ARCHIVESHISTORIQUES
DELACOMMISSION
COLLECTION RELIEEDES
DOCUMENTS "COM"
COM(80)364
Vol.1980/0129

Disclaimer
Conformément aurèglement(CEE,Euratom)n°354/83duConseildu1erfévrier1983
concernantl'ouvertureaupublicdesarchiveshistoriquesdelaCommunauté économique
européenne etdelaCommunauté européenne del'énergieatomique(JOL43du15.2.1983,
p.1),telquemodifiéparlerèglement(CE,Euratom)n°1700/2003du22septembre2003
(JOL243du27.9.2003,p.1),cedossierestouvertaupublic.Lecaséchéant,lesdocuments
classifiésprésentsdanscedossierontétédéclassifiés conformément àl'article5dudit
règlement.
Inaccordance withCouncilRegulation(EEC,Euratom)No354/83of1February1983
concerningtheopeningtothepublicofthehistoricalarchivesoftheEuropeanEconomic
Community andtheEuropeanAtomicEnergyCommunity (OJL43,15.2.1983,p.1),as
amendedbyRegulation(EC,Euratom)No1700/2003of22September2003(OJL243,
27.9.2003,p.1),thisfileisopentothepublic.Wherenecessary,classifieddocuments inthis
filehavebeendeclassified inconformitywithArticle5oftheaforementioned regulation.
InÜbereinstimmung mitderVerordnung(EWG,Euratom)Nr.354/83desRatesvom1.
Februar1983überdieFreigabederhistorischen ArchivederEuropäischen
Wirtschaftsgemeinschaft undderEuropäischen Atomgemeinschaft (ABI.L43vom15.2.1983,
S.1),geändertdurchdieVerordnung (EG,Euratom)Nr.1700/2003vom22.September2003
(ABI.L243vom27.9.2003,S.1),istdieseDateiderÖffentlichkeit zugänglich.Soweit
erforderlich,wurdendieVerschlusssachen indieserDateiinÜbereinstimmung mitArtikel5
dergenanntenVerordnungfreigegeben.

COMMISSION OFTHEEUROPEAN COMMUNITIES
COM (80)364 final
Brussels ,30th June 1980
METHOD OFADJUSTING THE REMUNERATION
OFOFFICIALS AND OTHER SERVANTS OF
THE EUROPEAN COMMUNITIES
(presented bytheCommission totheCouncil )
k V->Κ ν ·Λ
PIb*£-" -v
ïi
'Syfyf-
C0M(80 )364 final

REVIEWOFTHERESULTSOFAPPLYINGTHEMETHODOFADJUSTING THEREMUNERATION
OFOFFICIALS ANDOTHERSERVANTSOFTHEEUROPEAN COMMUNITIES ADOPTEDON
26JUNE1976
On21JanuarytheCouncilasked"theCommissiontosubmitareviewofthe
resultsapplyingthemethodofadjustingtheremuneration ofofficials
oftheEuropeanCommunities (adoptedon26June1976),accompaniedbyan
"appropriate"proposal,by1July.
ThismethodwasthesecondadoptedbytheCounciltogoverntheprocedure
fortheannualreviewofremuneration providedforinArticle65ofthe
StaffRegulations ;thefirstdatedfrom1972.
Thepresentreviewconoernstheperiod1976-79coveredbythesecondadjustment
method,adoptedbytheCouncilon26June'1976.Ashortdescriptionofthe
methodmayprovehelpful.
I.DESCRIPTION OFCURRENTADJUSTMENT PROCEDURE
Themainfeatureofthemethodisremunerationincreasedregularlysoasto
obviateeitherdelaysinadjustmentsorsudden,sharpincreases.
Inordertomaintainthisbalancedprogression,theCouncildecidedtomake
acleardistinction between:

cost-of-livingadjustments ,whicharedesignedtopreventaserious
erosionofpurchasingpowerbetween -twoannynlreviews;and
adjustmentstoassureEuropeanofficialsthattheirpurchasingpower
willchangeupordownin-parallelwiththerealremuneration ofcivil
servantsintheMemberStates.
Therearetwocorresponding setsofreferencefactorsusedtodetermine
thesizeofanyadjustment :
cost-of-livingcompensation isbasedonaEuropeanpriceindexcalculated
everysixmonths;
tomeasurethedevelopment ofpurchasingpower,theStatisticalOffice
oftheEuropeanCommunitiescalculatesaspecificindicatorforthe
changesinrealcivilservicesalariesintheMemberStates,onthe
basisofinformation suppliedbythenationalauthorities.
II.ASSESSMENT OFTHECURRENTMETHOD
(a)Itsvalue
Therecanbenodoubtofthevalueofamethodwhichclarifiestheprovisions
ofArticle65oftheStaffRegulations.Notmerelydoesitensurethatthe
datagatheredisasobjectiveaspossible,butthemerefactofusingsuch
datagivesasoundbasistodiscussions.
(b)Troublespots
Althoughanelementofconflicthasnotbeenentirelyremovedfromthe
negotiations ,certainaspects,suchastheeffectivedates,arenowbeyond
dispute.Andwithafewexceptionsthesameappliestothestatisticsthat
areused.

-3-
However,disagreementpersistsintwomamareas:
inthe'applicationofArticle65(2);
theaccuracyofthespeoifieindicatorthatissupposedto
measuretheactualtrendofpublic-servicesalariesinth<sMemberStates.
(l)WithregardtotheapplicationofArticle65(2),theprobltM*ofdefining
athresholdhasalwaysbeenthesubjectofcontroversy .
Furthermore ,theprincipleofmaintaining equivalentpurchasing powerbetween
thedifferentplacesofemployment endthefrequencywithwhichtheArticleis
usedraiBeseriousdifficulties atatimewheninflationratesarerising
rapidlyanddivergingwidelybetweentheMemberStates.
Anotherproblem*withArticle65(2)concernstransferswhich,underArticle
17ofAnnexVII,mustaccuratelyreflectpurchasingpowerparitiesbybeing
effectedattheexchangeratespecifiedinArticle63oftheStaffRegulations ,
adjustedbyacoefficientrepresenting thedifferencebetweentheweighting
forthecountryofemploymentandtheweightingforthecountrytowhichthe
transferismade.Itisthereforevitaltoensurethatweightingsare
properlyadjusted.
Inthisconnection theCommission wouldremindtheCouncilthatithastwice
hadtocallinmediatorstoassistitintheapplicationofArticle65(2)
(MrCoppeandMrChubb).AccordinglytheCommissionfeelsthatcrystal–clear
rulesmustnowbelaiddownforthefuture,particularly asallArticle65(2)
providesisaninterimmeasurewhichcaninnowisebainterpreted asasystem
ofindex-1inkingsinceitisagreedthatthepurchasing powerofEuropean
officialsmaybeadjustedupwardsordownwardswhenthea&nualreviewof
remuneration takesplace.

-4-
(2)Anumberofdefectsmustbepointedoutinthespecificindicatorused
toapplythepurchasing powerclause.
Thisindicatorisundeniablyavaluablestatisticaltoolforquantifying
thedegreetowhichnationalcivilservantsshareinchangesinthestandard
oflivinginthenineMemberStates.Themethodologyusedtocompileithas
beenrefinedinrecentyears.Itneverthelessrequiresconstantmonitoring,
firstlybecausetheMemberStatesdonotallusethesamemethodofadjusting
civilservicesalariesendsecondlybecausetherulesforapplyingthem
generallychangefrc;i)oneyeartothenext.
AlthoughgreateffortshavebeenmadebothbyMemberStates'delegations and
bytheCommissionitaaiftogivethisindicatormoreauthority,anumberof
defectspersist.
Themajoronesare;
(i)Thedetermination ofthecomponentsofincometobetakenintoaccount
inaxiaccuratemeasurement ofthechangeinpurchasingpower;thereisa
tendencytoconsideronlyofficialsalaryscalesandapplythemacrossthe
board.Butinsomecountriesriseshaveinfactbeenawardedindependently
ofthesalaryscalesforanumberofyearstanditliasoftennotbeanpossible
toreflecttheaini>/-»fewoifinindicator ?thishasreduoedthecredibility of
thatindicatorawdfrw&vueddistortions whentheywereincorporated into
nationalsalary Soth«sp#oificindicatorsometimeslagsbehind
tfe©r«altread.Th»baefeXogisthenmadeupinasaddenjimp*-whioh.may
occuratatiaiewfc<snrestraintsareinforceinothercotmtries.
Hailingregardtothospiritoft&eaethod,effecthastobegiventothis
kindofincreasein-%'mexmoifloindicator,whichrefleotsincreases ,in
nationalsalable*ngores*severalreference'yearsjthisoaa
naturally@mm.ghpø&»pxoluewaforJfønberStates*Governments.

-5-
(ii)Thefigures supplied forremuneration donotalways correspond tothe
sum3 actually paid .This problem isparticularly acute inItaly ,but it
also arises intheUnited Kingdom ,where thefigures donot include the
Inner London Weighting ,a&d inPrance ,where efficiency andproductivity
bonuses aredisregarded .
(iii)Theconversion ofgross resnmsratiaa into netfigures also corresponds to
theory rather than practice ,sinoe .adjust /seats "baa«d ontheparticular circumstances
ofeach individual taxpayer ,andhence ofesch individual civil servant ,such as
taxrelief granted forfanily acd/oroccupational expenses ,arealsoexcluded .
'
(iv)Thespecific indicator ascurrently defined provides nomechanism for
quantifying indirect increases inremuneration resulting from reductions in
working time .This type ofcompensation is,however ,becoming increasingly
common intheMember States ,
The accurate measurement ofthe trend inthe Member States isamost difficult
operation which mast beeffected continuously andexhaustively bytheWorking
Party ofStatisticians setupunder themethod toeliminate progressively the
shortcomings which have become apparent .
TheCommission isoftheopinion that asadhoc study should also becarried
out toassess the changes inworking time initsbroadest sense inthe
national civil services .Changes .ofthis nature arelikely togain inimportance
inthefuture ,andwill indubitably have so^e influence ontheevolution of
real remuneration .

-6-
Finally theCommunity system hastheadvantage over thesystems intheMember
States ofbeing completely transparent ;allemoluments ofwhatever kind
areclearly listed intheStaff Regulations ofOfficials ortheConditions
ofEmployment ofOther Servants .
(c)Assessment ofthemethod 'sresults
Since 1970 theparallelism principle hasbeen fundamental tothemethods
devised foradjusting remuneration .Theprinciple was confirmed ,formally
in1976 ,inthese terms :
"TheCouncil considers that thesystem ofadjusting remuneration forms part
ofapolicy aiming toguarantee ,inthemedium term ,that theremuneration
paid toEuropean officials moves parallel toaverage salaries paid inthe
Member States tothevarious grades ofnational civil servants ."
Over theperiod 1962–70 there wasalack ofparellelism between movements in
thereal remuneration ofnational civil servants and that ofCommunity
officials ;however there hasbeen acloser correlation intheperiods covered
bythetwomethods ofadjusting remuneration (1971-75 1975-79 )•
This parallelism isillustrated inthefollowing table .

-7-
Changesinrealnetsalariesinnationalcivilservicescomparedwith
changesinrealnetComimnitysalaries
Allofficials
Country 1975-71 1979-75
GermanyI112.2 103.1
Prance 114.4 100.9
Italy 92.4 116.1
Netherlands 119.0 103.5
Belgium 111.7 101.8
Luxembourg 120.7 106.2
UnitedKingdom 104.2 96.9
Ireland 106.r
-V106.8
Denmark 109.9 88.7
Community–––––––– –––-
108.6
! i104.0,
EECOfficials
1110.6 IO4.4
1975-73.

-8-
Underthefirstsalaryadjustmentmethod.,changesinpurchasingpower
weredealtwithbymeansoftwogrossparameters.Theirinclusion
intheCommunitysystemgaveCommunityofficialsanapparentadvantage
worthabout0.45$ayear.Atthattimethespecificindicatorwas
distinctlyunreliable. ^
Underthecurrentmethodithasbeenimproved.
TheincreasesgrantedtoCommunityofficialssirecalculatedbyreference
tothenetincreasesobservedatthenationallevel,inotherwords
Europeanofficialsareentirelysubjecttothetaxandsocialsecurity
policiesappliedbyMemberStatestotheirownofficials.
NTherearetworeasonswhytherealnetincreaseinCommunitysalaries(4.4$)
is0.4$higherthanfornationalcivilservicesovertheperiodinwhich
thecurrentmethodapplied(1975~79)»giving0.1%annually.First,the
staffstructureoftheCommunityinstitutionsisdifferentfromthatofthe
nationalcivilservices;second,therehasbeenamarkeddegreeof
non-linearity intheadjustmentofpurchasingpoweroverthelastfew
years.AttheexpressrequestoftheCouncilthisnon-linearity hasbeen
appliedinordertobenefitofficialsinthemiddleandlowergrades
especially.Moreover,althoughthespecificindicatorhasbeenimproved,
itstilldoesnotproperlyreflectparchasingpowertrendsinthe
MemberStates.
III.RELATIVE LEVELOFgJROPr^TQgTTCJALS 1SALARIES
TheCommissionisawarethatthequestionoftherelativelevelof
Europeanofficials'salariesmightberaisedinconnectionwithproposals
foradjustments .
Thisisanextre»elydelicatequestionandtheCommissionfeelsthatit
shouldpointputthat:

-9-
(i)undertherecruitmentsystemoftheCommunityinstitutions ,
whichisrecognizedasextremelydemanding,newrecruitsare
notdrawnonlyfromthenationaladministrations ;therange
andcomplexityofCommunitytasksrequiresanincreasingly
broadspectrumofapplicants.Inthesecircumstances the
Communityfindsitselfcompeting "bothwiththeprivatesector-
aboveallthemultinationals -andwiththeseai-state or
publicsectorsproperlysocalled;
(ii)therequirements oftheCommunityinstitutions ,intermsof
bothlanguageabilityandabilitytoworkinaninternational
environment ,aregrowingsteadilygreaterasthenumberof
membercountriesincreases ;
(iii)overtheyearsthebalancingactconstantlydemandedbythe
governments oftheMemberStates,particularly inthehigher
posts,hasconsiderably reducedcareerprospectsinthe
EuropeanCommunities .
Acomparisonofcareerprofilesinthenationaladministrations
andintheCommunityinstitutions cannotfailtomakethis
fullyapparent;
(iv)lastly,nofaircomparisoncanbemadebetweennationalcivil
servantsworkingintheirowncountryandEuropeanofficials,
thegreatmajorityofwhomareworkingawayfromtheirplace
oforigin.The16$expatriation allowancewhichEuropean
officialsaregrantedcannotcompensateforthefinancialand
otherinconveniences whichworkingawayfromtheirown
countryinvolves.TheCommission wouldalsopointoutthat
itisstillhavingdifficultyinattracting andkeeping
officialsfromcertainMemberStates.

-10-
TheCommissionthereforeconsidersthatifthereisto"beanycomparison,
itmustbeprimarilywiththesalariesofstaffworkingoutsidetheir
countryoforigin,suchasstaffworkingformultinational companiesor
membersofthediplomaticservioe.Thestatisticsprovidedbythe
MemberStatesforcalculatingthespecificindicatorcannotbe
regardedasginadequateyardstickforthreereasons:
thesestatisticsrelatetothesalariesofstaffworkingintheir
homecountry;
thestatisticsarecompiledinordertodeterminechangesinthese
salariesandthispurposetheyadequatelyfulfil,althoughthereare
somewell-knowndifficulties ,whicharedescribedbelow;
theyarenotcomprehensive ,asindicatedabove,andthereforecannot
beusedforcomparison.
IV.REASONSBEHIND APOSSIBLE COMMISSION PROPOSAL FORAMENDMENTS
Thetimelagbetweensalaryadjustmentsbeingintroducedatthenational
levelandtheCouncilbeingcalledupontotakeadecisiononcorresponding
measuresforEuropeanofficialsisaconfetantproblem.

-11-
Each time that anewmethod ofadjustment hasbeen introduced the
Commission hasproposed that this situation "beremedied byintroducing
ascheme offorward estimates oranex-ante system .Such asystem
would also have been inline with thetrend over the last fewyears
inmost Member States indetermining changes innational civil service
salaries .
The Council has notseen fit toapprove these proposals .
Inthepresent circumstances ,with theoutlook forthefuture very
uncertain ,such amethod would nolonger appear appropriate .
However ,experience over theperiod covered bythecurrent method andthe
considerations setoutbelow militate infavour ofcontinuing themethod ,
with amendments designed to:
rationalize discussions byspecifying inadvance howtheeconomic
andsocial situation ofthemoment will betaken into consideration ;
avoid conflicts several times ayear ;
ensure equal purchasing power inthevarious places ofemployment .
TheCommission intends touphold theprinciple ofparallel changes in
themedium term ,which istheonly way ofensuring that thehigh
professional quality ofEuropean officials ismaintained .
Lastly ,theCommission believes that themedium-term principle should
make iteasier totake account ofthepsychological andpolitical problems
caused bytheeconomic situation oftheCommunity .Similarly this will ,
initsview ,make iteasier fortheinstitutions tofollow any
recommendations made attheCommunity level asregards salaries .

-12-
V.'POSSIBLEADJUSTMENTS TOTHEMEWMETHODOF26JUNE1976
Fromtheforegoingconsiderations itfollowsthattwoaspectsofthe
currentmethodshouldbeadjusted;
(i)Firstly,adheringtotheprincipleofmedium-termparallel
evolution,apreciseeconomicfactorcouldbetakeninto
accountforthepurposeofadjustmentsinlinewiththe
trendofpurchasing power.
(ii)Secondly,aclearerdefinitionisneededforthepurpose
ofapplyingArticle65(2)oftheStaffRegulationsof
Officials.
1.OneofthemainsourcesoftheCommunity'scurrenteconomic
difficulties isthefactthatincomesadjusttooslowlytothe
Community'sdecliningwealthensuingfromrisingoilpricesandhence
worseningtermsoftrade.
TheStrasbourgEuropeanCouncil*andtheCommissioninits
recommendations oneconomicpolicyguidelinesofOctober1979**
Btressedtheneed"tolimittotheminimumtherepercussion ofenergy
pricerisesintoincomes".
Moreover,intheminutesofits18JunemeetingtheCouncilrecorded
thatinitsproposalforchangesinthemethodofadjustingremuneration
theCommissionshould-inparticulartakeaccountofitsrecommendation
thattheriseinenergypricesshouldnotbereflectedinwagesand
salaries.
*Stepsmustbetakentoensurethatthedrainonrealresourceswhich
theincreaseinoilpricesentailsarenotcompensated bynominal
increasesinincomes.
**EuropeanEconomy,Number4s"Mainlinesofpolicy",page12.

-13-
MostMemberStateshavenotadequatelyheededthisrecommendation .This
isthemainreasonwhytheincreaseininflationhasbeengreaterthan
theincreaseinenergycostsandoneofthereasonsfortheslowdownin
economicgrowth.However,inthelongtermtheoutflowofwealthfrom
Europetotheoil-exporting countriesisboundtocauserealincomesin
theCommunitytorisemoreslowlythanbefore,andeventostartfalling.
/
Experiencegainedfromthefirstroundofoilpricerisesin1973/74
showsthattheprocessofadjustmentcantakeaslongasfouryears.
Onesolutiontothisproblemasitarisesinconnectionwiththeprinciple
ofmedium-termparallelevolutionmightbetodiscounttheimpactofoil
pricesintherateofadjustmentofpurchasing powertakeninto
consideration forthe1980annualreview.Themethodofadjusting
remuneration wouldthusfollowtherecommendations oftheEuropeanCouncil
andtheCommission.However,topreventofficialsbeingaffectedtwice-
firstlyontheoccasionoftheaboveadhocmeasureandsecondlyin
subsequentyearsviaapplication ofthemethodreflectingthedeclining
rateofgrowth,oreventheactualfall,inrealincomesatnational
level,theinitialadhocmeasurewouldhavetobeoffsetbysubsequent
measuresofcompensation duringtheabovementioned periodofadjustment
atthenationallevel.
Suchasystemisrelativelysimple,butifsuperfluousdiscussionisto
beavoidedtherewouldhavetobe:
(i)aprecisedefinitionforthepurposeofcalculatingtheimpact
ofoilpricerisesreflectedintheadhocmeasure;
(ii)clearagreementonthelengthoftheperiodofadjustmentin
connectionwiththeadhocmeasure.' .

-14-
Theriseintheoilbill(valueofnetimportsofcrudepetroleumand.
petroleumproducts)dependsbothondomesticenergysavings,which
reducethevolumeofimports,andontheincreaseincrudeprices
fixedbytheoil-exporting countries.Theincreaseintheoilbill
between1978and198OexpressedasapercentageofCommunityGDPmay
beconsidered asapreciseeconomicmeasurement oftheincreasedcosts
theCommunityisbearingasaresultofdecisionstakenelsewhere.
TheCommissioncouldoptforafour-yearperiodofadjustment,i.e.the
adhocmeastireappliedinDecember1980wouldbeoffsetentirelybythe
timeoftheDecember1984annualreview.
Ifinthenextfewyearsoilpricesagainincreasesubstantially ,a
furtheradhocmeasurewithasubsequentperiodofadjustmentwouldbe
applied,providedthattheimpactoftheincreasestakenintoconsideration
wasmorethan0.5inoneyear.
2.'ItmustberecalledthatArticle65(2)certainlydoesnotprovidean
automaticindex-linking mechanism,sincenegativepercentagesinpurchasing
powermaybetakenintoaccountattheannualreview.
Theaimsofthisprovisionare:
(1)toensurethatstaffindifferentplacesofemploymentenjoy
equivalentpurchasingpower,soastoguaranteeequaltreatment
ofallofficialsinaCommunitywheretherearestilllarge
differences ininflationratesinthedifferentStates;
(ii)topreventsignificantlossesinpurchasingpowerduringany
givenperiod;

(iii)tokeep contentious discussions totheend-of-the-year
review ^allthemore sosince allthebasic papers required
can "beprepared only once ayear .
Theinterim adjustments pursuant toArticle 65(2 )have tobemore
clearly defined forthepurpose ofattaining these objectives .
Athreshold will have tobeworked out .The Commission feels that this
could be40$oftheaverage rate ofinflation intheCommunity *over the
six-month referenoe period .However ,to-preclude excessively high
orlow-andtherefore unacceptable -threshold figures upper and :
lower limits of4%and2$respectively could befixed .
This threshold would beapplied inaccordance with thefollowing
procedure :
TheCommission ^proposal forapplication ofArticle 65(2 )in
respect ofthesecond half oftheprevious year issent tothe
Council nolater than the second half ofApril .
Ifthe above threshold were reached orexceeded atthe provisional
seats (Brussels andLuxembourg )theweightings forallplaces of .
employment would beadjusted on1January ofthecurrent year by
the rate ofinflation ineach ofthem .
*SOEC .-monthly updating ofconsumer prices –General Statistics andnational
Accounts .

-16-
Theratiobetweentheseweightingswillthenaoctiratelyrefleotthe
purchasingpowerratiosbetweentheMemberStatesandmaybeused
fortransfersinaccordancewithArticle17ofAnnexVIItothe
StaffRegulations .
Ifincertaincountriestherateofinflationexceedstheratesof
adjustmentasdefinedabove,furtheradjustmentsshallbemade.
Ahalforathirdoftheamounttobeadjustedshallbe.granted
dependingwhetherthisrepresentstwiceorthreetimestherateof
inflation.Theeffectivedatesshallbeeitheratthebeginning
ofthethirdmonthinthereferenceperiodorthebeginningofthe
(secondandfourthmonthsinthereferenceperiod*Thisshallbo
checkedwhentheCommission makesitsproposalinAprilandrechecked
attheannualsalaryreview.
Ifthethresholdisnotreachedattheprovisionalseats
(BrusselsandLuxembourg))theweightingsforthecountrieswhere
inflationhasexceededthethresholdshallbeadjustedinline
withtherateofinflationobservedtherelesstherateobserved
attheprovisionalseats.
Additionalinterimmeasuresshallconcernonlythecountrieswitha
veryhighrateofinflationandalterationstotheirweightingsshall
notbetakenintoacoountforthepurposeofapplyingArticle17of
AnnexVIItotheStaffRegulations (transfers).
ShouldthemeasurestakenunderArticle65(2)resultattheendof
theyearinareductionofnominalsalariesinoneoranotherof
thecountrieswherestaffareemployed,theywillbemaintainedat
itspresentlevelandthewholeorresidualreductionwouldbe
appliedatthenextadjustment.
Forallapplications ofArticle65(2)oftheStaffRegulations,and
ifnooommonindicatorsareavailable,thenationalconsumerprice
indexeswillbeused;anylevellingoffbythecommonindexwill
bedoneattheannualreview.

AMEX I
METHOD OFADJUSTING THE REMUNERATION
OFOFFICIALS AND OTHER SERVANTS OF
THE EUROPEAN COMMUNITIES
I. BASIC PRINCIPLE '
The Council considers that thesystem ofadjusting remuneration forms
part ofapolicy aiming toguarantee ,inthemedium term ,that the
remuneration paid toEuropean officials moves parallel toaverage
salaries paid intheMember States tothevarious grades ofnational
civil servants .
II.ANNUAL PAY REVIEW
(Article 65(1 )oftheStaff Regulations )
Pursuant toArticle 65(1 )oftheStaff Regulations theCouncil shall
decide ,onaproposal from theCommission ,whether inthecontext of
theeconomic andsocial policy oftheCommunities ,itisappropriate
that remuneration should "beadjusted . ,
This decision shall betaken inthelight ofthefactors setoutin
points 1to5below :
1.Cost-of-living trends
Thejoint index ,designed tomeasure cost-of –living trends ineach of
theMember States ,shall continue tobeused inaccordance with the
procedure applied hitherto .
Periodically ,theStatistical Office oftheEuropean Communities shall
verify whether theratios between weightings accurately compensate the
variations inpurchasing power between places ofemployment .

-18-
ANNEXI
2.Development oftherealincomeofnationalcivilservants-Specific
indicator
Theaimistomeasurethedevelopment ofpurchasingpowerinnational
civilservices.Forthispurpose:
(a)TheStatisticalOfficeoftheEuropeanCommunitiesshallcalculate
specificindicatorsforthechangesinrealcivilservicesalariesin
theMemberStatesduringtheprecedingreferenceperiod^,onthebasis
ofinformation suppliedbythenationalauthorities.
Theseindicatorsshallbecalculatedintwoways:
oneindicatorforeachofthefourgrades:A,B,CandD,
anaverageindicatorweightedtoreflectthenumbersofnational
civilservantsinthesefourgrades.
Eachoftheseindicatorsshallbecalculatedinrealgrossandrealnet
terms.Inconvertingthespecificindicatorsfromgrosstonet,
accountmustbetakenofallnationaltaxationfactorswhichreducethe
amountoftaxableincome.
/
AttherequestoftheStatisticalOfficeoftheEuropeanCommunities ,
nationalauthoritiesshallsupplyanyadditionalinformation whichit
mayconsidernecessary.
(b)IftheStatisticalOfficeoftheEuropeanCommunitiesfinds
statistical anomaliesintheinformation obtainedorfindsit
impossibletocalculateindicatorswhichmeasurewithstatistical
accuracythechangesintherealincomesofcivilservantsinagiven
MemberState,itshallreporttotheCommissionandprovidethe
Commissionwithmaterialenablingittodrawupaproposal.
1Referenceperiod:the12monthspreceding 1Julyoftheyearinwhich
thereviewiscarriedout.

-19-
AMEXI
(c)TheStatisticalOfficeoftheEuropeanCommunitiesshallalso
assessstatistically thedifferencebetweenthegrossandnetrates
ofthespecificindicators onthe"basisofnationalbudgetarydata
andnationalaccounts.
(d)Inordertodeterminethearrangementsforimplementing the
methoddescribedaboveandtominimizetheriskofdisputesregarding
thedataforthecurrentfinancialyear,theStatisticalOfficeof
theEuropeanCommunitiesshallinMarcheachyearconveneaWorking
Partycomposedofexpertsfromnationalstatisticalinstitutes.
ThisWorkingPartyshallexamineallthefactorsnecessaryforan
accuratemeasurement ofthedevelopmentinpurchasingpowerin
nationalcivilservicesandthepracticalproblemsinvolvedin
calculating thenetindicators.Thiswillentailcompilingalist
oftaxesandcompulsorycontributions andalsoofflat–rateor
individualdeductions andabatementswhichplayapartindetermining
thebasictaxableamount.
3«Civilservicepercapitaemolumentsinrealterms
Besidesthespecificindicator,theStatistical OfficeoftneEuropean
Communitiesshallsubmitdataconcerningrealpercapitalemoluments
incentraladministrations ,calculatedinaccordancewithnational
accountsdefinitions .
Itsreportonthespecificindicatorsshallbeaccompanied by
explanations ofthedifferences betweenthemandthechangesinthe
leveloftotalemoluments .
4.Generaleconomicandsocialfactors
TheCommissionshallsupplyforinformation othermacro–economic
information ,indicativeoftheeconomicandsocialpolicyofthe

-20-
AM2X I
Member States oftheCommunity ,such asgross domestic product perhead
ofoccupied population andemoluments perwage–earner intheeconomy as
•awhole .
5»Recruitment needs and structure ofCommunity staff complements
Intheannual ,,report theCommission shall make acomprehensive survey
ofthefacts andfuture prospects relating torecruitment ,taking into
account therequirements ofArticle 27oftheStaff Regulations of
Officials .
TheStatistical Office oftheEuropean Communities shall calculate ,
forinformation ,anaverage indicator ofchanges inthe level ofreal -
pay innational civil services weighted toreflect thestructure of
Community staff complements bygrades :A,B,Cand D.
6.Norms governing salary adjustments
(a)TheCommission shall make aproposal totheCouncil inthelight
ofthefactors set out inpoints 1to5«
(b)TheCouncil shall determine remuneration adjustments innetterms .
Such adjustments maybeexpressed asanidentical ,across -the-board
percentage orinanon–proportional manner .Theadjustment may
therefore beexpressed as:
apercentage ;
and/oraspecific amount .
(c)Thenetrate ofadjustment thus fixed andtheweightings applicable
toofficials inBelgium andLuxembourg shall beincorporated ,in

-<!1-
ΑΚλΞΧΙ
accordancewiththefollowingmethod,inthesalaryscalesgivenin
Article66oftheStaffRegulations andinArticles20and63ofthe
ConditionsofEmploymentofOtherServants:
thenetremuneration withaweightingof100attachingtoeachstep
ofeachgradeofofficialandtoeachclassineverygroupofother
servantsshall"beincreasedbytheaboveweightingandbythenet
rateofadjustmentdeterminedinaccordancewith(b)above,whether
itisgivenasapercentageorasaspecificamount:
i
thenewscaleofbasicsalariesingrosstermsshallbedrawnupby
calculatingforeachsteporclassthegrossamountwhich,sifter
»deductionoftax(havingregardto(d)below)andcompulsory
contributions ,givesthenewnetamountreferredtoabove;
*
thisconversionofnetamountsintogrossamountsshallbebasedon
thesituationofanunmarriedofficialwhodoesnotreceivethe
variousallowances ;
theweightingforBelgiumandLuxembourgshallbefixedat100;
theweightingsforothercountriesofemploymentshallbeadjusted
onthebasisoftheratiobetweenthecost–of–livingindexnumbers
inthesecountriesand.thecost–of-livingindexnumberin
Brussels/Luxembourg.
»
(d)ForthepurposeofapplyingRegulation(EEC,Euratom,ECSC)
No260/68concerningCommunitytaxtoremunerations paidinaccordance
withthescaleofbasicsalariesworkedoutinaccordance withthe
firstindent,theamountsinArticle4oftheRegulationshallbe
multiplied byafactorcomposedof:
theweightingapplicablebeforeincorporation totheremunerations
ofofficialsinBelgiumandLuxembourg ;

ANNEXI
thenetadjustmentinremunerations referred ,toat(b)above;
and/or,iftheadjustmentismadeintheformofaspecificamount,
theequivalentaveragepercentage.
Eachtimethescaleofbasicsalariesisadjusted,thenewmultiplier
shallbeobtainedbymultiplyingtheformermultiplierbythefigures
forthenewreferenceperiod.
(e)TheCouncildecisionshalltakeeffecton1Julyoftheyearin
whichtheendofthereferenceperiodusedforthepayreviewfalls.
III.INTERIMADJUSTMENT OFREMUNERATION
(Article65(2)oftheStaffRegulations )
ShouldtheCouncil,actingonaproposalfromtheCommissionbasedon
Article65(2)oftheStaffRegulations,decidetoadjustpayinview
ofasubstantialriseinthecostoflivinginoneormorecountries,
thisshallbedonebyadjustingtherelevantweighting(s).Allowance
willbemadeforsuchadjustments whenadecisionisreachedatthe
followingannualreview.
ς
IV.TRANSITIONAL ANDFINALPROVISIONS
Whentheannualpayreviewforthereferenceperiodfrom1July1975
to30June1976isheld,thecurrentweightingforBelgiumand
Luxembourgshallbeincorporated intothesalaryscalesinaccordance
withtheproceduresetoutinSectionIl(6)(c),theweightingfor
BelgiumandLuxembourgthusbecoming100%andtheweightingsforother
countriesofemploymentbeingadjustedaccordingly.

ANNEX I
V. REVIEW CLAUSE
Acting onaproposal from theCommission ,theCouncil shall carry out
i
areview oftheresults ofapplying themethod described above ,with
aview inparticular todetermining possible further improvements and
rectifying anydistortions .

-24- ANNEXII
AMENDMENTS TOTHETEXTOFTHEMETHODFORADJUSTING REMUNERATION
PointII»4(Generaleconomicandsocialfactors)toreadasfollows:
(a)TheCommissionshallsupplyforinformationpurposesother
macro–economicindicatorsoftheeconomicandsocialpolicy
oftheMemberStates,suchasgrossdomesticproductperhead
ofoccupiedpopulation,aggregateemolumentsperwage-earner
intheeconomyasawholeandthetrendinworkinghoursin
thelargestsenseoftheterm.
(b)TheCommissionshallspecificallytakeaccountoftheeconomic
effectsoftheoilsituation "byprovidingforadjustments
tothespecificindicatorbymeansofanadhocmeasureand
bydetermining theneutralization periodofthatmeasure.
I
Forthispurpose,thespecificindicatordescribedatpoint2
ofthemethodshallbeadjustedasfromthe1980annualreview
inthelightofthedegreeofchangeinoilprices.
Theriseintheoilbill(valueofnetimportsofcrude
petroleumandpetroleumproducts)dependsbothondomestic
energysavings,whichreducethevolumeofimports,andonthe
increaseincrudepricesfixedbytheexportingcountries.The
increaseintheoilbillbetween1978and1980,expressedas
apercentageofCommunityGDP,mayberegardedasaprecise
economicmeasurement oftheinoreasedcoststheCommunityis
bearingasaresultofdecisionstakenelsewhere.

-25- AMEXII
Theperiodofadjustmentshallbefouryears,meaningthatthe
adhocmeasureappliedin1980willbeentirelyneutralized
bythetimeoftheDecember1984annualreview.
Ifwithinthenextfewyearstheoilpricesagainincreasesubstantially ,
afurtheradhocmeasurewithasubsequentperiodofadjustmentshall
beapplied,providedthattheimpactofoilpriceincreasestakeninto
consideration ismorethan0«5inoneyear•
If,however,thismechanismproducesadecreaseinnominalsalaries,
salariesshallbemaintained attheircurrentlevelandthewhole
orresidualreductionduetotheoilimpactshallbeappliedatthe
nertadjustment#
PointIII:Interimadjustmentofremuneration
(Article65(2)oftheStaffRegulations )
ShouldtheCouncil,actingonaproposalfromtheCommissionbasedon
Article65(2)oftheStaffRegulations,decidetoadjustpayinview
ofasubstantialriseinthecostoflivinginoneormorecountries,
thisshallbedonebyadjustingtherelevantweighting(s )•Allowance
willbemadeforsuchadjustments whenadecisionisreachedatthe
followingannualreview®
Thethresholdshallbe40^oftheaveragelevelfortheCommunity
recordedoverthesix-monthreferenceperiod)aspublishedbytheSOEC^".
Buttoprecludeexcessively loworexcessively high–andtherefore
SOEC:monthlyupdating 1ofconsumerprioes-GeneralStatisticsand
NationalAccounts«

-26- ANNEXII
unacceptable–thresholds,aminimumof2$andamaximumof4$
shallbeset.
Thefollowingprocedurehasbeenadoptedforapplicationofthis
threshold :
TheCommission'sproposalforapplicationofArticle65(2)in
respectofthesecondhalfofthepreviousyearshallnormally
besenttotheCouncilnolaterthanthesecondhalfofApril.
Iftheabovethresholdwerereachedorexceededattheprovisional
seats(BrusselsandLuxembourg)theweightingsforallplacesof
employmentwouldbeadjustedon1Januaryofthecurrentyearby
therateofinflationineachofthem.

-27-
Theratiobetweentheseweightingswillthenaccuratelyreflectthe
purchasingpowerratiosbetweentheMemberStatesandmaybeused
fortransfersinaccordancewithArticle17ofAnnexVIItothe
StaffRegulations.
Ifincertaincountriestherateofinflationexceedstheratesof
adjustmentasdefinedabove,furtheradjustmentsshallbemade.
Ahalforathirdoftheamounttobeadjustedshallbegranted
dependingwhetherthisrepresentstwiceorthreetimestherateof
inflation.Theeffectivedatesshallbeeitheratthebeginning
ofthethirdmonthinthereferenoeperiodorthebeginningofthe
secondandfourthmonthsinthereferenceperiod.Thisshallbe
checkedwhentheCommission makesitsproposalinAprilandrechecked
attheannualsalaryreview.
Ifthethresholdisnotreachedattheprovisionalseats
(BrusselsandLuxembourg),theweightingsforthecountrieswhere
inflationhasexceededthethresholdshallbeadjustedinline
withtherateofinflationobservedtherelesstherateobserved
attheprovisionalseats.
Additionalinterimmeasuresshallconcernonlythecountrieswitha
veryhighrateofinflationandalterationstotheirweightingsshall
notbetakenintoacoountforthepurposeofapplyingArticle17of
AnnexVIItotheStaffRegulations (transfers).
ShouldthemeasurestakenunderArticle65(2)resultattheendof
J;heyearinareductionofnominalsalariesinoneoranotherof'
thecountrieswherestaffareemployed,theywillbemaintainedat
» . •,itspresentlevelandthewholeorresidualreductionwouldbe
appliedatthenextadjustment.
ForallapplicationsofArticle65(2)oftheStaffRegulations,and
ifnocommonindicatorsareavailable,thenationalconsumerprice
indexeswillbeused;anylevellingoffbythecommonindexwill
bedoneattheannualreview.