RESTRICTED  
  
WT/BFA/W/432  
 
24 October 20 17 
(17-5682) Page: 1/7 
Committee on Budget, Finance and Administration    
 
PROPOSED METHODOLOGY  FOR ESTABLISHING AND  ADJUSTING THE WTO DE PENDENCY 
ALLOWANCES  
 
1  SIMPLIFICATION OF TH E PERIODIC ADJUSTMEN TS OF DEPENDENCY ALL OWANCES  
1.   The proposal below sets out a new methodology for the dependency allowances using a two -
pronged approach :  
a. a methodology for the periodic adjustment of the allowances based on WTO salary 
scale movements every three years ; and; 
b. a methodology for the establishment of an initial reference amounts for respective 
allowance.  
2.  As regards the periodic adjustments of  the allowances, it is proposed to base future 
adjustments on the cumulative movement of the WTO salary scale over a three -year period as well 
as to introduce a threshold of 2%, below which no adjustment would be made.  
3.  As for the establishment of the init ial reference amounts, three alternative proposals are 
presented below which would use either tax abatements and social payments in Switzerland, the 
minimum subsistence level, or the average amounts paid by the United Nations and/or Co -
ordinated Organizati ons as a basis for the calculations.  
2  PURPOSE AND RATIONAL E OF DEPENDENCY ALLO WANCES: GRADING STRUCTURE   
4.  While salary levels are mainly set in order to ensure the competiveness of an organization, 
essentially ensuring the ability to attract and retain the de sired level of talent, dependency 
allowances typically serve a different purpose, i.e., to increase the equity in expendable income 
between employees with and without dependents.  
5.  The purpose of the dependency allowances is therefore to partially compensat e for the 
additional costs associated with raising children and/or having a dependent spouse.  
6.  Although public policy will vary from country to country, many national systems compensate 
for these additional costs through adjusting and increasing disposable  income levels through tax 
abatements and social payments. International Organizations, which are exempt from local 
national taxation, typically mimic national systems through the payment of allowances.  
7.  Both of the comparator organizations used for the pu rpose of adjusting WTO salary levels, the 
United Nations (UN) and the Co -ordinated Organizations (CO), rely upon national taxation and 
social payments to establish and adjust their allowances, albeit with different reference markets as 
set out below.  
3  DEPEN DENCY ALLOWANCES IN THE UNITED NATIONS A ND COORDINATED 
ORGANIZATIONS  
3.1  United Nations   
8.  Both the UN and the Co -ordinated Organizations offer dependency allowances to their staff and 
have revised their respective methodologies for the dependency allowances as  of 2017.   WT/BFA/W/432  
 
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  9.  In the United Nations, the child, spouse and secondary dependent allowance applicable to staff 
in the General Support category (grades 1 -7) are based on a similar methodology to the one 
currently applicable in the WTO. The allowances rates are based on tax abatements and social 
payments in the Canton of Geneva, albeit calculated at a lower average salary level than in the 
WTO given that these dependency allowances apply only to staff in the lower half of the grade 
range. This methodology remains  unchanged and the amounts of the allowances applicable to 
General Support staff in Geneva were increased in 2016 (see table 1 below).  
10.  For staff in the Professional category, the spouse allowance was previously reflected through a 
differentiated salary sca le (dependency rate), with the rationale for maintaining dependency and 
single rates on the base/floor salary scale directly linked to the practices of Member States that 
maintain such a differentiation in their own tax systems. The distinction resulted in  higher net 
salaries for staff with dependants to reflect the additional costs involved with additional 
dependants as opposed to staff without dependants.  
11.  As part of a comprehensive review  of the compensation package for staff in the Professional 
and high er categories, conducted by the International Civil Service Commission between its 76th 
to 81st sessions (March 2013 to July 2015), the Commission recommended to the General 
Assembly that one net salary scale be introduced for all staff in the Professional  and higher 
categories without regard to family status. As a result, financial support provided for dependent 
family members was separated from the salary amount. Dependent spouses are instead 
recognized through a spouse allowance set at 6 per cent of indi vidual net remuneration. The 6 per 
cent proportion is based on the difference in net pay as a result of taxes between a single and a 
married taxpayer in the United States.  
12.  Staff with non -dependent spouses, previously in receipt of the dependency rate salar y level by 
virtue of a first dependent child, instead receives a child allowance for each dependent child.  
13.  The child allowance for professional staff continues to be established as a global flat -rate 
amount calculated as the average of the US dollar amoun ts of child benefits (value of tax 
abatements and social legislation payments) at eight headquarters duty stations weighted by the 
number of staff at those locations.  
3.2  Coordinated Organizations  
14.  In the Coordinated Organizations  the amount of the base depend ency allowance is based on 
taxation in Belgium. The amount is converted using Purchasing Power Parities (PPP) depending on 
the duty station (including Switzerland) to reflect the local cost of living in each duty station. The 
base amount is revised annuall y based on consumer prices index (CPI) movement.  
15.  While the spouse (household) allowance was previously based on 6% of each staff member's 
individual net salary, the new methodology applicable as of 2017, applies the base allowance 
amount established for t he child allowance as a basis for the spouse (household). Locally recruited 
staff receive the base allowance while internationally recruited staff receive twice the base 
amount.   
16.  Each dependent child receives the base dependency allowance. For internation ally recruited 
staff, an additional Expatriated child allowance is added for each dependent child.  
17.  The stated purpose of the allowances is to provide financial assistance to officials who have 
dependent children and/or spouses and to guarantee that all sta ff is treated fairly, irrespective of 
the family situation. It is further noted that such assistance exist in all their comparator markets, 
i.e., national civil services and international organizations. Since officials of the Co -ordinated 
Organizations are  in principle eligible for neither family allowances nor associated in -kind benefits 
under national systems, it is the Organizations responsibility to provide their staff with 
compensation of the same nature.  
18.  The methodologies of respective WTO comparator result in amounts that differ significantly 
between internationally recruited and locally recruited staff. In the United Nations, locally recruited 
staff (support level staff in grades GS 1 to GS 7) receive allowances that are generally higher than 
those o f internationally recruited staff (generally professional staff in grades P1 to USG). In the WT/BFA/W/432  
 
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  Coordinated Organizations, internationally recruited staff receives significantly higher allowances 
than locally recruited staff. However, as stated above, both co mparators use relevant national 
systems (local tax and social payments) in order to set the reference amounts of their dependency 
allowances.  
19.  The table below sets out the current level of dependency allowances in respective comparator 
for Switzerland.  
Table 1 Spouse and child allowances in the United Nations and the Coordinated 
Organizations applicable in Switzerland to General Support/Professional staff (UN) and 
locally/internationally recruited staff (CO)  
Allowances 2017 (CHF)  United Nations  Coordinated 
Organizations  
Spouse (local)  7,939  5,997  
Spouse (international)  7,9111 11,994  
Child (local)  6,398  5,997  
Child (international)  2,785  7,860  
Single parent child (local)  13,183  11,994  
Single parent child (international)  7,911  12,134  
Secondary dependent ( local)  2,515  n/a 
Secondary dependent (international)  975 n/a 
 
4  METHODOLOGY – PERIODIC ADJUSTMENT OF THE REFERENCE AMO UNTS  
20.  As set out above, the Secretariat proposes to establish a base rate for the allowances with a 
separate methodology for updating the r eference base amounts, thus greatly simplifying future 
adjustments of the amounts. This could be done through various means such as using CPI 
movements in Geneva or Switzerland on an annual basis or adjusting the amounts in line with 
WTO salary scale adjus tments. Both these options would be viable and incur limited resources for 
the recalculation of the allowances on an annual basis and the Secretariat would propose to use 
the latter method, i.e., periodic adjustments based on the WTO salary scale movements , albeit not 
on an annual basis.  
21.  Once the base amounts of the allowances have been determined, it is proposed t hat 
adjustments are made every three  years based on the cumulative adjustments to the salary scale 
over the same period. This will simplify the a pplication of the methodology as well as increase the 
stability and transparency of any changes to respective amounts. It is also proposed that the 
introduction of a threshold of 2% would be introduced so as to avoid the administrative burden of 
making adj ustments which have a relatively limited impact on the actual amounts. In other words, 
no adjustment of the allowances would be made unless the WTO salary scale has been adjusted 
cumulatively by at least 2%.  
22.  Regardless of whether an adjustment of the allow ances is indicated or not, an annual report 
will be provided to the Committee on Budget, Finance and Administration, including the cumulative 
adjustment of the WTO salary scale since the last periodic adjustment of the amounts of the 
allowances.  
5  METHODOLOG Y – ALTERNATIVES FOR THE  ESTABLISHMENT OF THE  REFERENCE 
AMOUNTS  
23.  Three alternative ways of establishing the initial reference amounts are outlined below. The 
first alternative is based on the average tax abatements and social payments in the Canton of 
Genev a and in Switzerland, as represented by the ten most populated Swiss Cantons.  
                                                
1 Calculated based on 6% of WTO net salary at midpoint Grade 8. In the United Nations, the amount 
varies based on the net income (salary and post adjustment) of the staff member concerned.  WT/BFA/W/432  
 
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  24.  The second alternative uses the official minimum subsistence levels in the Canton of Geneva 
as a basis for establishing the amounts.  
25.  Alternative three base the reference amount s on those paid in the UN and Co -ordinated 
Organizations.  
5.1  Proposal  
26.  It is proposed that the underlying principle of basing the initial reference amounts of the 
allowances on local tax abatement and social payments be retained, which is in line with the 
methodologies used by the comparators.  
27.  Members felt that this reference to local political choices was inappropriate for an international 
organization. It is therefore proposed to cut that link once the reference amounts have been 
established. For the purpose  of future adjustments of the dependency allowances no reference to 
the local conditions would be made (see above methodology of periodic adjustment of the 
reference amounts).  
28.  In order to mitigate those concerns and in order to increase the stability of th e methodology, 
a viable solution would be to incorporate the tax rebates and social payments in Switzerland as a 
whole, as represented by the ten largest Swiss Cantons, in the methodology. In such a case, it is 
proposed that the current 100% weight placed on the Canton of Geneva be reduced to 50% and 
the remaining 50% weight be placed on the average tax rebates and social payments in the ten 
largest Cantons of Switzerland. The proposed initial amounts are set out in table 2 below.  
29.  It is proposed that the cu rrent principle of calculating the allowances based on the average 
salary level in the WTO (currently mid -point Grade 8) be retained.  
Table 2 Proposed reference amounts for the dependency allowances based on tax 
abatements and social payments in the Canton  of Geneva and the 10 largest Cantons in 
Switzerland, weighted at 50/50  
Allowances 2017 (CHF)  2009  2017  2018  
Spouse Allowance  7,788  10,188  9,159  
Child Allowance  5,160  7,368  6,497  
Single parent child  12,240  15,900  14,315  
Secondary dependent  2,712  3,805  3,385  
 WT/BFA/W/432  
 
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  5.2  Proposed Methodology – establishment of the reference amounts (Alternative 1)  
30.  An alternative method for establishing the reference amounts could be based on using cost of 
living elements rather than tax abatements and social payments. It is theref ore important to 
determine what minimum additional cost a child and/or spouse incurs. As indicated above, the 
most recent study from the Swiss "Office Federal de la Statistique" shows that the direct cost of 
raising a child in Switzerland, taking into acco unt only the fundamental basic needs of a child, and 
depending on the family situation, is on average between CHF 800 -1500 per month2.  
31.  Another reference study conducted by the "Office de la jeunesse du canton de Zürich3" 
includes direct and indirect costs  and places the cost at approximately CHF 23,000 per year. These 
costs include: food, shelter, clothing, transportation, insurances, medical costs, education related 
costs, day care, etc. The table below illustrates the average cost per child and per month  for 
different family situations.  
Table 3 Average cost per child and per month for different family situations  
In CHF  Age Food  Clothing  Shelter  Various 
activities 
including 
transpor
-tation 
and 
leisure  Health 
and 
education  Total 
cost in 
CHF 
One child  1-6 years 260 110 485 125 271 1,251  
 7-12 
years  340 155 485 375 146 1,501  
 13-18 
years  410 185 485 505 266 1,851  
        2 
children:  
cost per 
child 1-6 years  245 90 440 110 186 1,071  
 7-12 
years  250 110 440 330 136 1,266  
 13-18 
years  390 180 440 445 256 1,711 
        3 
children:  
cost per 
child 1-6 years  210 80 360 108 181 939 
 7-12 
years  215 120 360 355 131 1,181  
 13-18 
years  375 250 360 440 256 1,681  
32.  The above studies suggest that there is some variation in the methodologies and therefore the 
estimat ed cost of raising a child in Switzerland.  
                                                
2 Office Fédéral des Statistiques «Les familles en Suisse» rapport fédéral statistique 2014 . 
3 http://www.genevefamille.ch/N244208/ce -que-coute -nos-enfants.ht ml. WT/BFA/W/432  
 
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  33.  Therefore, using the minimum legal subsistence levels in Switzerland for children and 
dependent spouses would present a more solid base for determining the minimum cost of raising a 
child. These amounts are based on the legislation of the cantonal "Office of Legal Proceedings and 
Bankruptcies4". They represent the minimum amount of economic resources an individual must 
have to meet his or her primary needs (food, clothing, shelter, education, health, insurances, 
etc.). The subsistence minimum therefore depends on the socio -economic context but for the 
purpose of the WTO methodology, the absolute minimum rates have been applied.  
34.  For the purpose of the WTO child allowance, an average of CHF 500 (food, clothing, etc.) for 
the reference basic monthly cost per child would need to be taken into account.  
35.  In addition, the cost of shelter has to be added in order to establish the subsistence minimum. 
This cost is normally based on the effective rent paid by the household as l ong as the rent is 
considered reasonable. For the purpose of the WTO methodology, it is instead proposed that the 
amount of shelter is based on the average rental cost of a room for one child in the Canton of 
Geneva.  
36.  A room is defined in Geneva as a surfac e of a minimum of 9m2. According to the Canto nal 
Statistical Office in Geneva5, the average rental cost in a two bedroom apartment per m2 is equal 
to CHF 21.73. The cost of the shelter for a child would therefor  correspond to a minimum of 
CHF 195.60 per mo nth. 
37.  Therefore, the subsistence minimum for a child per month would equal: CHF 500 + 195.60 = 
CHF 695.60  
38.  The subsistence minimum for a dependent spouse is calculated in a similar way as the one 
defined above for a child. The cost of the food, clothing, he alth cost, insurances, etc. is set  in the 
Canton of Geneva at CHF  850 per month. In the Swiss legislation, to that amount, the cost of 
shelter should be added. However, for the determination of the WTO spouse allowance, we 
consider that adding an additiona l cost on shelter wouldn't make sense, since the spouse, contrary 
to a child wouldn't require an additional room.    
39.  Therefore, the subsistence minimum for a spouse per month would equal: CHF 850.  
40.  For a single parent, it is suggested to combine a child al lowance and the spouse allowance for 
the first dependent child.  
41.  As far as the secondary dependent allowance is concerned, the subsistence minimum defined 
in the legislation of the cantonal "Office of Legal Proceedings and Bankruptcies" doesn't provide 
any tangible elements for establishing a minimum amount. It is therefore reasonable to establish 
the secondary dependent allowance as a portion of the child allowance. It is suggested that it be 
set at 40% of the child allowance, which is comparable to the pr oportion used by the UN for the 
local staff in Geneva. The monthly amount is proposed to be set at: 695.60*0.40 = CHF 278.25  
42.  As the purpose of the dependency allowances is not to fully cover the additional costs 
associated with raising children and/or hav ing a dependent spouse, the respective portions of the 
amount to be covered for both the spouse and the child allowance would need to be determined by 
Members.  
43.  By way of illustration, table 4 below shows the level of the spouse and child allowance with a 
partial compensation of 80% of the minimum subsistence level for a spouse and for a child.  
                                                
4 https://www.ge.ch/legislation/rsg/f/s/rsg_E3_60p04.html . 
5 http://www.ge.ch/statistique/tel/publications/2016/informations_statistiques/autres_themes/ is_loyers_21_2016.pdf . WT/BFA/W/432  
 
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  Table 4 Reference amounts for the dependency allowances based on minimum 
subsistence levels in the Canton of Geneva. For the purpose of illustrating a partial 
compe nsation mechanism based on these amounts, 80% coverage has been applied to 
the Spouse and Child Allowance respectively  
 2009  2017  2018 Minimum subsistence levels  Example of 
partial 
compensation 
of minimum 
subsistence 
levels  
Spouse Allowance  7,788  10,188  10,200  8,160  
Child Allowance  5,160  7,368  8,347  6,678  
Single parent child  12,240  15,900  20,894  14,838  
Secondary dependent  2,712  3,805  3,339  3,3396 
 
5.3  Proposed Methodology – establishment of the reference amounts (Alternative 2)  
44.  A further alternative would be to establish the WTO dependency allowances based on those of 
the United Nations and Coordinated Organizations, i.e., the two comparators used for the purpose 
of adjusting the WTO salary levels. This could be done by using the average of the allowances p aid 
in these organizations.  
45.  It should be noted however that the amounts of the allowances in the comparators vary 
greatly and both comparators use tax abatements and social payments conditions in countries 
relevant to their geographical presence to establ ish their allowances. In effect, the amounts are 
impacted by the local conditions of a number of countries (in addition to Switzerland) which have 
no relevance to the actual costs of raising a child or maintaining a dependent spouse in 
Switzerland. The onl y exception is the allowances applicable to General Support Staff in UNOG.  
46.  It would seem more appropriate to base the amounts on conditions relevant to the host 
country rather than on local conditions in countries where the WTO has no presence.  
47.  Should neve rtheless this alternative be selected, the resulting amounts are set out in the table 
below.  
Table 5 Reference amounts for the dependency allowances based on the U N and 
Coordinated O rganizations  
 2009  2017  2018 Average UN and Coordinated Organization s 
Spouse Allowance  7,788  10,188  8,460  
Child Allowance  5,160  7,368  5,760  
Single parent child  12,240  15,900  11,305  
Secondary dependent  2,712  3,805  1,745  
 
__________  
 
 
 
                                                
6 Secondary dependent allowance is already apportioned at 40% .