COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 11.06.1996 
COM(%) 258 final 
COMMUNICATION FROM THE COMMISSION 
REVIEW OF THE METHOD 
FOR ADJUSTING REMUNERATION 

CONTENTS 
REVIEW OF THE METHOD 
1. INTRODUCTION 
1.1. Terms of reference 
1.2. Background: the need to adjust remuneration 
1.3. Remuneration: the underlying principles 
1.4. The 1991 method 
1.5. Results 
2. COMPONENTS OF THE METHOD 
2.1. Changes in the purchasing power of remuneration in the national civil services 
2.2. Change in the cost of living in Brussels 
2.3. Changes in the cost of living in other places in relation to Brussels 
3. APPLICATION OF THE METHOD 
3.1. Annual review 
3.2. Arrangements for recovering overpayments 
3.3. Interim review 
3.4. Recruitment requirements 
3.5. Exception clause 
3.6. Results of the application of the 1991 method 
4. QUID PRO QUO FOR THE METHOD 
4.1. Temporary contribution 
4.2. Increase in pension contributions 
5. CHANGES IN REMUNERATION 1991 TO 1995 
5.1. Changes in remuneration in Brussels and Luxembourg 
5.2. Remuneration in other places of employment in relation to Brussels 
5.3. Change in the purchasing power of remuneration 
5.4. Comparison with the change in purchasing power of national civil servants 
6. CONCLUSION 

1. INTRODUCTION 
1.1. Terms of reference 
Article 15(2) of Annex XI to the Staff Regulations provides that the provisions of the Annex 
«shall be reviewed at the end of the fifth year and revised, if appropriate, on the basis of 
a report transmitted to the European Parliament and the Council and a proposal from the 
Commission after consulting the other institutions within the framework of the Staff 
Regulations». 
1.2. Background: the need to adjust remuneration 
The need to recruit from a wide geographical base and to preserve the quality and 
independence of the European public service calls for competitive remuneration with regular 
adjustments to keep pace with trends in the purchasing power of remuneration on the 
labour market. 
In order to maintain harmonious staff relations, the general principles applied must be 
established by consensus. 
The Council has long favoured the principle of parallel development with remuneration in 
the national public services. This calls for a rigorous procedure. Hence the adoption by the 
Council of a method based on detailed and binding principles (Annex XI to the Staff 
Regulations) which has the advantage of not requiring annual negotiations and of avoiding 
the risk of dispute. 
The Council decision combines a negotiated approach and a procedural approach with a 
view to limiting conflict. Periodic negotiations since 1971 have produced a series of 
agreements spelling out the rules for implementing Articles 64 and 65 of the Staff 
Regulations: 
the 1971 and 1976 agreements; 
the 1981 method adopted for a period of 10 years, introducing a crisis levy; 
the 1991 method adopted for a period of 10 years, introducing a temporary 
contribution; staff contributions to the pension scheme were also increased. 
1.3. Remuneration: the underlying principles 
Remuneration, legally grounded exclusively in the Staff Regulations of Officials of the 
European Communities, comprises basic salary, and family and other allowances, from 
which are deducted social security contributions, tax and the temporary contribution. 
Adjustments are governed by a system based on two principles: 
parallel development of the remuneration of officials of the European institutions and 
that of civil servants in the Member States of the European Union; 
purchasing power parity for the remuneration paid in the various places of 
employment and in Brussels. 
1.4. The 1991 method 
The 1991 method was adopted following lengthy negotiations involving both the trade 
unions and staff associations representing the staff of the Community institutions (also 
consulted by referendum) and the institutions themselves. At its 1528th meeting, the 
Council endorsed the compromise produced by the Concertation Committee, subsequently 
confirming its agreement by adopting the corresponding regulations on 19 December 1991. 
The note transmitted by Coreper to the Council prior to its decision describes the 
compromise as a comprehensive solution comprising several interdependent components: 
the method, applying from 1 July 1991 to 30 June 2001; and its «quid pro quo», namely 
the temporary contribution and the increase in staff contributions to the pension scheme. 
In other words, the final compromise not only introduced a procedure for adjusting 
remuneration but also had an impact on its level through these two additional components 
which have reduced purchasing power. 
The method negotiated with the Council and adopted by it in December 1991 is valid for 
ten years (till 2001) with provision for a review in 1996 and, if appropriate, revision on a 
proposal from the Commission. 
The Staff Regulations also had to be amended to make provision for the temporary 
contribution; it too is payable until 30 June 2001 and is equivalent to a gross rate of 5.83% 
of the base to which it is applied. 
In addition, staff contributions to the pension scheme were increased from 6.75% to 8.25% 
of basic salary. 
1.5. Results 
Since 1991 civil servants in the Member States - and consequently the officials of the 
European Communities - have suffered a 3.1% loss in purchasing power, a 13.8% rise in 
the cost of living in Brussels producing a 10.4%1 increase in the salary scale. 
The two binding measures introduced as the quid pro quo for the method have led to an 
additional 4.2% reduction in purchasing power: 2.9% as a result of the temporary 
contribution and 1.3% as a result of the increase in staff contributions to the pension 
scheme. 
So, if the impact of this quid pro quo is added to the above, the result is a 5.7% increase 
in net remuneration, which actually represents a 7.1% loss in purchasing power for officials 
of the European institutions over five years, 4.2% more than for national civil servants. 
1 96,9/100 x 113,8/100 = 110,4/100 = +10,4 
4 
2. COMPONENTS OF THE METHOD 
Article 1(1) of Annex XI provides that each year Eurostat «shall draw up ... a report on 
changes in the cost of living in Brussels, the economic parities between Brussels and the 
other places of employment in the Member States, and changes in the purchasing power 
of salaries in the national civil services». 
2.1. Changes in the purchasing power of remuneration in the national civil services 
2.1.1. The specific indicator measures changes in the purchasing power (increase minus 
inflation) of the remuneration of national civil servants in the Member States of the 
European Union. Table 1 shows that between 1991 and 1995 they suffered an 
average loss in purchasing power of 3.1%. 
Table 1 
SPECIFIC INDICATOR 
Average change in the purchasing power of remuneration in the national civil services of the 
Member States of the European Union 
(1) (2) (3) (4) (5) (6) (7) 
Date Adjustment of 
remuneration 
% t/t-1 cumulative % Consumer price index 
% t/t-1 cumulative % Purchasing power (specific 
indicator) 
% t/t-1 cumulative % 
1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 +4,1 
+4,8 
+1,9 
+1,0 
+3,1 +4,1 
+9,1 
+11,2 
+12,3 
+15,8 +4,8 
+4,2 
+3,2 
+3,0 
+2,9 +4,8 
+9,2 
+12,8 
+16,1 
+19,4 -0,7 
+0,6 
-1,3 
•1,9 
+0,2 -0,7 
-0,1 
-1,4 
-3,3 
-3,1 
% t/t-1: percentage change year on year 
cumulative %: cumulative values are calculated by multiplying the year-on-year changes 
20 
10 
-10 
-20 CUMULATIVE % CHANGE Consumer price index ... -~r»^FT&;4 
....-•-+i6;i* _-*+i5,8 
.^**9X _M - - 'X+§$ *-*l?Z Adjustment of 
remuneration 
T^—r Purchasing power (specific indicator) -3,1 
-4-
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
The method for calculating the specific indicator derives essentially from decisions taken 
by the Council (Annex XI to the Staff Regulations). The rules for its practical application are 
laid down by the Article 65 Working Party, chaired by Eurostat. 
All calculations are based on the data sent to Eurostat by the national administrations in 
the Member States relating to the remuneration of central government staff on 1 July of the 
current year. 
The data are for a sample population, relating as a rule to the first and last steps of the 
main grades. Figures are provided for unmarried staff and married staff with two 
dependent children. 
The 1994-95 specific indicator already takes account of changés in Finland, Austria and 
Sweden but with a weighting of only 50% (membership of the European Union from 
1 January 1995). 
Table 2 shows the changes in purchasing power by country. 
Table 2 
SPECIFIC INDICATOR BY MEMBER STATE (1.7.90 -1.7.95) 
Change in the purchasing power of remuneration in the national civil services of the Member 
States of the European Union 
(D (2) (3) (4) (5) 
Country 
B 
DK 
D 
GR 
E 
F 
IRL 
1 
L 
NL 
P 
UK Nominal change 
in net remuneration 
(%) 
+17,7 
+12,7 
+13,5 
+44,9 
+21,7 
+13,8 
+26,7 
+13,5 
+35,6 
+10,8 
+46,9 
+19,1 Change in consumer 
price index 
(%) 
+13,6 
+10,9 
+18,1 
+90,3 
+29,5 
+12,2 
+13,6 
+28,7 
+15,8 
+15,7 
+42,6 
+18,0 Real change 
in net remuneration 
(%) ' 
+3,8 
+1,6 
-3,8 
-23,8 
-5,8 
+1,5 
-11,9 
+17,1 
-4,3 
+3,0 
+1,0 
SPECIFIC INDICATOR (1.7.94 -1.7.95) 
A 
FIN 
s 
SPECIFH +2,3 
+1,4 
+1,3 +2,6 
~ +1,0 
+3,0 -0,3 
+0,4 
-1,7 Weighting factor 
95. 
(%) 
4,1 
1,7 
26,3 
0,8 
~^\5,0 
24,6 
0,7 
16,1 
0,2 
3,0 
2,3 
13,2 
1,2 
0,4 
0,7 
C INDICATOR 
EU +15,8 +19,4 -3,1 100,0 
EUR12 until 1.1.1995 then EUR 15 
Cumulative real values (4) are calculated by multiplying the year-on-year changes 
Rounding can produce discrepancies between these cumulative values and the relationship (2)/(3). 
2.1.2. Control indicator 
Annex XI provides for the year-on-year change in real per capita emoluments in the 
national civil services to be used as a control indicator to check the gross specific indicator. 
Table 3 compares the changes in the two indicators. 
Table 3 
CONTROL INDICATOR 
Change in the purchasing power of gross remuneration in the national civil services of the 
Member States of the European Union 
(1) (2) (3) (4) (5) . (6) (7) 
Date Gross specific indicator 
% t/t-1 cumulative % Control indicator 
% t/t-1 cumulative % Difference 
% t/t-1 cumulative % 
1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 +0,0 
+0,1 
-0,5 
-2,4 
+1,8 +0,0 
+0,1 
-0,4 
-2,8 
-1,0 +2,7 
+4,5 
+2,6 
-0,1 
+0,9 +2,7 
+7,3 
+10,1 
+10,0 
+11,0 -2,6 
-4,2 
-3,0 
-2,3 
+0,9 -2,6 
-6,7 
-9,5 
-11,6 
-10,8 
Cumulative values are calculated by multiplying the year-on-year changes 
[--ngrjiauonwE %7^TARgE 
20 
10 
-10 
-20 Control indicator 
..... -•-+1Q.-1- --*HH^^^^^ti1--Q 
Gross specific indicator 
-"--•--•2,$"" 
Difference 
OT5 _ -
•++#• TOT 
—\ 
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
2.2. Change in the cost of living in Brussels 
Changes in the cost of living in Brussels are measured by the composite index, which is 
constituted as follows: 
75% by the joint index for European officials in Brussels; 
25% by the Brussels consumer price index. 
Table 4 
d) CHANGE IN THE COST OF LIVING IN BRUSSELS 
(2) (3) (4) (5) (6) (7) 
Date Brussels joint index 
% t/t-1 cumulative % Brussels consumer price 
index 
% t/t-1 cumulative % Brussels composite 
index 
% t/t-1 cumulative % 
1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 +4,2 
+3,6 
+2,1 
+2,3 
+0,8 +4,2 
+8,0 
+10,2 
+12,8 
+13,7 +3,9 
+3,3 
+2,4 
+2,7 
+1,3 +3,9 
+7,3 
+9,9 
+12,9 
+14,3 +4,1 
+3,5 
+2,2 
+2,4 
+0,9 +4,1 
+7,7 
+10,1 
+12,8 
+13,8 
Brussels composite index(6) = 75% Brussels joint index(2) + 25% Brussels CPI(4) 
Cumulative values are calculated by multiplying the year-on-year changes 
Cumulative.0/? change 
— -• — Brussels joint index 
- - • - - Brussels consumer price index 
—•— Brussels composite index 30 
20 
+ 13,8 
—f— 
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
These two indices are calculated in agreement with the Belgian Ministry of Economic 
Affairs. The joint index measures the change in the cost of living for officials of the 
European institutions in Brussels, while the consumer price index measures the overall cost 
of living in the Belgian capital. 
The weighting used to aggregate the 173 basic indices into the joint index is obtained from 
a survey of the family budgets of Community officials in Brussels, while the weightings used 
for the Belgian index are derived from a sample survey of Belgian family budgets 
conducted by the Belgian National Statistical Institute. 
And, for the purposes of calculating the joint index, the rent index is replaced by a 
corresponding index calculated by Eurostat on the basis of an annual survey of Community 
officials employed in Brussels. 
8 
2.3. Changes in the cost of living in other places in relation to Brussels 
2.3.1. Economic parities 
Article 1(3)(a) of Annex XI provides that «the Statistical Office, in agreement with the 
national institutes, shall calculate the economic parities which establish the equivalence 
of purchasing power of the salaries of European officials serving in the capitals of the 
Member States and in certain other places of employment specified in Article 9 with 
reference to Brussels». 
The economic parity is thus the amount in national currency needed to purchase in the 
place of residence the equivalent in goods and services to what could be purchased in 
Brussels with 1 Belgian franc. 
Table 5 shows the change in economic parities. 
Table 5 
ECONOMIC PARITIES 
(1) (2) (3) (4) (5) (6) (7) 
COUNTRY/PLACE 1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 % 95/91 
B 
DK 
D(Berlin) 
Bonn 
Kaisruhe 
Munich 
GR 
E 
F 
IR 
I 
Varese 
NL 
A 
P 
FIN 
S 
UK 
Culham 1 
0,23145 
0,051095 * 
0,045743 
0,044747* 
0,050291' 
4,1453 
3,1897 
0,18617 
0,017600 
40,556 
37,424 
0,053563 
3,6093 
0,019399 
0,016929 1 
0,22602 
0,052053 * 
0,046686 
0,045974 * 
0,051495 
4,7891 
3,3062 
0,18703 
0,017838 
41,694 
38,893 
0,055358 
0,020171 
0,017241 1 
0,23175 
0,054986 * 
0,048548 
0,048764 * 
0,053788 
5,5159 
3,4770 
0,19031 
0,018256 
44,756 
41,709 
0,055442 
3,8702 4,1109 
0,020582 
0,018072 1 
0,22931 
0,054036 
0,049267 
0,048398 
0,053520 
5,8780 
3,5112 
0,18840 
0,018464 
45,218 
43,315 
0,056037 
0,37963 
4,0149 
0,17527 
0,24010 
0,021103 
0,018030 1 
0,23354 
0,053954 
0,049032 
0,048641 
0,053612 
6,3003 
3,6192 
0,18894 
0,018926 
46,671 
44,812 
0,056253 
0,38860 
4,1809 
0,17760 
0,24490 
0,022178 
0,018502 +0,9 
+5,6 
+7,2 
+8,7 
+6,6 
+52,0 
+13,5 
+1,5 
+7,5 
+ 15,1 
+19,7 
+5,0 
+15,8 
+14,3 
+9,3 
* Commission proposal not adopted by the Council; Bonn parity is applied 
Article 1 (3)(b) provides that «the economic parities shall be calculated in such a way that 
each basic component can be checked by a direct survey at least once every five years». 
In practice: 
one third of the basic parities are checked each year and replaced by the new 
parities produced by the latest price survey; 
the basic parities are then updated using detailed indices. 
The economic parity determines remuneration in national currency arrived at by updating 
the following two components: 
the annual exchange rate applied to remuneration (July exchange rate); 
the weighting (ratio economic parity/exchange rate). 
2.3.2. Exchange rates 
Table 6 shows that certain currencies fluctuated strongly against the Belgian franc during 
the period under consideration. 
Table 6 
REMUNERATION EXCHANGE RATE* 
(D (2) (3) (4) (5) (6) (7) 
1FB= 1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 % 95/91 
FB 
DKR 
DM 
DRA 
PTA 
FF 
IRL 
LIT 
HFL 
OS 
ESC 
FMK 
SKR 
UKL 1 
0,18774 
0,048544 
5,3189 
3,0482 
0,16479 
0,018151 
36,148 
0,054692 
4,2335 1 
0,18665 
0,048593 
5,9133 
3,0703 
0,16337 
0,018230 
36,767 
0,054765 
4,0512 1 
0,18699 
0,048650 
6,6260 
3,7205 
0,16389 
0,019945 
44,236 
0,054558 
4,6281 
0,016567 0,016756 0,019187 1 
0,19059 
0,048515 
7,3282 
3,9920 
0,16642 
0,020048 
47,987 
0,054413 
0,34123 
4,9903 
0,16114 
0,23386 
0,019784 1 
0,18984 
0,048638 
7,9001 
4,2517 
0,17057 
0,021333 
57,113 
0,054490 
0,34204 
5,13901023 
0,14923 
0,25372 
0,022033 +1,1 
+0,2 
+48,5 
+39,5 
+3,5 
+17,5 
+58,0 
-0,4 
+21.4 
+33,0 
Article 63 of the Staff Regulatbns: exchange rate used for the implementation of the EC general budget on 1 July* 
10 
2.3.3. Weighting 
The weighting equals the ratio economic parity/exchange rate. In other words, it is the 
amount in Belgian francs at the July remuneration exchange rate needed in another place 
of employment to purchase articles which would cost Bfrs 100 in Brussels. 
The weightings set out in Table 7 show the relationship in July of each year between the 
salaries paid in the other places of employment and those paid in Brussels. 
Table 7 
(1) (2) WEIGHTINGS 
(3) (4) (5) (6) (7) 
COUNTRY/PLACE 1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 % 95/91 
B/L 
DK 
D(Berlin) 
Bonn 
Kalsruhe 
Munich 
GR 
E 
F 
!R 
I 
Varese 
NL 
A 
P 
FIN 
S 
UK 
Culham 100,0 
123,3 
105,3 * 
94,2 
92,2 * 
103,6 
77,9 
104,6 
113,0 
97,0 
112,2 
103,5 
97,9 
85,3 
117,1 
102,2 100,0 
121,1 
107,1 * 
96,1 
94,6 * 
106,0 
81,0 
107,7 
114,5 
97,8 
113,4 
105,8 
101,1 
95,5 
120,4 
102,9 100,0 
123,9 
113,0 * 
99,8 
100,2 * 
110,6 
83,2 
93,5 
116,1 
91,5 
101,2 
94,3 
101,6 
88,8 
107,3 
94,2 100,0 
120,3 
111,4 
101,6 
99,8 
110,3 
80,2 
88,0 
113,2 
92,1 
94,2 
90,3 
103,0 
111,3 
80,5 
108,8 
102,7 
106,7 
91,1 100,0 
123,0 
110,9 
'100,8 
100,0 
110,2 
79,7 
85,1 
110,8 
88,7 
81,7 
78,5 
103,2 
113,6 
81,4 
119,0 
96,5 
100,7 
84,0 -0,2 
+5,3 
+7,0 
+8,5 
+6,4 
+2,3 
-18,6 
-1,9 
-8,6 
-27,2 
-24,2 
+5,4 
-4,6 
•14,0 
•17,8 
* Commission proposal not adopted by the Council; Bonn weighting is applied 
With effect from 1 July 1994, the Berlin weighting became the weighting for Germany; this 
led to the introduction of weightings for Karlsruhe and Bonn. 
As of 1 January 1995, the weightings for Finland, Austria and Sweden were calculated in 
accordance with Annex XI. 
The substantial reductions in a number of weightings were basically caused by increases 
in the exchange rates (national currency/Belgian franc). 
11 
3. APPLICATION OF THE METHOD 
3.1. Annual review 
Article 3(1) of Annex XI provides that «with effect from 1 July and pursuant to Article 65(3) 
of the Staff Regulations, the Council, acting on the Commission proposal and on the basis 
of the criteha set out in Section I, shall take a decision before the end of each year 
adjusting remunerations». 
These adjustments (see 3.6) were generally made in December. 
3.2. Arrangements for recovering overpayments 
The establishment of new weightings at the end of the year effective from 1 July can lead 
to retroactive upward or downward adjustments to remuneration and pensions. Hence the 
inclusion in regulations adjusting remuneration, from 1994 onwards, of a provision for the 
payment of arrears in the event of an increase and for the recovery of sums overpaid in the 
event of a reduction. 
The institutions have introduced the necessary implementing measures. 
3.3. Interim review 
Article 4(1) of Annex XI provides that «interim adjustments of remuneration pursuant to 
Article 65(2) of the Staff Regulations, taking effect on 1 January, shall be made in the 
event of a substantial change in the cost of living if the sensitivity threshold is reached and 
with due allowance being made for the forecast of the change in purchasing power during 
the current annual reference period». 
During the period under consideration interim adjustments were made for Italy, Greece, 
Spain and Portugal. 
3.4. Recruitment requirements 
Article 2 of Annex XI provides that «the Commission shall produce, before the end of 1992 
and every three years thereafter, a comprehensive report on the recruitment requirements 
of the institutions and transmit it to the European Parliament and the Council. On the basis 
of this report the Commission shall, if necessary, present proposals based on all relevant 
factors to the Council after consulting the other institutions within the framework of the 
Staff Regulations». 
The second report (SEC(95)2298) was transmitted to the Council and Parliament on 
27 December 1995. 
12 
3.5. Exception clause 
Article 10 of Annex XI provides that «if there is a serious and sudden deterioration in the 
economic and social situation within the Community, assessed in the light of objective data 
supplied for this purpose by the Commission, the Commission shall submit appropriate 
proposals on which the Council shall act by qualified majority after consulting the other 
institutions concerned in accordance with the procedure laid down in the second 
subparagraph of Article 24(1) of the Treaty establishing a Single Council and a Single 
Commission of the European Communities». 
In its report (SEC(94)1027) transmitted to the Council on 27 June 1994, the Commission 
concluded that the economic situation had already impacted on the remuneration of 
national civil servants and, through the specific indicator, on the remuneration of 
Community officials. 
13 
3.6. Results of the application of the 1991 method 
3.6.1. The purpose of the adjustment of the basic salary table is to ensure that the 
purchasing power of Community officials develops in parallel with that of 
national civil servants. 
The change in the cost of living in Brussels as measured by the composite index 
was+13.8%. 
The average change in the purchasing power of the national civil services in the 
European Union as measured by the specific indicator was -3.1%. 
The resulting adjustment to the basic salary table (in Belgian francs) was +10.4%. 
Table 8 shows the year-on-year calculations as well as the cumulative results. 
Table 8 
Adjustment of the table of basic salaries of officials of the EU institutions (7) 
(1) (2) (3) (4) (5) (6) (7) 
Date Brussels composite 
index 
% t/t-1 cumulative % Specific indicator 
% t/t-1 cumulative % Adjustment of basic salary 
table 
% t/t-1 cumulative % 
1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 +4,1 
+3,5 
+2,2 
+2,4 
+0,9 +4,1 
+7,7 
+10,1 
+12,8 
+13,8 -0,7 
+0,6 
-1,3 
-1,9 
+0,2 -0,7 
-0,1 
-1,4 
-3,3 
-3,1 +3,4 
+4,1 
+0,9 
+0,5 
+1,1 +3,4 
+7,6 
+8,6 
+9,2 
+10,4 
(7) Basic salary adjustment = (100+ Brussels composite index (2)) x (100+ specific indicator (4)) /100 ) -100 
(3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 
20 
10 
-10 
-20 i IL^CUMI^ATIVE°/o- CHANGE 
Brussels composite index 
....--•• +>2,8-
.^•+4 -•+13,8 
i j-1Û,4 
Adjustment of basic salary table 
-^e^— -9rt^--~^-_ ,4 _"!__"_ ^SpecificjndicatQr. -3;3-
H 
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
14 
3.6.2. The adjustments in national currency made it possible to guarantee the 
principle of purchasing power parity with Brussels. 
In most countries devaluation against the Belgian franc was greater than the inflation 
differential with Belgium (see Tables 5 and 6). 
The result was a reduction in the price ratio between the other places of employment 
and Brussels, reflected in the 102.5% to 86.6% reduction in the average weighting 
for the other places of employment. 
In order to ensure the principle of purchasing power parity, this reduction also has 
to be reflected in the relationship between remuneration paid in the other places of 
employment and that paid in Brussels. 
This is shown in Table 9. 
Table 9 
120 
115 
110 
105 
100 
95 
90 -
85 -
80 Average weighting weighted by the number of officials 
outside Belgium and Luxembourg 
86,6 
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
15 
4. QUID PRO QUO FOR THE METHOD 
4.1. Temporary contribution 
When it adopted the method, the Council introduced a temporary contribution as one of the 
interdependent components of a comprehensive solution. The level of the contribution, the 
rules for its application, and its commencement and expiry dates were negotiated in this 
context. The temporary contribution was introduced by inserting Article 66a into the Staff 
Regulations (Council Regulation (ECSC, EEC, Euratom) No 3831/91 of 19 December 1991) 
and terminates at the same time as the method. 
Article 66a(1) and (2) provides that: 
«1. By way of derogation from Article 3(1) of Regulation (EEC, Euratom, ECSC) 
No 260/68, a temporary measure regarding remuneration paid by the Communities to staff 
in active employment, to be known as the "temporary contribution", shall be applied for a 
period running from 1 January 1992 to 1 July 2001. 
2. (a) The rate of this temporary contribution, which shall apply to the base defined in 
paragraph 3, shall be 5.8%. 
(b) The Council, acting in accordance with the procedure laid down in Article 24(1) 
of the Treaty establishing a Single Council and a Single Commission of the 
European Communities after consulting the other institutions concerned, may, 
if appropriate, in the context of the review provided for in Article 15(2) of Annex 
XI to the Staff Regulations, alter the rate of the temporary contribution referred 
to in point (a) on the basis of a report and proposal from the Commission». 
This measure resulted in an average loss in purchasing power of approximately 2.9%. 
4.2. Increase in pension contributions 
The Council considered it advisable, in the course of negotiations for a comprehensive 
solution, in the interests of longer-term stability of the pension scheme to raise the rate of 
staff contributions to the scheme. In Article 83(2) of the Staff Regulations, the rate of 
6.75% was accordingly replaced by 8.25% by Council Regulation (ECSC, EEC, Euratom) 
No 3832/91 of 19 December 1991. 
This measure resulted in an average loss in purchasing power of approximately 1.3%. 
16 
5. CHANGES IN REMUNERATION 1991 TO 1995 
5.1. Changes in remuneration in Brussels and Luxembourg 
The economic situation has impacted on the salaries of national civil servants in the 
Member States of the European Union and consequently, through the parallel development 
principle, on the salaries of officials of the European institutions. 
Moreover, the purchasing power of officials has been reduced beyond what would be 
required by this principle, as a result of the supplementary measures (temporary 
contribution, increased pension contributions). 
The change in the remuneration in Belgian francs of officials in Brussels and Luxembourg 
was therefore as follows: 
Change in the remuneration of officials of the EU institutions 
(1) (2) (3) (4) (5) (6) (7) 
Date Adjustment of basic 
salary table 
% t/t-1 cumulative % Change in deductions 
% t/t-1 cumulative % Adjustment of 
remuneration 
% t/t-1 cumulative % 
1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 +3,4 
+4,1 
+0,9 
+0,5 
+1,1 +3,4 
+7,6 
+8,6 
+9,2 
+10,4 -2,9 
•1,3 -2,9 
-4,2 
-4,2 
-4,2 +3,4 
+1,1 
-0,5 
+0,5 
+1,1 +3,4 
+4,5 
+4,0 
+4,5 
+5,7 
(4) Temporary contribution: payable from 1.1.92 
Increased pension contributions: payable from 1.1.93 
(6) Adjustment of remuneratbn = ( (100+ basic salary adjustment (2)) x (100+adjustment of deductbns (4)) /100 ) -100 
(3) (5) (7)Cumulath/e values are calculated by multiplying the year-on-year changes 
20 
10 
•10 
-20 J CUMULATIVE % CHANGE 
Adjustment of basic salary table 
„ - ^-+7+3 
"—B+4,5 ,6 f=f9^ , ^*-M0A 
+5,7 
^QiQrr Adjustment of remuneration 
-•--2,9--4,2- •--•••-42- «-4,2 
Change m deductions 
•i 
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
Table 10 
17 
5.2. Remuneration in other places of employment in relation to Brussels 
Average remuneration in the other places of employment in relation to Brussels was as 
follows: 
Table 11 
Average weighting weighted by the number of officials outside Belgium and Luxembourg 
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
102,5 104,6 97,5 94,5 86,6 
5.3. Change in the purchasing power of remuneration 
If the change in remuneration of officials in Brussels (+5.7%) is set against the change in 
the cost of living (+13.8%), the result is a 7.1% reduction in purchasing power. 
This is shown in Table 12. 
Table 12 
Relative change in the purchasing power of the remuneration of officials of the 
institutions of the European Union 
(1) (2) (3) (4) (5) (6) (7) 
Date Adjustment of 
remuneration 
% t/t-1 cumulative % Brussels composite 
index 
% t/t-1 cumulative % Purchasing power 
% t/t-1 cumulative % 
1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 +3,4 
+1,1 
-0,5 
+0,5 
+1,1 +3,4 
+4,5 
+4,0 
+4,5 
+5,7 +4,1 
+3,5 
+2,2 
+2,4 
+0,9 +4,1 
+7,7 
+10,1 
+12,8 
+13,8 -0,7 
-2,3 
-2,6 
-1,9 
+0,2 -0,7 
-3,0 
-5,5 
-7,3 
-7,1 
(3) Temporary contribution: payable from 1.1.92 
Increased pension contributions: payable from 1.1.93 
(7) Purchasing power - 100 x (100+adjustment (3)) / (100+ Brussels composite index(5))-100 
(3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 
20 
10 CHANGE IN CUMULATIVE % 
**épT .-•"+7;7" -•+itJ,1-Brussels composite index 
.-••-+Î2& «+13.8 
Adjustment of remuneration 
-»-»-4,e--•-^4r5-• +5,7 
-10 
-20 Purchasing power 
-7r3 "-7,1 
H —\ 
1.7.91 1.7.92 1.7.93 
18 1.7.94 1.7.95 
5.4. Comparison with the change in purchasing power of national civil servants 
Since 1991 there has been a 3.1% loss in the purchasing power of national civil servants 
in the Member States and, as a result of the method, in that of officials of the European 
institutions. 
If the impact of the temporary contribution (-2.9%) and of the increase in pension 
contributions (-1.3%) is added to the above, the result is a 7.1% loss in the purchasing 
power of officials over five years. 
These figures show that the remuneration of officials of the European institutions has 
closely followed trends in the social and economic situation, changing at the same rate as 
national civil service salaries but with an additional reduction in purchasing power. 
Table 13 
Change in the purchasing power of the remuneration of officials of the 
Member States and of the EU institutions 
(1) (2) (3) (4) (5) (6) (7) 
Date Remuneration of civil 
servants in the Member 
States of the EU 
% t/t-1 cumulative0/ Remuneration of 
officials of the EU 
institutions 
% t/t-1 cumulative % Difference 
% t/t-1 cumulative % 
1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 -0,7 
+0,6 
-1,3 
-1,9 
+0,2 •0,7 
•0,1 
-1,4 
•3,3 
•3,1 -0,7 
-2,3 
-2,6 
-1,9 
+0,2 •0,7 
•3,0 
•5,5 
-7,3 
-7,1 +0,0 
-2,9 
-1,3 
+0,0 
+0,0 +0,0 
-2,9 
-4,2 
-4,2 
-4,2 
(6) Temporary contribution: payable from 1.1.92 
Increased pension contributions: payable from 1.1.93 
(3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 
20 
10 CUMULATIVE % CHANGE IN PURCHASING POWER _J 
Remuneration of civil servants in the Member States of the EU 
"""••--•-3,0.. •A A _ 
-•-5,5 "•-3:3 *-3,1 
-•-7-,3 «-7,1 
•10 
-20 Remuneration of officials of the EU institutions 
+- -
1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 
19 
6. CONCLUSION 
Annex XI to the Staff Regulations (the method) was adopted by the Council for a period of 
ten years (until 30 June 2001). As such, in common with all other regulations, it is part of 
the acquis communautaire, with which the Community institutions and all Member States 
must comply. 
There is provision for it to be reviewed after five years - an objective review to check that 
the principle of parallel development has been properly applied. 
Only if it were established that the method had failed to operate properly could the 
Commission present a proposal for revision of the Staff Regulations to the Council after 
consulting the other institutions. 
The review shows that: 
there has been a reduction (3.1%) in the purchasing power of the remuneration of 
officials of the European institutions, the same as for the salaries of national civil 
servants; 
there has been a further reduction (4.2%) in purchasing power as a result of the 
temporary contribution and the increase in pension contributions; 
staff relations have remained conflict-free as a result of the introduction of the 
procedure. 
The Commission therefore feels that any proposal to amend the method would affect the 
very substance of the final compromise resulting from the 1991 negotiations and the 
commitments entered into by the parties to it. 
Any departure from this compromise, which has attained its objectives, would undermine the 
legitimate expectations of staff as regards the institutions' compliance with the commitments 
entered into and would have grave consequences for the operation of the institutions. 
The Commission consequently considers that there are no grounds for any proposal to 
amend any of the components of the compromise. 
20 

ISSN 0254-1475 
COM(96) 258 final 
DOCUMENTS 
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Catalogue number : CB-CO-96-268-EN-C 
ISBN 92-78-05235-3 
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