COMMUNICATION FROM THE COMMISSION - REVIEW OF THE METHOD FOR ADJUSTING REMUNERATION
Date: 1996-06-11
Institutions: European Commission
Subjects: European civil service, cost of living, purchasing power, regulations for civil servants, wage determination

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 

Interim review 

3.1.  Annual review 
3.2.  Arrangements for  recovering overpayments 
3.3. 
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) 

Date 

1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 

(3) 

(2) 
Adjustment of 
remuneration 
% t/t-1  cumulative % 
+4,1 
+4,8 
+1,9 
+1,0 
+3,1 

+4,1 
+9,1 
+11,2 
+12,3 
+15,8 
% t/t-1:  percentage change year on year 

(4) 

(5) 

(6) 

(7) 

Consumer price index 

Purchasing power (specific 
indicator) 

% t/t-1  cumulative % 
+4,8 
+4,2 
+3,2 
+3,0 
+2,9 

+4,8 
+9,2 
+12,8 
+16,1 
+19,4 

% t/t-1 
-0,7 
+0,6 
-1,3 
•1,9 
+0,2 

cumulative % 
-0,7 
-0,1 
-1,4 
-3,3 
-3,1 

cumulative %:  cumulative values are calculated by multiplying the year-on-year changes 

20 

10 

-10 

-20 

CUMULATIVE % CHANGE 

Consumer price index . .. -~r»^FT&;4 
_ - * + i 5 ,8 

. . . . - • - + i 6 ; i* 

.^**9X 

_M -  - 'X+§$ 

*-*l?Z  Adjustment of 

remuneration 

Purchasing power (specific indicator) 

T ^ —r 

-3,1 

1.7.91 

1.7.92 

1.7.93 

1.7.94 

1.7.95 

- 4-

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 

Country 

(2) 
Nominal  change 
in net  remuneration 

(3) 
Change in consumer 
price index 

(4) 
Real  change 
in net  remuneration 

B 
DK 
D 
GR 
E 
F 
IRL 
1 
L 
NL 
P 
UK 

(%) 
+17,7 
+12,7 
+13,5 
+44,9 
+21,7 
+13,8 
+26,7 
+13,5 
+35,6 
+10,8 
+46,9 
+19,1 

(%) 
+13,6 
+10,9 
+18,1 
+90,3 
+29,5 
+12,2 
+13,6 
+28,7 
+15,8 
+15,7 
+42,6 
+18,0 

SPECIFIC  INDICATOR  (1.7.94  -1.7.95) 
+2,3 
+1,4 
+1,3 

A 
FIN 
s 

+2,6 
~  +1,0 
+3,0 

SPECIFH 
EU 

C INDICATOR 
+15,8 

+19,4 

' 

(%) 
+3,8 
+1,6 
-3,8 
-23,8 
-5,8 
+1,5 

-11,9 
+17,1 
-4,3 
+3,0 
+1,0 

-0,3 
+0,4 
-1,7 

-3,1 

(5) 
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 

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) 
Date 

1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 

(2) 

(3) 

Gross specific indicator 
cumulative % 
+0,0 
+0,1 
-0,4 
-2,8 
-1,0 

% t/t-1 
+0,0 
+0,1 
-0,5 
-2,4 
+1,8 

(4) 
Control indicator 

(5) 

. 

(6) 

(7) 

Difference 

% t/t-1 
+2,7 
+4,5 
+2,6 
-0,1 
+0,9 

cumulative % 
+2,7 
+7,3 
+10,1 
+10,0 
+11,0 

% t/t-1 
-2,6 
-4,2 
-3,0 
-2,3 
+0,9 

cumulative % 
-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- 

- - * H H ^ ^ ^ ^ ^ t i1- -Q 

Gross specific  indicator 

-"--•--•2,$"" 

OT5 

_ 

-

•++#• 

TOT 

Difference 

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 

CHANGE IN THE COST OF LIVING IN BRUSSELS 

d) 

(2) 

(3) 

(4) 

(5) 

(6) 

(7) 

Date 

Brussels joint  index 

Brussels  consumer  price 
index 

Brussels  composite 
index 

cumulative % 
+4,2 
+8,0 
+10,2 
+12,8 
+13,7 
Brussels composite  index(6)  = 75% Brussels joint index(2)  + 25% Brussels CPI(4) 

cumulative % 
+3,9 
+7,3 
+9,9 
+12,9 
+14,3 

% t/t-1 
+4,2 
+3,6 
+2,1 
+2,3 
+0,8 

% t/t-1 
+3,9 
+3,3 
+2,4 
+2,7 
+1,3 

1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 

Cumulative values are calculated by multiplying the year-on-year  changes 

30 

20 

Cumulative.0/? change 
— -• —  Brussels joint index 

- - •  - - Brussels consumer price index 

—•— Brussels composite index 

% t/t-1 
+4,1 
+3,5 
+2,2 
+2,4 
+0,9 

cumulative % 
+4,1 
+7,7 
+10,1 
+12,8 
+13,8 

+ 13,8 

1.7.91 

1.7.92 

1.7.93 

1.7.94 

1.7.95 

— f— 

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 

(1) 
COUNTRY/PLACE 
B 
DK 
D(Berlin) 
Bonn 
Kaisruhe 
Munich 
GR 
E 
F 
IR 
I 
Varese 
NL 
A 
P 
FIN 
S 
UK 
Culham 

ECONOMIC  PARITIES 

(2) 
1.7.91 

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) 
1.7.92 

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 

(4) 
1.7.93 

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 

3,6093 

3,8702 

4,1109 

0,019399 
0,016929 

0,020171 
0,017241 

0,020582 
0,018072 

(5) 
1.7.94 

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 

(6) 
1.7.95 

(7) 
% 95/91 

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 

(D 

REMUNERATION EXCHANGE RATE* 

(6) 
1.7.95 

(7) 
% 95/91 

(2) 
1.7.91 

(3) 
1.7.92 

(4) 
1.7.93 

(5) 
1.7.94 

1 
0,18665 
0,048593 
5,9133 
3,0703 
0,16337 
0,018230 
36,767 
0,054765 

1 
0,18774 
0,048544 
5,3189 
3,0482 
0,16479 
0,018151 
36,148 
0,054692 

1FB= 
FB 
DKR 
DM 
DRA 
PTA 
FF 
IRL 
LIT 
HFL 
OS 
ESC 
FMK 
SKR 
UKL 
Article 63 of the Staff Regulatbns:  exchange rate used for the implementation of the EC general budget on  1 July* 

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 
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 
0,18699 
0,048650 
6,6260 
3,7205 
0,16389 
0,019945 
44,236 
0,054558 

0,016567 

0,016756 

0,019187 

4,2335 

4,0512 

4,6281 

+1,1 
+0,2 
+48,5 
+39,5 
+3,5 
+17,5 
+58,0 
-0,4 

+21.4 

+33,0 

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) 
COUNTRY/PLACE 
B /L 
DK 
D(Berlin) 
Bonn 
Kalsruhe 
Munich 
GR 
E 
F 
!R 
I 
Varese 
NL 
A 
P 
FIN 
S 
UK 
Culham 

(2) 
1.7.91 
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 

WEIGHTINGS 

(3) 
1.7.92 
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 

(4) 
1.7.93 
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 

85,3 

95,5 

88,8 

117,1 
102,2 

120,4 
102,9 

107,3 
94,2 

(5) 
1.7.94 
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 

(6) 
1.7.95 
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 

(7) 
% 95/91 

-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 

Specific  indicator 

Adjustment of basic  salary 
table 

1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 

cumulative % 
+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 

cumulative % 
+4,1 
+7,7 
+10,1 
+12,8 
+13,8 

cumulative % 
-0,7 
-0,1 
-1,4 
-3,3 
-3,1 

% t/t-1 
-0,7 
+0,6 
-1,3 
-1,9 
+0,2 

% t/t-1 
+3,4 
+4,1 
+0,9 
+0,5 
+1,1 

% t/t-1 
+4,1 
+3,5 
+2,2 
+2,4 
+0,9 

20 

10 

-10 

-20  i 

IL^CUMI^ATIVE°/o- CHANGE 

Brussels composite index 

....--•• +>2,8-

. ^ • +4 
Adjustment of basic salary table 

- • + 1 3 ,8 
i j-1Û,4 

- ^ e ^— 

-9rt^--~^-_ 

,4  _ " ! _ _ "_ 

^SpecificjndicatQr. 

-3;3-

1.7.91 

1.7.92 

1.7.93 

1.7.94 

1.7.95 

H 

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 

1.7.91 

1.7.92 

1.7.93 

1.7.94 

1.7.95 

86,6 

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 
(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. 

from  Article  3(1)  of  Regulation 

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 
In  Article  83(2)  of  the  Staff  Regulations,  the  rate  of 
staff  contributions  to  the  scheme. 
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) 

Date 

1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 

Adjustment of basic 
salary table 

% t/t-1 
+3,4 
+4,1 
+0,9 
+0,5 
+1,1 

cumulative % 
+3,4 
+7,6 
+8,6 
+9,2 
+10,4 

Change in deductions 

% t/t-1 

cumulative % 

-2,9 
•1,3 

-2,9 
-4,2 
-4,2 
-4,2 

(6) 
(7) 
Adjustment of 
remuneration 

% t/t-1 
+3,4 
+1,1 
-0,5 
+0,5 
+1,1 

cumulative % 
+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 

J  CUMULATIVE % CHANGE 

„  -  ^-+7+3 
" —B + 4 ,5 

^QiQrr 

Adjustment of basic salary table 

,6 

f=f9^ 

, 

^*-M0A 

+5,7 

Adjustment of remuneration 

-•--2,9-

-4,2-

•--•••-42- 
Change m deductions 

«-4,2 

•i 

1.7.91 

1.7.92 

1.7.93 

1.7.94 

1.7.95 

20 

10 

•10 

-20 

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 
102,5 

1.7.92 
104,6 

1.7.93 
97,5 

1.7.94 
94,5 

1.7.95 
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) 

Date 

1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 

(2) 
(3) 
Adjustment  of 
remuneration 

(4) 

(5) 

(6) 

(7) 

Brussels  composite 
index 

Purchasing  power 

% t/t-1 
+3,4 
+1,1 
-0,5 
+0,5 
+1,1 

cumulative % 
+3,4 
+4,5 
+4,0 
+4,5 
+5,7 

% t/t-1 
+4,1 
+3,5 
+2,2 
+2,4 
+0,9 

cumulative % 
+4,1 
+7,7 
+10,1 
+12,8 
+13,8 

% t/t-1 
-0,7 
-2,3 
-2,6 
-1,9 
+0,2 

cumulative % 
-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 

-10 

-20 

CHANGE IN CUMULATIVE % 

. - • " + 7 ; 7" 

* * é pT 

- • + i t J , 1-

-»-»-4,e-

Brussels composite index 

.-••-+Î2& 

« + 1 3 .8 

Adjustment of remuneration 

-•-^4r5-

•  +5,7 

Purchasing  power 

-7r3 

"-7,1 

1.7.91 

1.7.92 

1.7.93 

1.7.94 

1.7.95 

H 

—\ 

18 

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 
(6) 
(4) 

(3) 

(2) 

(5) 

(7) 

(1) 

Remuneration of civil 
servants  in the  Member 
States of the EU 

Remuneration  of 
officials  of the  EU 
institutions 

Date 

Difference 

% t/t-1 
-0,7 
-2,3 
-2,6 
-1,9 
+0,2 
(6)  Temporary contribution: payable from 1.1.92 

cumulative0/ 
•0,7 
•0,1 
-1,4 
•3,3 
•3,1 

% t/t-1 
-0,7 
+0,6 
-1,3 
-1,9 
+0,2 

1.7.91 
1.7.92 
1.7.93 
1.7.94 
1.7.95 

cumulative % 
•0,7 
•3,0 
•5,5 
-7,3 
-7,1 

% t/t-1 
+0,0 
-2,9 
-1,3 
+0,0 
+0,0 

cumulative % 
+0,0 
-2,9 
-4,2 
-4,2 
-4,2 

Increased pension contributions: payable from 1.1.93 

(3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 

20 

10 

•10 

-20 

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 
-•-7-,3 

*-3,1 
«-7,1 

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 

EN 

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Catalogue number  : CB-CO-96-268-EN-C 

ISBN 92-78-05235-3 

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