Opinion No 3/2001

on a proposal for a Council Regulation introducing special measures to terminate the service of officials of the Commission of the European Communities as part of the reform of the Commission

(2001/C 162/02)

THE COURT OF AUDITORS OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular Article 283 thereof,

Having regard to the Commission proposal of 31 January 2001(1),

Having regard to the request for an opinion on this proposal, sent by the Council to the Court of Auditors and received at the Court on 19 February 2001,

Whereas the purpose of the proposal is to authorise a termination-of-service scheme for 600 Commission officials, with 300 leaving in 2001 and 300 in 2002, in order to enable the Commission to undertake a reallocation of human resources across its departments,

HAS ADOPTED THE FOLLOWING OPINION:

1. In its explanatory memorandum the Commission stated that the termination-of-service scheme for 600 Commission officials would make it possible for 258 new officials to be recruited, with a neutral impact on the budget, as the savings generated by the scheme would make it possible to balance the cost of the 258 new recruitments.

Calculation of budget neutrality

2. The annual savings and costs set out in Annex 2 of the proposal summarise for both "leavers" and "entrants" the main salary costs and revenue charged to the budget each year.

3. The way in which the immediate budgetary impact is presented is essentially reasonable.

4. It is arguable that the calculation could have been more sophisticated. The analysis presented is static, in that it makes no allowance for advancement up salary scales either for those officials taking early retirement or for the new officials recruited in their place. Making allowance for this would on balance produce further savings. Similarly the pensions of those taking early retirement will be based on a lower average level of salary than would have been the case had they continued in service until their normal age of retirement; this again should produce some longer-run savings (it would be desirable to improve the wording of Article 4(7), to ensure that this has the effect that the Commission intends). Again, the calculation takes no account of the longer-run savings, beyond the transitional period, from the assumed permanent reduction in staff numbers as 600 less productive officials are replaced, directly or indirectly by 258 new officials with skills better adapted to current needs. Finally the Court notes that no allowance is made for the real costs of the pension rights earned by the newly recruited officials; as the Court noted in its Annual Report on 1999 (paragraphs 6.7 and 6.8) the full cost of funding such pension rights amounts to rather more than a third of pensionable pay, while at present only employees' contributions of 8,25 % are collected. This implies the long-run full cost (but not the immediate cash cost) of the newly recruited officials would be some 25 % higher than shown in the Commission's calculation. Overall, the net effect in the long run should be a significant reduction in Commission staff costs, essentially reflecting the lower numbers employed than would otherwise have been the position.

The other institutions

5. In several institutions and bodies the age pyramid of the staff and the difficulty that some of them have in adapting to the development of new technologies create situations and needs similar to those at the Commission. Only the Economic and Social Committee, whose age pyramid will naturally ensure a large-scale renewal of staff during the coming years, and the Committee of the Regions, which is in a growth phase, are not affected by this problem. In its Judgment of 30 September 1998, Busacca and Others v Court of Auditors (T - 164/97) the Court of First Instance of the European Communities stated that a regulation which restricted the right to have recourse to measures for the release of staff to one institution alone imposed "a distinction between entirely similar situations which was arbitrary, or manifestly inappropriate in relation to the objective pursued, and was as such contrary to the principle of equal treatment, a fundamental principle of Community law". In its Judgments of 5 October 2000, C-432/98 P, C-433/98 P and C-434/98 P, the Court of Justice did not question the ground stated by the Court of First Instance and thus upheld the definitive nature of the Judgment. Given that the Commission's proposal involves a derogation from the normal arrangements whereby the Staff Regulation applies to all the institutions, the Commission should have sought their views on whether they face a comparable situation before putting forward this draft Regulation.

This opinion was adopted by the Court of Auditors in Luxembourg at the Court meeting of 5 April 2001.

For the Court of Auditors

Jan O. Karlsson

President

(1) COM(2001) 50 final of 31 January 2001.