Nominal Exchange Rates (NER).   
 
G. A
DJUSTMENT FOR INFLATION  
19. Since the pay comparisons and adjustments w ill be carried out on an annual basis against 
actual salary levels in the two comparators mentio ned; since these comparators adjust their salary 
levels annually for inflation, and since they co nduct 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 addition al annual adjustment for inflation is 
necessary; and that Regulation 6.2 and Annex B of the Staff Regulations be amended 
accordingly. 
 
H. REVIEW  
21. The decision of the General Council and the st atement of the General Council Chairman in 
December 2002 called for a predictable a nd smooth evolution in salary levels. 
22. In the light of this, the Comm ittee examined the question of how the General 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 me thodology and the overall compensation philosophy 
set out in Annex 2 of document WT/L/282 (Conditions of Service Applicable to the Staff of the WTO 
Secretariat). WT/BFA/64 
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 also 
important to allow for the interaction between th is 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 refl ect the dynamics of pay developments in that 
wider community of international organisations. 
25. On that basis, the Committee c onsidered that, for a reasonable initial period, the methodology 
should be applied without review.  Thereafter it mi ght 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 pa y 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 re ndered 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 organisation 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 
recommendations 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. 
SUMMARY OF RECOMMENDATIONS 
 27. The Committee recommends that:  
(a) The WTO use, on an annual basis, comp arator salary scales in the UN and 
Coordinated Organisations (CO), weighted to reflect the considerations above as: 
  UN – 70% 
  CO – 30% (b) The salary comparisons should be based on measurement of salary scales of the 
comparators in question at the mid-point of those scales. 
(c) 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. 
(d) As recommended in Document WT/BFA/W/80, the CO salary scales should be 
adjusted using a combination of 50% Parity of Purchasing Power (PPP) and 50% Nominal Exchange Rates (NER).  WT/BFA/64 
 Page 7 
 
 
(e) 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 as follows: 
SALARIES AND BENEFITS 
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 .   
 
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 effectiv e on 1 January in a basket of comparators.  
The comparators shall be the United Nations Office in Geneva (UNOG) and the Coordinated Organisations
1 (CO).  The relative weighting of the comparators shall be 70% for the United 
Nations and 30% for the Coordinated Organisations. 
 The salaries of the comparators shall be measure d at the mid-point of each of the grades that 
have been determined by the Director-Gener al, 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 Coordina ted 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 Swiss 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 betw een the WTO salary scale and the comparator 
salary scales shall then be determined
2, and the WTO salary scale adjusted on average 
accordingly, provided that the resulting over all payroll increase shall not exceed the 
corresponding payroll-weighted average di fference between the WTO salary scale and 
comparator salary scales.  In applying the adju stment, 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. 
                                                      
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 Fo recasts (ECMWF) and the OECD.  The scale used for 
the CO will be based on a weighted average of any change to the CO salary scale as implemented by the 
constituent organizations of the CO. 
 
2 The grade-weighted average refers to the average diff erence in salaries weighted by the percentage of 
WTO staff in grades 1 to 12, ADG and DDG. 
 WT/BFA/64 
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Data sources 
 
Comparator salary scales Salary scales for UNOG (Swiss franc salaries for UN staff in Geneva) 
and the Coordinated Organisations e ffective 1 January for the year in 
question. 
Purchasing Power Parities 
(PPP) PPP provided by the Coordinated Organisations for the adjustment of 
salaries of international staff. 
Nominal Exchange Rate (NER) One-year average of UN operational exchange rates 
 
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(f) 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 Genera l Council on whether circumstances 
rendered it necessary for that Committ ee 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 organisation in line with the 
compensation philosophy set out in document WT/L/282. 
(g) Periodically, the Committee on Budget, Fi nance and Administration may review 
the need for any minor technical adjustments (e.g. to grade equivalences) and 
submit its recommendations to the General Council. 
 
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