EN ECB-P UBLIC  
 
 
OPINION OF THE EUROPEAN CENTRAL BANK 
of 4 January 2012 
on the salaries of civil servants 
(CON/2012/1) 
 Introduction and legal basis
 
On 15 December 2011, the European Central Bank (ECB) received a request from the Cypriot Ministry of 
Finance for an opinion on a draft law relating to the salar ies of civil servants (hereinafter the ‘draft law’)1.  
The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 
Functioning of the European Union and on the third i ndent of Article 2(1) of Council Decision 98/415/EC 
of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions2, as the draft law relates to the Central Ba nk of Cyprus (CBC). In accordance with 
the first sentence of Article 17.5 of the Rules of Pr ocedure of the European Central Bank, the Governing 
Council has adopted this opinion. 
 1.  Purpose of the draft law The ECB understands that the aim of the draft law is to freeze, for 2012-2013, the index-linked allowance 
to which all officers and civil servants, and persons employed in the wider public sector, local government and school inspectorates in Cyprus, are entitled.  It will also freeze, for the same period, the 
salaries of those categories of employees, and the pens ions paid to those retired from the public and wider 
public sector, local government and school inspectorates.  The draft law is part of the Government’s 
reform efforts, aimed at redressing public finances by a rresting wage costs, thereby arresting any further 
increase in the public deficit.  
 2.  General observations While the draft law does not refer ex plicitly to the CBC, its officers or  staff members, either in its 
substantive provisions or in its Annex, the ECB und erstands that the CBC’s officers and staff members 
would fall within the draft law’s scope of applicatio n. Consequently, the draft law would also apply to 
and directly affect the CBC’s decision-making bodies a nd its staff members. It follows that the draft law 
                                                 
1  The corresponding law was published in the Official Ga zette of the Republic of Cyprus on 30 December 2011. 
2  OJ L 189, 3.7.1998, p. 42. 
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2 should be examined from the perspective of central bank independence, in particular institutional and 
financial independence, as well as that of the personal independence of the members of the CBC’s 
decision-making bodies.  
 3. Institutional and financial independence 3.1 Article 130 of the Treaty prohibits third parties, including the governments of the Member States, 
from issuing instructions to the national central banks (NCBs). Also, the principle of central bank 
independence means that third parties may not exer cise direct or indirect influence over an NCB, 
whether relating to the performance of its task s or its financial ability to fulfil its mandate
3. As 
stated in the ECB’s convergence reports and in several of its opinions4, Member States may not 
impair the autonomy of their NCBs in staff-relate d matters. Autonomy in such matters extends to 
issues relating to staff salaries and pensions5. It is therefore essential that measures such as those 
contemplated in the draft law do not prevent the CBC or its staff members from performing independently the tasks conferred upon them by the Treaty, the Statute of the European System of Central Banks, the Constitution of the Re public of Cyprus or national law. 
3.2 Currently, the CBC enjoys statutory autonomy in determining its staff policy (including staff 
remuneration), with the CBC’s officers and staff be ing subject to individual employment contracts 
and to collective bargaining agreements entere d into between the CBC and the banking sector 
union. The measures contemplated in the draft la w represent a departure from the current regime. 
3.3 The ECB understands that the CBC would not object  to the draft law. Moreover, in substantive 
terms, the impact of the measures contemplated is unlikely to prevent the officials or staff members 
of the CBC, or the CBC as a whole, from carrying out  their tasks independently. In particular, the 
draft law is unlikely to limit the CBC’s ability to reta in qualified staff, or otherwise to deprive its 
decision-making bodies of their powers of internal organisation and control over staff. The ECB 
also notes that the measures contemplated in th e draft law, which are intended as measures of 
general applicability, are strictly limited to freezi ng increases in salaries with the objective of 
reducing public expenditure, and do not impose a decrease in salaries or interfere with the CBC’s 
staff policy (e.g. its ability to increase salaries due to promotions or to recruit new staff). While the 
CBC’s remuneration structure differs from that of th e rest of the public sector, equivalent measures 
could also be adopted autonomously by the CBC  and the ECB is satisfied that the measures 
contemplated in the draft law do not limit the CBC’s institutional and financial independence.  
 
                                                 
3  See, for example, the ECB’s Conv ergence Report of May 2007, p. 20. 
4  See Opinions CON/2008/9, CON/ 2008/10, CON/2009/15, CON/2009/45, C ON/2009/47, CON/2010/42, CON/2010/51, 
CON/2010/56, CON/2010/58, C ON/2010/59, CON/2010/69 and C ON/2010/80. All ECB opinions are published on the 
ECB’s website at www.ecb.europa.eu  
5  See Opinion CON/2010/80, paragraph 3.2.1. 
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3 4. Personal independence 
Article 130 of the Treaty requires the governments of the Member States to r espect the principle of 
central bank independence and not to seek to infl uence the members of the NCBs’ decision-making 
bodies in the performance of their tasks. The ECB unders tands that the draft law would not only affect the 
remuneration of the CBC’s staff members, but also that  of the members of its decision-making bodies. It 
also understands that the measures contemplated in the draft law are intended not only to apply to the 
members of the CBC’s decision-making bodies but, mo re generally, to the management of public 
institutions in Cyprus. Their aim, as stated in the e xplanatory memorandum to the draft law, would not be 
to directly or indirectly influence the CBC’s deci sion-making bodies in the performance of their tasks but, 
rather, to contribute to sound public finances by arr esting wage costs. In the light of the above, the ECB 
considers that the draft law does not limit the personal independence of the members of the CBC’s 
decision-making bodies. 
 This opinion will be published on the ECB’s website.   Done at Frankfurt am Main, 4 January 2012. 
 
[signed] 
 
The President of the ECB 
Mario DRAGHI