Report from the Commission, to the Council and the European Parliament on the system of remuneration
Date: 1999-12-08
Institutions: European Commission
Subjects: conciliation, remuneration of work, social-security contribution

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 8.12.1999
COM(1999) 650 final

REPORT FROM THE COMMISSION TO THE COUNCIL
AND THE EUROPEAN PARLIAMENT

on the system of remuneration

1.

2.

Introduction ............................................................................................................... 4

Background ................................................................................................................ 5

2.1.

Basic principles..................................................................................................... 5

2.2.

The history of the method for adjusting remuneration ........................................... 5

2.3.

The 1991 method .................................................................................................. 6

2.4.

Report on the 1996 mid-term review ..................................................................... 7

2.5.

Other reports relating to the method ...................................................................... 7

2.5.1. Report on the exception clause .................................................................... 7

2.5.2. Reports on recruitment requirements........................................................... 8

2.5.3. Reports on statistical methods ..................................................................... 8

2.5.4. Reports on Annex VII ................................................................................. 8

2.5.5. Reports on Annex X (weightings outside the Community) .......................... 9

2.6.

Reports on pensions .............................................................................................. 9

2.7.

Situation on expiry of the 1991 method ................................................................. 9

3.

The system of remuneration .................................................................................... 11

3.1.

Basic salary......................................................................................................... 11

3.2.

Allowances (Annex VII) ..................................................................................... 12

3.2.1. Family allowances..................................................................................... 12

3.2.2. Other allowances....................................................................................... 14

3.3.

Social security contributions and taxes ................................................................ 15

3.3.1. Social security contributions ..................................................................... 15

3.3.2. Taxes and contributions............................................................................. 15

2

3.4. Weighting ........................................................................................................... 16

3.5.

Budgetary cost of remuneration by institution in 1998 in EUR million ................ 18

4.

Changes in remuneration in Brussels and Luxembourg ........................................ 19

4.1.

Changes in the purchasing power of national civil servants (specific indicator) ... 19

4.1.1. Comparison of changes in the gross specific indicator and the control

indicator ................................................................................................... 21

4.2.

Brussels cost of living ......................................................................................... 23

4.3.

Adjustment of gross remuneration....................................................................... 24

4.4.

Effects of the quid pro quo for the method .......................................................... 25

4.4.1. Temporary contribution............................................................................. 25

4.4.2. Increase in pension contributions............................................................... 25

4.5.

Net remuneration ................................................................................................ 26

4.6.

Purchasing power of Community officials........................................................... 27

4.7.

Comparative purchasing power of national civil servants' and Community
officials' remuneration ........................................................................................ 28

4.8.

Summary table .................................................................................................... 28

5.

Remuneration outside Brussels and Luxembourg (weightings)............................. 30

5.1.

Economic parity.................................................................................................. 32

5.2.

Annual exchange rate.......................................................................................... 33

5.3.

The changeover to the euro in 1999 and the weightings....................................... 34

5.4.

Recovery of overpayments .................................................................................. 35

6.

Conclusions............................................................................................................... 36

3

1.

INTRODUCTION

The legal basis for remuneration is laid down in Title V (Articles 62 to 85a and
56 to 56b) of, and Annexes VII and XI to, the Staff Regulations1 of Officials of
the European Communities.

The 1991 method was the result of negotiations2 between the Council,
representatives of the Community institutions and representatives of the staff of
those institutions.

The quid pro quo for the method has been a reduction3 in remuneration through
the introduction of a temporary contribution and an increase in pension
contributions. The method is binding on staff and on the institutions until
30 June 2001 and they must therefore see to it that the agreement is complied
with.

In 1996, in response to requests from the Council at the time of the interim
review provided for in the method, the Commission reached the conclusion that
the method had operated correctly, that there was therefore no justification for
amending it, and that amendment would go against the commitments entered
into by the parties as part of the 1991 agreement.

In December 1998, in response to requests from the Council during discussions
on the annual adjustment of remuneration, the Commission agreed to propose a
timetable for the presentation of communications and reports required under the
reform process. The timetable presented to Parliament by President Santer in
January 1999 provides inter alia for the presentation of a report on the system of
remuneration by 8 December 1999.

This report therefore analyses the current system of remuneration and the
operation of the system of adjustment.4 It is expected to serve as the basis for
drawing up, by mid 2000, of suitable proposals5 in the perspective of the expiry
of the current agreement on the method in July 2001.

1

2

3

4

5

Council Regulation (EEC) No 259/68 adopted pursuant to Article 24 of the Treaty establishing a
Single Council and a Single Commission of the European Communities.

Within the Concertation Committee.

Reduction in net remuneration resulting from the crisis levy introduced under the 1981 method.

The Commission has asked an outside consultant to carry out a comparative study of the
remuneration of civil servants in the Member States and of employees of international
organisations and multinational companies. It is due to be completed at the beginning of the
year 2000.

At the Cologne European Council on 3 and 4 June 1999, the European Council recalled that "the
method of adjusting remuneration and pensions expires on 30 June 2001. It welcomes the
Commission's intention of submitting relevant reform proposals in good time and also at the same
time explaining its thinking on the reform of staffing policy".

4

2.

BACKGROUND

2.1.

Basic principles

The legal basis in matters of remuneration is provided by the Staff Regulations6
the European Communities. The system for adjusting
of Officials of
remuneration, which is governed by Articles 64 and 65 of those Regulations, is
based on the following two principles:

–

–

parallel development of the remuneration of officials of the European
institutions and that of civil servants in the Member States;

purchasing power parity between the remuneration paid in the various
places of employment and that paid in Brussels (Article 24 of the
Treaty).

The rules for applying these general principles have always been established on
the basis of consensus so as to prevent conflict.

2.2.

The history of the method for adjusting remuneration

Since 1971, regular negotiations have led to agreements establishing the rules
for applying Articles 64 and 65 of the Staff Regulations.

the Council has rigorously applied the principle of the
For many years,
adjustment of remuneration in parallel with that in the national civil services
through methods laid down in the rules and binding on staff and the institutions.

This procedure, based on detailed and binding methods and enshrined in rules,
has avoided annual negotiations and the risk of conflict.

The Council's decisions have, via the following agreements, combined a
negotiated and a procedural approach:

–

–

–

the 1972 and 1976 Agreements, which confirmed the parallel
adjustment of remuneration as a basic principle;7

the Concertation Committee:8
concertation procedure in 1981;

the Council

established

the

the 1981 method: this was adopted for ten years and coincided with
the introduction of a crisis levy;9

6

7

8

9

In particular Title V and Annexes VII and XI.

The 1976 method: "I. Basic principle - The Council considers that the system of adjusting
the
remuneration forms part of a policy aiming to guarantee,
remuneration paid to European officials moves parallel to average salaries paid in the Member
States to the various grades of national civil servants".

in the medium term,

that

The Council, representatives of the Community institutions and representatives of the staff of
those institutions.

The 1981 method and the crisis levy came to an end in June 1991.

5

–

the 1991 method agreement: the Council adopted the 1991 method
(Annex XI to the Staff Regulations) for ten years and, at the same time,
introduced a
temporary contribution and increased pension
contributions.

2.3.

The 1991 method agreement

The Commission presented a proposal in October 1990. An in-depth technical
examination was made of the proposal10 during the first half of 1991 which was
to the Permanent Representatives Committee dated
detailed in the report
29 April 1991.11

The matter was examined by the Permanent Representatives Committee and by
the Council (15 meetings of the Committee, three meetings of the Council
(general affairs) and one European Council) and was the subject of various
meetings between the Presidency, the Commission and staff representatives. The
negotiations resulted in eight days of strikes and other action. The compromise
reached in the Concertation Committee was put to the staff in referendums in
October 1991.

The Council approved the compromise agreement in November and confirmed
its approval by adopting Regulations based on the agreement on 19 December
1991.

The note transmitted by the Permanent Representatives Committee12 to the
Council prior to its decision on 4 November 1991, subsequently confirmed by the
Court's case-law, describes the compromise negotiated with the Council and
approved by the Council in December 1991 as a "comprehensive solution" which:

(a)

(b)

introduces a procedure for adjusting remuneration.13
is
binding on all parties and is valid for ten years, from 1 July
1991 to 30 June 2001;

It

reduces the level of remuneration through two additional
components, i.e.:

–

a temporary contribution14 applicable, from 1 January
1992 to 30 June 2001, at a gross rate of 5.83%15 on that
part of
the remuneration exceeding the minimum
remuneration;

10

11

12

13

14

15

Three meetings of an ad hoc working party, with a report to the Permanent Representatives
Committee on 8 February 1991, and five meetings of the Working Party on the Staff Regulations.

Doc. 5926/91, STAT11, FIN124.
Doc. 9012/91, STAT37, FIN372.
Annex XI to the Staff Regulations.

Article 66a of the Staff Regulations.

The temporary contribution entails an average reduction of about 2.9% in net remuneration for an
unmarried non-expatriate official.

6

–

an increase in the staff contributions to the pension
scheme from 6.75% to 8.25% of basic salary from
1 January 1993.

2.4.

Report on the 1996 mid-term review

Annex XI provides for a review in 1996, at
the end of the fifth year of
application, with the possibility of revision on the basis of a proposal from the
Commission. The purpose of the objective review was to verify that
the
principle of parallel development had been correctly applied.

The 1996 mid-term report showed that, over the period 1991 to 1995, the
purchasing power of Community officials had fallen in line with that of national
civil servants (-3.1%), that the temporary contribution and the increase in
pension contributions had further reduced the purchasing power of officials (-
4.2 %) and that conflict had been avoided.

In the light of those conclusions and in response to concerns expressed by the
delegations, the Council asked the Commission to carry out any necessary
studies
to the Staff
Regulations, pensions, exception clause17) and to send it any appropriate
proposals as soon as possible,
in particular concerning certain allowances
provided for in Annex VII to the Staff Regulations.

(statistical methods, Annex VII

in several

fields16

In reply, the Commission said that amending the method in any way, when it
had achieved its objectives, would have affected both the substance of the final
compromise resulting from the 1991 negotiations and the commitments entered
into by the parties to it, and that there was therefore no justification for any
proposal to amend any of the components of the compromise.

2.5.

Other reports relating to the method

In response to requests from the Council,
following reports:

the Commission presented the

2.5.1.

Report on the exception clause18

In its report SEC (94)1027, sent
the
Commission took the view that there was no reason to apply the exception
clause because the economic situation had already affected the remuneration of
national civil servants and, through the application of the method, had therefore

to the Council on 27 June 1994,

16

17

18

Listed on page 3 of document 10815/96 STAT 41 FIN 476.

Article 10 of Annex XI.

Article 10 of Annex XI to the Staff Regulations stipulates 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".

7

automatically affected the remuneration of officials of
institutions.

the Community

2.5.2.

Reports on recruitment requirements19

The third report, SEC 99/754 dated 7 June 1999, was sent to the Council and
Parliament on 9 June 1999.

The period covered by the report (1995-97) was characterised mainly by the
enlargement exercises in Austria, Finland and Sweden. Leaving aside the
enlargement
balanced
recruitment was
reasonably well
geographically,
countries were heavily represented.
Difficulties remain as regards attracting applicants from certain Member States.

although the host

competitions,

2.5.3.

Reports on statistical methods

The statistical methods were examined in 1994. In 1997, on the basis of that
examination, Eurostat presented three reports, on housing parities, consumption
patterns and price surveys. In 1998 Eurostat presented a report on statistical
methods to the Working Parties on Article 64 and Article 65 of the Staff
Regulations.

At the request of the Working Party on the Staff Regulations, the Council's
Legal Service issued an opinion, which concluded that "In adopting annual
Regulations adjusting remuneration and weightings, the Council cannot depart
from the method laid down in Annex XI to the Staff Regulations for a period of
ten years".

2.5.4.

Reports on Annex VII

In 1993, the Commission presented a report20 to the Council on the provisions of
Annex VII to the Staff Regulations and their application. At
the Council's
request, the figures were updated in 1998.

After completing its work the Working Party on the Staff Regulations presented
its conclusions to the Permanent Representatives Committee on 13 June 1999
and proposed:

it repeat

"that
the Council's invitation to the Commission to submit any
appropriate proposals concerning Annex VII to the Staff Regulations; that, on
that occasion, it invite the Commission to take account of the comments and
conclusions set out in [the] report; and that it remind the Commission of its

19

20

Article 2 of Annex XI to the Staff Regulations 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".

Doc. 11555/93 STAT 44 FIN 466.

8

undertaking to begin discussions at the earliest opportunity on the method for
the adjustment of remuneration".

The Commission, recalling the special situation arising from its resignation on
15 March 1999, said that it would give its views on the conclusions of the
Working Party on the Staff Regulations at the appropriate time.

2.5.5.

Reports on Annex X (weightings outside the Community)

As specified in Annex X to the Staff Regulations, the Commission must send
the Council an annual report on the application of Annex X. The most recent
report (SEC (1999)1023), dealing with 1997 and 1998, was sent on 29 June
1999.

More recently,
the Commission has made a number of changes to the
administrative procedures for calculating the weightings outside the Community
which will appreciably reduce (by around 50%) the cost of gathering the data
required from the year 2000.

2.6.

Reports on pensions

the Council's request,

At
the KPMG report of December 1998 on its
comparative and actuarial study was sent to the Council on 18 December 1998
and has been discussed on various occasions by the Working Party on the Staff
Regulations.

The Commission is drawing up a communication on this.

2.7.

Situation on expiry of the 1991 method agreement

The method (Annex XI
to the Staff Regulations) and the temporary
contribution21 (Article 66a of the Staff Regulations) apply until 30 June 2001.
The increased pension contributions will continue to apply after 30 June 2001.

In the absence of a new agreement for the annual review of remuneration in
2001, the Commission and the Council will to some extent be able to use their
discretion in applying Articles 64 and 65.22

21

22

The temporary contribution entails an average reduction of about 2.9% in net remuneration for an
unmarried non-expatriate official.

Article 64 of the Staff Regulations:

An official's remuneration expressed in euros shall, after the compulsory deductions set out in
these Staff Regulations or in any implementing regulations have been made, be weighted at a rate
above, below or equal
to 100%, depending on living conditions in the various places of
employment.

These weightings shall be adopted by the Council, acting by a qualified majority on a proposal
from the Commission as provided for in the first indent of the second subpararaph of Article
148(2) of the Treaty establishing the European Economic Community and 118(2) of the Treaty
establishing the European Atomic Energy Community. The weighting applicable to the
remuneration of officials employed at the provisional seats of the Communities shall be equal to
100% as at 1 January 1962.

9

Accordingly, the proposal for the annual adjustment to be presented by the
Commission for adoption by the Council (by a qualified majority):

• will have to respect the principles of parallel development with national civil
servants and parity of purchasing power between Community officials;

• will require interinstitutional negotiations with staff representatives within

the Concertation Committee.

Article 65 of the Staff Regulations:

1.
The Council shall each year review the remunerations of the officials and other servants
of the Communities. This review shall take place in September in the light of a joint report by
the

Commission based on a joint index prepared by the Statistical Office of the European
Communities in agreement with the national statistical offices of the Member States; the
shall reflect the situation as at 1 July in each of the countries of the Communities.

index

policy of
taken of any

During this review the Council shall consider whether, as part of economic and social
the Communities, remuneration should be adjusted. Particular account shall be
increases in salaries in the public service and the needs of recruitment.

2.
two
them

In the event of a substantial change in the cost of living, the Council shall decide, within
months, what adjustments should be made to the weightings and if appropriate to apply
retrospectively.

3.
For the purposes of this Article, the Council shall act by a qualified majority on a
proposal from the Commission as provided for in the first indent of the second subparagraph of
of the Treaty establishing the European Economic Community and 118(2) of the
Articles 148(2)
Treaty establishing the European Atomic Energy Community.

10

3.

THE SYSTEM OF REMUNERATION

Remuneration, the legal basis for which is the Staff Regulations applicable to
officials of
family
allowances and other allowances24 less social security contributions, tax and the
temporary contribution. It is weighted at a rate above, below or equal to 100%.25

the European Communities,23 comprises basic salary,

Although the system in Belgian francs could have functioned until January
2002, the Council Decision of 12 November 1998 brought forward to 1 January
1999 conversion into euros of the amounts provided for in the Staff Regulations
(basic salary, allowances, contributions,
taxes, exchange rate applied to
remuneration, etc.) and used for calculating remuneration, pensions and other
financial entitlements (mission allowances, medical expenses, etc.).

The effect of the changeover on the budget and on emoluments was neutral and
did not change the value of officials' remuneration.

Consequently, since 1 January 1999,
the remuneration, pensions and other
financial entitlements of Community staff have been paid in euros in the eleven
participating countries and in national currency in the other four Member States.

All the figures given below are therefore expressed in euros and are valid from
1 January 1999.

3.1.

Basic salary

The basic salary is determined for each category, grade and step as follows:26

23

24

25

26

In particular Title V and Annexes VII and XI.

Article 62 of the Staff Regulations: "Remuneration shall comprise basic salary, family allowances
and other allowances".

Article 64 of the Staff Regulations: "An official's remuneration expressed in Belgian francs shall,
after the compulsory deductions set out in these Staff Regulations or in any implementing
regulations have been made, be weighted at a rate above, below or equal to 100%, depending on
living conditions in the various places of employment".

Article 66 of the Staff Regulations.

11

Table 3.1

ST EP

1

2

3

4

5

6

7

8

9998,68 10484,63 10970,58 11456,53
9422,05
8284,15
7892,66
6901,10
6662,73
5873,55
4976,18

8663,45
7231,62
6136,61
5182,68

9042,75
7562,14
6399,67

G RADE

A1
A2
A3 / LA3
A4 / LA4
A5 / LA5
A6 / LA6
A7 / LA7
A8 / LA8
B1
B2
B3
B4
B5
C1
C2
C3
C4
C5
D1
D2
D3
D4

9026,78
7525,55
6240,06
5347,43
4563,18

9512,73
7904,85
6570,58
5610,49
4769,68

10959,87 11542,07 12124,27 12706,47 13288,67 13870,87
9725,98 10281,53 10837,08 11392,63 11948,18 12503,73
8054,88
6766,95
5579,02
4821,31
4150,18
3670,46
4821,31
4177,30
3503,88
3030,55
2708,91
3091,03
2688,55
2507,91
2266,09
2089,47
2361,41
2153,15
2004,02
1889,52

8540,83
7146,25
5909,54
5084,37
4356,68
3818,48
5084,37
4373,14
3666,72
3171,77
2823,19
3215,67
2802,78
2605,78
2357,88
2175,09
2464,66
2244,85
2089,79
1967,01

5610,49
4764,82
3992,40
3454,21
3051,75
3464,95
3031,24
2801,52
2541,46
2346,33
2671,16
2428,25
2261,33
2121,99

5347,43
4568,98
3829,56
3312,99
2937,47
3340,31
2917,01
2703,65
2449,67
2260,71
2567,91
2336,55
2175,56
2044,50

3589,59
3145,47
2899,39
2633,25

3714,23
3259,70
2997,26
2725,04

6136,61
5156,50
4318,08
3736,65

5873,55
4960,66
4155,24
3595,43

2877,66
2611,65
2432,87

2774,41
2519,95
2347,10

6399,67
5352,34
4480,92
3877,87

6662,73
5548,18
4643,76
4019,09

3838,87
3373,93
3095,13
2816,83

3963,51
3488,16
3193,00
2908,62

2980,91
2703,35
2518,64

3084,16
2795,05
2604,41

Value
of step
582,20
555,55
485,95
379,30
330,52
263,06
206,50
148,02
263,06
195,84
162,84
141,22
114,28
124,64
114,23
97,87
91,79
85,62
103,25
91,70
85,77
77,49

3.2.

Allowances (Annex VII)27

3.2.1.

Family allowances

Family allowances are of a complementary nature: all payments of the same
nature received from other sources are deducted from the Community
allowance.

The household allowance28 is paid to a married official or other servant whose
spouse is either not gainfully employed or whose salary does not exceed the
basic salary of a Grade C3/3 official or to an official or other servant who has
one or more dependent children.29

Article 1 of Annex VII to the Staff Regulations sets the household allowance at
5% of the basic salary.

27

28

29

See also point 2.5.4.
Article 67 of the Staff Regulations, Article 1 of Annex VII to the Staff Regulations, general
implementing provisions (adopted on 11 April 1988).

By special reasoned decision of the appointing authority, the household allowance may also be
paid to an official or other servant who does not fulfil the above conditions but who does,
however, actually assume family responsibilities.

12

The dependent child allowance30 is a fixed sum per child designed to help the
official or other servant cover additional expenditure on the maintenance of a
dependent child. The allowance is granted automatically for children under
18 years of age and on application, with supporting evidence, for children
between 18 and 26 who are receiving educational or vocational training.31

The dependent child allowance is EUR 213.61 per child per month.32

The dependent child allowance is of a complementary nature: all payments of
the same nature received from other sources are deducted from the Community
payment.

The education allowance33 is designed to cover the cost of the regular full-time
attendance by a child of an official or a member of the temporary staff at an
educational establishment in the country of posting or elsewhere.

Article 3 of Annex VII specifies the maximum actual education costs incurred
by the official or member of the temporary staff covered by the education
allowance.

In the interests of streamlined efficient administration most of the educational
allowances are fixed sums expressed as a percentage of a maximum amount
(EUR 190.90) and vary according to the age of the child and the type of
education.34

Article 67 of the Staff Regulations, Article 2 of Annex VII to the Staff Regulations, general
implementing provisions (assimilation to dependent child) which entered into force on 1 February
1997 (repealing and replacing those of 1 October 1989).

In addition, any person whom the official has a legal responsibility to maintain and whose
maintenance involves heavy expenditure may be treated as a dependent child. It should also be
noted that the allowance continues to be paid in respect of a child prevented by serious illness or
invalidity from earning a livelihood throughout the period of that illness or invalidity.

Under Article 67(3) of the Staff Regulations, in exceptional circumstances, the amount may be
doubled by special decision of the appointing authority where the child concerned is suffering
from a mental or physical handicap which involves the official in heavy expenditure.

Article 67 of the Staff Regulations, Article 3 of Annex VII to the Staff Regulations, general
implementing provisions (adopted on 1 March 1975).

The official is entitled:
-
the
-
equal to 50% of the maximum amount;
-

for a child under the age of 11 attending primary school, to a fixed sum equal to 36% of
maximum amount;
for a child over the age of 11 attending a primary or secondary school, to a fixed sum

for a child in higher education, to a fixed sum equal to 100 % of the maximum amount.

An amount not exceeding the maximum amount may be paid to officials on presentation of the
supporting documents.

Up to double the maximum amount may be paid to officials whose place of employment is at least
50 km from a European school or an educational establishment working in their language which a
child attends for imperative educational reasons.

Officials receiving the expatriation allowance and whose place of employment is at least 50 km
from an establishment of higher education in the country of which they are nationals or working
in their language receive double the maximum amount.

13

30

31

32

33

34

3.2.2. Other allowances

The expatriation allowance35 is intended to compensate officials and other
servants for the costs and difficulties entailed by moving from their country of
domicile to their country of employment with the Communities and living in a
foreign environment.

It is the only allowance which compensates officials and other servants for costs
and difficulties arising directly from their being posted outside their country of
origin.

Article 4 of Annex VII to the Staff Regulations sets the expatriation allowance
at 16% (4% for officials who do not meet all the requirements) of the basic
salary, the household allowance and the dependent child allowance.36

The secretarial allowance37 was introduced by a Council Decision in 196538 to
cope with the difficulties in recruiting multilingual secretarial staff as a result of
the significant increases in the salaries for such posts in both the public and
private sectors in certain Member States.

The allowance, paid by all the institutions, was initially paid only to secretarial
staff of certain nationalities, but since 1971 it has, in accordance with the
principle of equal treatment, been paid to all officials and other servants
principally carrying out secretarial functions.

35

36 1.

Legal basis: Article 69 of the Staff Regulations, Article 4 of Annex VII to the Staff Regulations.

An expatriation allowance shall be paid, equal to 16% of the total amount of the basic salary plus
household allowance and the dependent child allowance paid to the official:

(a)

to officials:

–

–

who are not and have never been nationals of the State in whose territory the
place where they are employed is situated, and

who during the five years ending six months before they entered the service did
not habitually reside or carry on their main occupation within the European
territory of that State. For the purposes of this provision, circumstances arising
from work done for another State or for an international organization shall not
be taken into account;

(b)

to officials who are or have been nationals of the State in whose territory the place
where they are employed is situated but who during the 10 years ending at the date of
their entering the service habitually resided outside the European territory of that State
for reasons other than the performance of duties in the service of a State or of an
international organization.

The expatriation allowance shall not be less than EUR 381.61 per month.

2.

An official who is not and has never been a national of the State in whose territory he is
employed and who does not fulfil the conditions laid down in paragraph 1 shall be entitled to
a foreign residence allowance equal to one quarter of the expatriation allowance.

Article 4a of Annex VII to the Staff Regulations: "An official in Category C employed as a copy
typist, shorthand-typist, telex operator, varitypist, executive secretary or principal secretary may
be paid a fixed allowance. The amount of this allowance shall be determined by the Council in
accordance with the procedure laid down in Article 65(3) of the Staff Regulations."

Regulation No 30/65/EEC.

37

38

14

This temporary fixed allowance, originally paid for two years, was regularly
extended until the Council made it permanent in 1978.39

Since the introduction of information technology, the allowance has, subject to
certain requirements, been paid to clerical officers in Category C. Those
requirements may vary in the light of the specific role of each institution.

The monthly amount of the secretarial allowance is adjusted each year during
the annual review of remuneration. It is currently EUR 99.55 per month for
secretaries in Grades C4-C5 and EUR 152.63 per month for secretaries in
Grades C3-C1.

3.3.

Social security contributions and taxes

3.3.1.

Social security contributions

Pension contributions are set at 8.25 % of the basic salary. They are paid into the
Community budget. Officials contribute one third of the funding required for the
pension scheme .40

The sickness insurance contribution is set at 1.70% of the basic salary.
Officials contribute one third of the funding required for the scheme, subject to a
limit of 2% of the basic salary.41

The accident insurance contribution is set at 0.1% of the basic salary.42

The unemployment insurance contribution, equal to 0.4% of the basic salary,
is paid only by members of the temporary staff.

3.3.2.

Taxes and contributions

Officials are subject to the following:43

Community tax,44 imposed at source and paid into the Community budget.
There are fourteen rates of tax, ranging from 8% to 45%, each one of which is
levied on a separate band of taxable income.45 The marginal rate of 8% is levied

39

40

41

42

43

44

45

Regulation (EEC) No 914/78 of 2 May 1978.

Article 83(2) of the Staff Regulations.

Article 72 of the Staff Regulations.

Article 73 of the Staff Regulations.

Plus taxes at the place of residence not related to income from the Communities: VAT, local
taxes (taxes for rubbish collection, etc.), property taxes payable by property owners, etc.

Article 13 of Chapter V of the Protocol on the Privileges and Immunities of the European
Communities and Council Regulation 260/68.

Article 3 of Council Regulation (EEC, Euratom, ECSC) No 260/68:

1.
Communities

The tax shall be payable each month on salaries, wages and emoluments paid by the

to each person liable.

15

on taxable monthly amounts between EUR 82.94 and EUR 1 463.98. The
marginal rate of 45% is levied on that part of the taxable monthly income above
EUR 5 238.80;

a temporary contribution46 of 5.83% on that part of the remuneration above
the minimum remuneration.47 Introduced as part of the method, it is paid into the
Community budget.

3.4.

Weighting

A weighting is applied to the remuneration of officials posted within the
European Union but outside Belgium and Luxembourg in order to compensate
for the (positive or negative) difference in the cost of living compared with
Brussels. This does not therefore represent an advantage or disadvantage for the
officials concerned; it simply guarantees that their purchasing power is equal to
that of officials working in Brussels.

However, monies and allowances, whether

2.
lump sums or not, which represent
compensation for expenses incurred in the performance of official duties, shall be excluded from
the basic taxable amount.

3.
taxable amount:

The family allowance and social benefits listed below shall be deducted from the basic

(a)

family allowances: head of household allowance, dependent child's allowance,

education allowance, allowance on the birth of a child;

(b)

(c)

(d)

social assistance;

allowances paid on account of occupational disease or accident;

that part of any payment which represents family allowances.

The amount to be deducted shall be calculated, with due regard, where appropriate, to the
provisions of Article 5.

46

Article 66a(1) and (2) of the Staff Regulations:

"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.
paragraph 3, shall be 5.83%.

(a)

The rate of this temporary contribution, which shall apply to the base defined in

(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 a proposal from the Commission".

47 Article 66a(3) of the Staff Regulations: 'The base for the temporary contribution shall be the basic salary
for the grade and step used to calculate remuneration, minus social security and pension contributions
and the tax, before any temporary contribution, payable by an official in the same grade and step
without dependants within the meaning of Article 2 of Annex VII, and an amount equal to the basic
salary of an official in Grade D4, step 1".

16

The system used for the salaries of officials posted outside the EU follows the
same basic principle of maintaining purchasing power at the level pertaining to
Brussels, but features a number of significant differences.48

48

Firstly, weighting is applied only at the specific request of the official. In most cases, the
weighting is applied to a maximum of 80% of the salary.
Secondly, in calculating the weighting, no account is taken of differences in rents or in the cost of
education or medical services, since these facilities are either supplied by or their cost reimbursed
by the Commission.
Thirdly, the method used to deal with rapid changes in prices differs slightly from that used for
weightings within the Community.

17

3.5.

Budgetary cost of remuneration by institution in 1998 in EUR million

Table 3.2

Expenditure

Com mission

Council

P arliament

ES C and

Court of

Court of

COR

Justice

Auditors

Agencies

T otal

expenditure

% total

Basic salary
A1100 and A1000
Household
allowance A1101
and A1002
Expatriation/
foreign
residence
allowance A1102
residence

A1001
Fixed allowance
(secretarial)
A1103

Fixed
allowances: fixed
rate allowance
A1143 and
entertainment
allow ance A1003

Weightings
A1090 and A1190

1160,59

132,94

208,13

11,80

61,12

33,59

42,84

1651,01

102,8%

107,88

12,09

18,56

0,82

5,16

3,00

8,79

156,28

9,7%

137,90

18,19

29,44

1,59

9,60

5,32

5,57

207,61

12,9%

8,36

1,96

2,29

0,13

0,36

0,19

0,41

13,70

0,9%

0,34

-

0,08

0,03

0,38

-

0,01

0,83

0,1%

13,61

1,85

1,21

-

1,01

0,80

8,42

26,89

1,7%

Gross total

1429,00

167,00

260,00

14,00

78,00

43,00

66,00

2056,00

128,1%

Ow n resources

T ax 400

P ension
contribution 401
T em porary
contribution 403
T otal
contributions
and tax

204,99

101,68

15,87

11,22

24,51

18,26

27,17

2,78

4,39

4,00

3,14

0,73

9,05

4,51

1,41

4,70

2,59

0,78

4,75

3,63

0,83

267,88

16,7%

145,03

9,0%

38,09

2,4%

333,84

29,87

47,16

7,88

14,97

8,07

9,22

450,99

28,1%

Net total

1094,85

137,16

212,55

6,48

62,66

34,82

56,81

1605,33

100,0%

i.e. 38% of
The total cost
expenditure and 1.9% of the Community budget for 1998.49

is thus EUR 1 605 million,

the administrative

49

Administrative expenditure: EUR 4 223.3 million; Community budget: EUR 82 798.9 million
(Source: The Community Budget: The Facts in Figures (1999 Edition)).

18

4.

CHANGES IN REMUNERATION IN BRUSSELS AND LUXEMBOURG

the remuneration of officials of the European
The basic principle is that
institutions must develop in parallel with that of national civil servants in the
Member States.

This means that if the average increase for national civil servants in 1998 was
2% below (or above) the national rate of inflation, the increase for Community
officials the following year will also be 2% below (or above) the rate of inflation
in Brussels.

It should be noted that 89% of Community officials work in Brussels or
Luxembourg.

Adjustments are usually made in December, applying retrospectively from
1 July.50

In order to apply this principle in accordance with Article 65 of the Staff
Regulations and Article 1 of Annex XI51 to the Staff Regulations, the Council
carries out an annual examination of the remuneration of officials and other
servants of the Communities on the basis of a report from the Commission.

The Statistical Office of the European Communities (Eurostat)52 draws up the
report in agreement with the national statistical institutes in the Member States
on the basis of information supplied by the national departments concerned.
Eurostat is therefore the source of all the information in connection with this
chapter.

4.1.

Changes in the purchasing power of national civil servants (specific
indicator)

In order to respect the principle of parallel development, the difference (positive
or negative) between the adjustment to the remuneration and inflation must be
the same for Community officials and national civil servants.

50

51

52

Article 3(1) of Annex XI to the Staff Regulations lays down 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 criteria set out in Section 1, shall take a decision before the end of
each year adjusting remunerations".

Article 1(1) of Annex XI to the Staff Regulations lays down that "For the purposes of the review
provided for in Article 65(1) of the Staff Regulations, the Statistical Office of the European
Communities - hereinafter called the 'Statistical Office' - shall draw up every year before the end
of September 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, hereinafter called 'changes in purchasing power'.
The reference period for these data shall be the 12 months preceding 1 July of the year in which
the review is carried out".

Article 11 of Annex XI to the Staff Regulations specifies that: "It shall be the task of the
Statistical Office of the European Communities to monitor the quality of basic data and statistical
methods used to work out the factors taken into account for the adjustment of remunerations. In
particular, it shall make any assessments or carry out any studies required for such monitoring".

19

The following table shows that between 1991 and 1998 the purchasing power of
national civil servants in the Member States of the European Union fell by an
average of 2.0%.

Table 4.1

Purchasing power of national civil servants

Cumulative % change

30

20

10

+9,1

+4,1

+4,8

+24,3

+26,4

+23,8

+22,2

+21,1

+16,1

+19,4

+15,8

+18,3

+12,7

+12,3

+11,2

+9,2

Adjustment of
remunerations
EUR15
Consumer price index
EUR15

Purchasing power
(specific indicator)

0

-10

-0,7

-0,1

-1,4

-3,3

-3,1

-3,2

-2,5

-2,0

(Source: Eurostat)

1.7.1991

1.7.1992

1.7.1993

1.7.1994

1.7.1995

1.7.1996

1.7.1997

1.7.1998

1.7.1999

1.7.2000

Annex XI specifies53 how Eurostat must measure the change using the specific
indicators, which reflect changes in the purchasing power54 of civil servants in
each central government of the Member States.55

The method to be used, along with the rules for its practical application, is laid
down56 by the Working Party on Article 65 of the Staff Regulations. The
Working Party is composed of representatives of the Member States and is
chaired by Eurostat.

All calculations are based on the data sent to Eurostat by the relevant departments
of the national administrations in the Member States relating to the remuneration
of central government staff on 1 July of the current year.

The following table57 shows that changes have differed greatly from Member
State to Member State.

53

54

55

56

57

Article 1(4) of Annex XI to the Staff Regulations lays down that "For the purpose of measuring
the percentage change, either upward or downward, in the purchasing power of salaries in the
national civil services, the Statistical Office shall, on the basis of information supplied by the
national departments concerned, calculate specific indicators reflecting changes in the real
remuneration of civil servants in each central government during the reference period".

Nominal increase less inflation.

EU average weighted according to total emoluments.

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.

Since 1994, the specific indicator has taken account of the situation in Finland, Austria and
Sweden.

20

Table 4.2

C hange in the purchasing pow er of salaries of civil servants in central
government in the Member States
Specific indicator 1990-98

(3)
Net

(4)

rem uneration Cost of living

(1)

(2)
Weighting in
1998
(%)
3,9
1,8
28,4
2,1
4,4
22,8
0,8
16,0
0,3
3,0
2,1
2,6
0,7
1,4
9,8
100,0

C ountry
B
D K
D
GR
E
F
IR L
I
L
N L
A
P
FIN
S
U K
EU R 15

(%)
+21,3
+24,6
+17,9
+66,9
+29,8
+18,7
+48,3
+27,3
+46,8
+18,3
+7,8
+63,6
+13,7
+7,3
+35,2
+23,8
EUR12 until 1.1.1995 then EUR15

(5)
Purchasing
power
(% )
+1,6
+5,7
-4,3
-25,2
-6,6
+1,5
+23,1
-7,7
+22,6
-3,9
+3,1
+5,7
+9,1
+1,9
+5,3
-2,0

(6)
Weighted
effect
(%)
0,1
0,1
-1,2
-0,5
-0,3
0,3
0,2
-1,2
0,1
-0,1
0,1
0,1
0,1
0,0
0,5
-2,0

(%)
+19,5
+17,8
+23,2
+129,8
+39,1
+17,1
+20,3
+38,2
+19,9
+23,0
+6,4
+54,8
+4,2
+5,3
+28,6
+26,4

Example Germany :(5) 117,9/123,2 = 95,7 ;(6) -4,3 x 28,4/100 =-1,2

(Sour ce : Eur os tat)

A total of ten Member States (in particular Ireland and Luxembourg) gave their
civil servants an increase above the rate of inflation and five Member States (in
particular Greece) an increase below the rate of inflation.

It should be noted, however, that the changes in four Member States (Germany,
France, the United Kingdom and Italy) account for 77% of the final result.58

4.1.1. Comparison of changes in the gross specific indicator and the control indicator

In accordance with Annex XI,59 Eurostat calculates each year a control indicator
showing the variation in purchasing power of per capita emoluments in the
national civil service.

58

59

Article 1(4)(a) of Annex XI to the Staff Regulations: "To establish gross and net indicators for all
the Member States together, the results per country shall be weighted by the total emoluments of
central government civil servants as shown in the most recent statistics published in the national
accounts.

Article 1(4)(d) of Annex XI to the Staff Regulations: "Besides the specific indicators,
the
Statistical Office must submit control indicators in the form of data on real per capita emoluments
in general government and in central government, drawn up in accordance with national accounts
definitions.

21

As this indicator is expressed in gross terms, it is compared not with the actual
specific indicator, which is expressed in net terms, but with the gross specific
indicator.

Column [2] of the following table shows the ratio between the real emoluments
per official in 1998 and 1990. Column [3] shows the ratio between the real gross
remuneration per official at 1 July 1998 and remuneration at 1 July 1990.
Column [4] shows the percentage difference between the two ratios.

Table 4.3

C hanges in gross purchasing pow er
1990-98

(1)

C ountry

B
D K
D
EL
E
F
IRL
I
L
NL
P
UK
EU R 15

(2)
C ontrol
indicator
+28,5
+14,1
+3,4
-1,4
-3,1
+6,5
+39,7
+1,0
+13,0
+27,0
+44,2
+53,2
+11,9

(3)
Gross specific
indicator
+5,1
+0,4
+1,4
-21,4
-6,1
+2,5
+18,2
-7,1
+20,9
-2,6
+7,4
+4,8
+0,4

(4)

% difference

+22,3
+13,7
+2,0
+25,4
+3,3
+4,0
+18,2
+8,7
-6,5
+30,3
+34,2
+46,2
+11,5
(Source : Eurosta t)

The gross specific indicator and the control indicator are, by definition, different
and it is only natural that their values should differ. Changes in the control
indicator are determined not only by variations in collective labour agreements
but also by intrinsic factors (changes in the average age of the reference
population, promotion to higher categories, etc.) and by changes in incidental
salary components such as overtime payments, productivity incentives and early
retirement compensation.

reference populations, part-time work,

Moreover, certain factors distort the statistical comparability of the two indices
(the quality of the sample used to calculate the specific indicator, differences in
security
the
contributions, etc.). The deflator used for the control indicator is the consumer
expenditure deflator in the national accounts. The deflator for the specific
indicator is the national consumer price index.

employers'

social

A study undertaken in 1995 by Eurostat to take a more detailed look at France,
Italy, Germany and the United Kingdom shows that if the notional and statistical
differences between the gross specific indicator and the control indicator are
eliminated, the two indicators show a practically parallel development.

22

4.2.

Brussels cost of living

Since 1991, at the Council's request, inflation in Brussels has been measured
using a composite index60 which consists of the following:

–

–

75% of the joint index61 produced by Eurostat which measures the
change in the cost of living for staff of the European institutions in
Brussels;

25% of the Brussels consumer price index produced by the Ministry of
Economic Affairs which measures the overall cost of living in the
Belgian capital.

The joint index is derived from the price index, taking into account the structure
of Community officials' expenditure in Brussels and the movement of the rents
they pay.

These two indices are accordingly very similar, as can be seen from the
following table:

60

61

Article 3 of Annex XI to the Staff Regulations.

Article 1 of Annex XI to the Staff Regulations.

23

Table 4.4

Brussels cost of living
Cumulative % change

1

,

8
1
+

2

,

7
1
+

0

,

7
1
+

5

,

5
1
+

3

,

6
1
+

2

,

5
1
+

3

,

4
1
+

8

,

3
1
+

7

,

3
1
+

B

8

,

2
1
+

9

,

2
1
+

8

,

2
1
+

2

,

0
1
+

1

,

0
1
+

9

,

9
+

(Source : Eurostat)

3

,

9
1
+

9

,

8
1
+

7

,

8
1
+

Brussels joint
index

Brussels
consumer price
index

Brussels cost of
living

20

15

10

5

0

2

,

4
+

9

,

3
+

1

,

4
+

0

,

8
+

7

,

7
+

3

,

7
+

1.7.1991 1.7.1992 1.7.1993 1.7.1994 1.7.1995 1.7.1996 1.7.1997 1.7.1998 1.7.1999 1.7.2000

The cost of living in Brussels thus rose by 18.9% (75% x 18.7% + 25% x
19.3%).

4.3.

Adjustment of gross remuneration

Since 1991 national civil servants have seen a loss of purchasing power (-2% on
average for EU-15). Applying the principle of parallelism in the method has
automatically transposed this loss to the salaries of Community officials.

The adjustment of the gross remuneration of +16.5%62 is thus equal to the rise
in the cost of living in Brussels (+18.9%), minus the average loss of purchasing
power of national civil servants' salaries (–2%).

The following table shows this calculation for each year, together with the
aggregate results since 1991.

62

98.0 x 118.9 / 100 = 116.5.

24

Table 4.5

Adjustment of gross remuneration

(Source: Eurostat)

Cumulative % change

+18,9

+17,2

+15,5

+16,5

+14,4

+13,8

+12,8

+10,1

+8,6

+9,2

+7,7

+7,6

+11,9

+10,4

Brussels cost of living

Purchasing power of
national officials

Gross adjustment

15

+4,1

+3,4

5

-0,7

-0,1

-1,4

-3,3

-3,1

-3,2

-2,5

-2,0

-5

1.7.1991 1.7.1992 1.7.1993 1.7.1994 1.7.1995 1.7.1996 1.7.1997 1.7.1998 1.7.1999 1.7.2000

The impact of the economic situation over the period 1991 to 1998 on national
civil servants' salaries has thus also been felt by Community officials' salaries in
the shape of a 2% loss of purchasing power.

4.4.

Effects of the quid pro quo for the method

4.4.1.

Temporary contribution

introduced a

The Council
terms,
commencement and expiry dates of which were negotiated in connection with
the method. The temporary contribution was incorporated into the Staff
Regulations - in Article 66a - and ends at the same time as the method.63

temporary contribution,

level,

the

The effect of this measure has been an average loss of purchasing power of
some 2.9%64 (from 1 January 1992 to 30 June 2001).

4.4.2.

Increase in pension contributions

In the context of the method, the Council considered it advisable, in the interests
of equilibrium in the pensions system, 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%.65

63

64

65

Council Regulation (ECSC, EEC, EURATOM) No 3831/91 adopted on 19 December 1991
introduced, for a period of ten years, a temporary contribution affecting remuneration paid by the
Communities to staff in active employment.

For an unmarried official not eligible for the expatriation allowance.

Council Regulation (ECSC, EEC, EURATOM) No 3832/91 of 19 December 1991.

25

This measure has resulted in an average fall
approximately 1.3%.66

in purchasing power of

Together the two measures adopted as a quid pro quo for the method have resulted
in an additional reduction in purchasing power of 4.2%67 via the temporary
contribution and increased pension contributions.

Table 4.6

10

Effects of the quid pro quo for the method

Cumulative % change

Increase in pension contributions from 1.1.1993

Temporary contribution, 1.1.1992 to 1.7.2001

+0,0

0

-2,9

-2,9

-2,9

-1,3

-4,2

-2,9

-1,3

-4,2

-2,9

-1,3

-4,2

-2,9

-1,3

-4,2

-2,9

-1,3

-4,2

-2,9

-1,3

-4,2

-10

1.7.1991 1.7.1992 1.7.1993 1.7.1994 1.7.1995 1.7.1996 1.7.1997 1.7.1998 1.7.1999 1.7.2000

The effect is similar to that of the crisis levy linked to the 1981 method, the
difference being that the increase in the pension contributions is not temporary.

4.5.

Net remuneration

The result of a gross increase of 16.5% and a reduction of 4.2% as a quid pro
quo for the method is thus a net increase of 11.6%.68

Since 1991 net remuneration in Brussels and Luxembourg has developed as
follows:69

66

67

68

69

For an unmarried official not eligible for the expatriation allowance.

97.1 x 98.7/100 = 95.8%.

116.5 x 95.8 / 100 = 111.6.

For instance, the net salary for a grade A7/4 official rose from BEF 132 873 in July 1991 (before
the annual adjustment) to BEF 148 286 in July 1998 (after the annual adjustment).

26

Table 4.7

Net remuneration
Cumulative % change

20

10

+16,5

Gross adjustment

+14,4

+8,6

+9,2

+10,4

+11,9

+11,6

+9,5

+7,6

+3,4

+3,4

+4,5

+4,0

+4,5

+7,2

+5,7

Effects of the quid pro
quo for the method

Net adjustment

0

+0,0

-2,9

-10

-4,2

-4,2

-4,2

-4,2

-4,2

-4,2

1.7.1991

1.7.1993

1.7.1995

1.7.1997

1.7.1999

4.6.

Purchasing power of Community officials

If the net increase of 11.6% is compared with the change in the cost of living in
Brussels, i.e. 18.9%, the loss in purchasing power of Community officials'
salaries comes to 6.1%70 over an eight-year period.

Table 4.8

Purchasing power
Cumulative % change

+12,8

+13,8

+18,9

+17,2

+15,5

+11,6

+9,5

+7,2

+5,7

-7,3

-7,1

-7,2

-6,6

-6,1

+7,7

+4,5

+4,1

+3,4

+10,1

+4,0

+4,5

-0,7

-3,0

-5,5

20

10

0

-10

Net adjustment of
remunerations

Cost of living in Brussels

Purchasing power

1.7.91 1.7.92 1.7.93 1.7.94 1.7.95 1.7.96 1.7.97 1.7.98 1.7.99 1.7.00 1.7.01

70

111.6/118.9 = 93.9.

27

4.7.

Comparative purchasing power of national civil servants' and

Community officials' remuneration

The remuneration of European officials has thus adapted to changes in the
economic and social situation at the rate of reduction in the purchasing power of
national civil servants' salaries (-2.0%), but with an additional loss of purchasing
power of 4.2%.71

The movements in question are compared in the following table:

Table 4.9

Purchasing power of national/Community officials

10

Purchasing power of national officials

Purchasing power of Community officials

Effects of 1991 method

+0,0

-0,1

0

-0,7

-0,7

-1,4

-3,3

-3,1

-3,2

-2,5

-2

-2,9

-3,0

-4,2

-5,5

-4,2

-4,2

-4,2

-4,2

-4,2

-7,3

-7,1

-7,2

-6,6

-6,1

-10

1.7.1991

1.7.1993

1.7.1995

1.7.1997

1.7.1999

4.8.

Summary table

The following table summarises all the information contained in this chapter

71

Temporary contribution of 2.9% plus increase in pension contributions of 1.3%.

28

Table 4.10

(2)
(3)
Pu rch asin g
p o wer o f
n atio n al civil
servan ts

Pu rch asin g p o wer o f n atio n al/C o mmu n ity o fficials

(4)

(5)

(6)

(7)

(8)

(9)

(10)

(11)

Bru ssels co st o f
livin g

Gro ss
ad ju stmen t o f
remu n eratio n s

Effects o f 1991
meth o d

Net ad ju stmen t
o f remu n eratio n s

(12)

(13)
Pu rch asin g
p o wer o f
Co mmu n ity
o fficials

% (t/t-1) Cumul.% % (t/t-1) Cumul.% % (t/t-1) Cumul.% % (t/t-1) Cumul.% % (t/t-1) Cumul.% % (t/t-1) Cumul.%

-0,7

+0,6

-1,3

-1,9

+0,2

-0,1

+0,7

+0,5

-0,7

-0,1

-1,4

-3,3

-3,1

-3,2

-2,5

-2,0

+4,1

+3,5

+2,2

+2,4

+0,9

+1,5

+1,5

+1,4

+4,1

+7,7

+10,1

+12,8

+13,8

+15,5

+17,2

+18,9

+3,4

+4,1

+0,9

+0,5

+1,1

+1,4

+2,2

+1,9

+3,4

+7,6

+8,6

+9,2

+10,4

+11,9

+14,4

+16,5

-2,9

-1,3

+3,4

+1,1

-0,5

+0,5

+1,1

+1,4

+2,2

+1,9

+3,4

+4,5

+4,0

+4,5

+5,7

+7,2

+9,5

+11,6

-0,7

-2,3

-2,6

-1,9

+0,2

-0,1

+0,7

+0,5

-0,7

-3,0

-5,5

-7,3

-7,1

-7,2

-6,6

-6,1

-2,9

-4,2

-4,2

-4,2

-4,2

-4,2

-4,2

(1)

Date

1.7.91

1.7.92

1.7.93

1.7.94

1.7.95

1.7.96

1.7.97

1.7.98

1.7.99

1.7.00

Purchasing power of national civ il servants: 98,0

Gross adjustment: 98,0 x 118,9 / 100 = 116,5,9
Net adjustment: 116,5 x 96,8 /100 = 111,6

Purchasing power of C ommunity officials: 111,6 / 118,9 = 93,9

29

5.

REMUNERATION OUTSIDE BRUSSELS AND LUXEMBOURG (WEIGHTINGS)

The basic principle is equivalence of purchasing power of remunerations
between each place of employment in the EU and Brussels.72

For Brussels and Luxembourg the weighting is 100%.73

Outside Belgium/Luxembourg, a weighting74 is applied to offset the difference
(whether positive or negative) between the cost of living in the capital or place
of employment75 as compared with Brussels.

Remunerations outside B/L = B/L remuneration x weighting.76

The weighting is thus equal to the average ratio of prices between the place of
employment and Brussels. It is equal to the amount needed77 to buy a basket of
items which in Brussels would cost 100 currency units.

Applying the weighting78 thus makes up for the difference between the cost of
living in a particular place of employment and that in Brussels.

Intermediate adjustments79 can be decided by the Council if there is a substantial
rise in the cost of living. Since 1991 this has happened in Italy, Greece, Spain
and Portugal. There has been no intermediate adjustment since 1997.

The table below shows how the weightings have developed since 1990.

72

73

74

75

76

77

78

79

The method applied to adjust the salaries of officials based in places of employment outside the
EU follows the same basic principle of preserving equivalence of purchasing power with Brussels,
but with certain differences.

Article 64 of the Staff Regulations: "The weighting applicable to the remuneration of officials
employed at the provisional seats of the Communities shall be equal to 100% as at 1 January
1962."

And an annual exchange rate for those Member States that have not adopted the euro.

Article 9 of Annex XI states: "On the basis of a report by the Statistical Office and when objective
factors reveal an appreciable distortion in purchasing power in a given place of employment
compared with that in the capital of the Member State concerned, the Council, on a proposal from
the Commission and in accordance with the second paragraph of Article 64 of the Staff
Regulations shall decide to set a weighting for that place."

Multiplied by the exchange rate where the euro does not apply.

At the annual exchange rate for those Member States that have not adopted the euro.

And an annual exchange rate for those Member States that have not adopted the euro.

Article 4(1) of Annex XI to the Staff Regulations stipulates 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".

30

Table 5.1

WEIGHTING

N u m b er

o f staff

Place

27 550 B/L
93 DK
44 D*
24

Bo nn
197 Karlsruh e*

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

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

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

1.7.1990 1.7.1991 1.7.1992 1.7.1993 1.7.1994 1.7.1995 1.7.1996 1.7.1997 1.7.1998
100,0
100,0
100,0
129,3
120,3
129,7
108,2
111,4
105,3
102,2
101,6
94,6
98,8
99,8
92,4
109,0
110,3
M u nich 103,8
84,3
80,2
77,8
91,0
88,0
104,1
120,0
113,2
114,2
104,2
92,1
98,6
100,8
94,2
111,5
94,7
90,3
100,9
111,5
103,0
97,7
111,2
111,3
84,9
80,5
116,6
108,8
119,7
102,7
157,5
106,7
123,4
91,1
100,2
99,4

100,0
128,7
109,7
101,1
98,1
108,8
87,6
90,8
118,0
104,9
100,3
94,4
108,1
114,5
86,5
117,4
116,7
142,4
115,0
100,0

100,0
125,4
111,5
100,8
99,0
110,4
86,5
91,3
116,4
93,6
97,0
92,7
104,9
114,7
84,0
117,0
117,6
115,3
91,5
99,7

100,0
123,0
110,9
100,8
100,0
110,2
79,7
85,1
110,8
89,6
81,7
78,5
103,2
113,6
81,4
119,0
96,5
100,7
84,0
98,7

120,4
102,9
100,5

117,1
102,2
100,2

110,1
97,8
100,1

107,3
94,2
99,7

Varese

85,3

95,5

77,3

88,8

Culham

4
121 G R
477 E
134 F
174 IRL
175 I

1 300

184 NL
30 A
77 P
12 F IN
14 S
214 UK
5

30 829 Average**

% 98/91
(94
FI N,A,S )

eu ro

in tro d u ce

d o n

1.1.1999

-0,3
+2,8
+8,0
+6,9
+5,0
+8,4
-12,6
+5,1
+5,7
-9,6
-6,1
+14,1
-0,1
+9,8
+7,2
+16,6
+43,1
+26,2
+0,2

100,0
129,3
108,2
102,3
98,8
109,0
84,5
90,8
120,0
102,8
100,3
94,3
111,6
111,2
84,8
116,6
108,7
144,7
113,3
100,1

* C om m ission proposal to the C ouncil not adopted; Bonn w eighting applied for 1990-93

** w eighted according to the num ber of staff

(So u rce: Eu ro stat)

The places of employment with the largest number of staff are Belgium and
Luxembourg (89% of total staff; weighting 100%), Varese (weighting: 94.3%),
Spain (weighting 90.8%) and Karlsruhe (weighting: 98.8%).

The average weighting adjusted according to the number of officials and other
staff is 100.1.

In practice, the weighting is calculated in two stages:

First the national statistical institutes record prices in the Member States,80 and
Eurostat calculates an average price ratio known as the economic parity.

Economic parity = average (of prices in the place of employment/prices in
Brussels)

80

In the capitals and other places of employment.

31

This parity is then divided by the annual exchange rate to obtain the weighting
(ratio of prices after conversion into a single currency).

weighting = economic parity/annual exchange rate81

Changes in weightings can thus result from changes in the economic parities
and/or exchange rates.

5.1.

Economic parity

The economic parity82 is the average ratio of prices in the place of employment
to Brussels prices. It is thus the amount in the national currency needed to
purchase, in the place of employment, the equivalent of goods and services to
what could be bought in Brussels with 1 currency unit.83

The table below shows how the economic parities have developed:

Table 5.2

ECONOMIC PARITIES

1 BEF =

1 BEF =

1 BEF =
1.7.1990 1.7.1991 1.7.1992 1.7.1993 1.7.1994 1.7.1995 1.7.1996 1.7.1997 1.7.1998 98/90
1
0,22931

1 BEF =

1 BEF =

1 BEF =

1 BEF =

1 BEF =

1 BEF =

%

0,045974

0,044962

0,044747

1
0,23493

1
0,24041
0,051230

1
0,22602
0,052053

1
0,23145
0,051095

4,7891
3,3062
0,18703

4,1453
3,1897
0,18617

3,7007
3,1145
0,18670

B/L
DK
D*
Bo n n
Karlsru he*

1
1
1
0,23175
0,23757
0,23354
0,054986 0,054036 0,053954 0,054169 0,053153
0,046014 0,045743 0,046686 0,048548 0,049267 0,049032 0,048967 0,048973
0,048764 0,048398 0,048641 0,048101 0,047525
M u n ich 0,050494 0,050291 0,051495 0,053788 0,053520 0,053612 0,053657 0,052743
6,7030
3,7206
0,19301
0,017903 0,017600 0,017838 0,018256 0,018464 0,019123 0,018823 0,019447
47,553
44,777
0,053553 0,053563 0,055358 0,055442 0,056037 0,056253 0,057138 0,058955
0,39058
4,2371
0,16980
0,25124
0,018500 0,019399 0,020171 0,020582 0,021103 0,022178 0,023872 0,023907
Cu lham 0,016446 0,016929 0,017241 0,018072 0,018030 0,018502 0,018950 0,019307

G R
E
F
IRL
I
Varese
NL
A
P
F IN
S
UK

0,38855
4,1809
0,17756
0,24495

0,39219
4,2001
0,17305
0,24924

0,37963
4,0149
0,17527
0,24010

6,3003
3,6192
0,18894

5,5159
3,4770
0,19031

5,8780
3,5112
0,18840

6,6570
3,7318
0,19132

39,878
36,088

40,556
37,424

41,694
38,893

44,756
41,709

45,218
43,315

46,671
44,812

47,517
45,406

3,3078

3,6093

3,8702

4,1109

1
0,2388
0,05248
0,04958
0,04792
0,05285

-0,7
+2,4
+7,7
+6,6
+4,7
6,905 +86,6
3,744 +20,2
+4,5
0,1951
0,02007 +12,1
48,16 +20,8
45,25 +25,4
0,06096 +13,8
0,3792
4,215 +27,4
0,1718
0,2556
0,02530 +36,8
0,01982 +20,5

sw itch

to the

euro

EUR 1

=

1.1.1999

1

9,633

1,082

1,023

EU R

D K K

EU R

EU R

0,9884 EU R

1,090

EU R

278,5

GR D

0,9077

EU R

1,200

1,028

1,003

0,9427

1,116

1,112

EU R

EU R

EU R

EU R

EU R

EU R

0,8481

EU R

1,166

10,31

1,021

EU R

SEK

GB P

0,7995 GB P

* C om m is sion proposal to the C ouncil not adopted for 1990-93; Bonn w eighting applied.

(Sou rce: Eurostat)

81

82

83

If it is the same currency, the rate is 1 and the parity is equal to the weighting.

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".

Until 1 January 1999 this was 1 Belgian franc; since then it has been 1 euro.

32

In practice the calculation is done as follows:

– about one third of the existing price ratios are checked each year84 by incorporating new

prices recorded in the latest price survey;

– all the prices are then updated using detailed indices;

– the price ratios are aggregated into a weighted average in the light of the pattern of
Community officials' expenditure to obtain the economic parity (average price ratio).85

Some aspects of this calculation are currently being looked into:

– The incorporation of prices from new surveys may break the continuity (in relation to
updating with price indices), and thus affect the stability of the economic parities.

– Specific problems regarding the comparability and representativeness of rents have
led to the setting up of a rent task force within the Article 64 Group;86 its final report
is due in May 2000.

– The Article 64 Group has asked Eurostat to check whether the conclusions reached in
1995 on the spending patterns to be used for aggregating the economic parities are still
valid. Eurostat had done a series of statistical tests showing that the spending patterns
of international officials differed significantly from those of national civil servants, so
it was not appropriate to use national figures to aggregate the economic parities.

5.2.

Annual exchange rate

Until 31 December 1998, the salaries of officials employed in Member States
other than Belgium and Luxembourg were expressed in Belgian francs but paid
in local currency, e.g. in pesetas in Spain.

This involved applying an exchange rate fixed annually against the Belgian
franc so that the salary paid in local currency did not vary from month to month.

The following table shows that some exchange rates fluctuated greatly against
the Belgian franc during the reference period, with very substantial effects on
the weightings.

84

85

86

Article 1(3)(b) lays down 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".

To facilitate the aggregation, the key prices are grouped so that their relative weight in overall
spending can be estimated.

The Statistical Office convenes the Working Group on Article 64 of the Staff Regulations, made
up of experts form the national statistical institutes, at least once a year, at the latest in September.

At its meetings the Group looks at all the statistical problems encountered in establishing the joint
index and the economic parities.

33

Table 5.3

ANNUAL EXCHANG E RAT ES*

BEF 1 = B EF 1 = BE F 1 = BE F 1 = B EF 1 = B EF 1 = BE F 1 = BEF 1 = B EF 1 = %
1.7.1990 1.7.1991 1.7.1992 1.7.1993 1.7.1994 1.7.1995 1.7.1996 1.7.1997 1.7.1998 98/90
1
0,19059

1
0,184699

0,18733 0,184635

1
0,18533

1
0,18774

1
0,18984

1
0,18699

1
0,18665

-0,3

1

1

BEF
DKK

sw itch to

th e eu ro

EU R 1 =
1.1.1999
1
7,44878

DEM 0,048655

0,048544

0,048593

0,048650

0,048515

0,048638

0,048596 0,0484637 0,0484896

-0,3

1

4,7583

2,9916

5,3189

3,0482

5,9133

3,0703

6,6260

3,7205

7,3282

3,9920

7,9001

4,2517

7,6970

7,65462

8,19471 + 72,2

329,689

4,0891

4,09937

4,11607 + 37,6

0,16347

0,16479

0,16337

0,16389

0,16642

0,17057

0,16443 0,163519

0,162538

-0,6

0,018149

0,018151

0,018230

0,019945

0,020048

0,021333

0,020113 0,0185432 0,0192637 +6,1

35,754

36,148

36,767

44,236

47,987

57,113

48,998

47,4158

47,7737 + 33,6

NLG 0,054789

0,054692

0,054765

0,054558

0,054413

0,054490

0,054487 0,0545435 0,0546568

-0,2

4,2788

4,2335

4,0512

4,6281

4,9903

5,13901

5,0010

4,89980

4,96500 + 16,0

0,34123

0,34204

0,34202 0,341006

0,341146

0,16114

0,14923

0,14789 0,144672

0,147384

GBP 0,016810

-4,4
* Art.63 of the Staff R egulations: exchange rates used for the im plementation of the EC general budget on 1 July.

0,019784

0,016567

0,022033

0,019187

0,016756

0,23386

0,25372

0,21188 0,215378
0,213611
0,020710 0,016787 0,0160658

1

1

1

1

1

1

1

1

9,48803

0,705455

GRD

ESP

FRF

IEP

ITL

ATS

P TE

FIM

S EK

5.3.

The changeover to the euro in 1999 and the weightings

Since 1 January 1999, salaries have been expressed in euros (and paid in euros
in the 11 Member States participating in the single currency).

The introduction of the euro means there is no longer any need to fix an
exchange rate annually for the participating Member States since salaries are
expressed and paid in the same currency (the euro).

Salaries outside B/L = B/L salaries x weighting87

87

Multiplied by the exchange rate where the euro does not apply.

34

Table 5.4

Changeover to the euro on 1.1.1999
Calculation of weightings

The w eighting is equal to the economic parity div ided by the ex change rate

for information: in B EF at 1.1.1999
Ex change
rate
(1.1.1999)
and bilateral
rates
(BEF 1 =)

Economic
parity
(BEF 1 =)

Weighting
(% )

1

1

0,2388

0,184650

0,05248

0,0484837

0,04958

0,0484837

0,04792

0,0484837

0,05285

0,0484837

6,905

3,744

8,17281

4,12460

0,1951

0,162607

0,02007

0,0195232

48,16

45,25

47,9989

47,9989

0,06096

0,0546287

0,3792

4,215

0,1718

0,2556

0,02530
0,01982

5

0,341109

4,96981

0,147391

0,235202

0,0174878
0,0174878

6

100,0

129,3

108,2

102,3

98,8

109,0

84,5

90,8

120,0

102,8

100,3

94,3

111,6

111,2

84,8

116,6

108,7

144,7
113,3

7

C o u n tr y/

p lace of

em p loym e

n t

B / L

DK

D

Bonn

Karlsruhe

M u n ich

GR

E

F

I RL

I

Varese

NL

A

P

FI N

S

UK

y
c
n
e
r
r
u
c

BEF

DKK

DEM

DEM

DEM

DEM

GR D

ESP

F R F

IEP

IT L

IT L

N LG

ATS

PTE

F IM

SEK

GBP

Culham GBP

1

in force sin ce 1.1.1999

Economic
parity
(EUR 1 =)

Ex change
rate
(EUR 1=)

Weighting
(% )

1

9,633

1,082

1,023

0,9884

1,090

278,5

0,9077

1,200

1,028

1,003

0,9427

1,116

1,112

0,8481

1,166

10,31

1,021

0,7995
8

1

7,44878

1

1

1

1

329,689

1

1

1

1

1

1

1

1

1

9,48803

0,705455

0,705455

9

100,0

129,3

108,2

102,3

98,8

109,0

84,5

90,8

120,0

102,8

100,3

94,3

111,6

111,2

84,8

116,6

108,7

144,7

113,3
10

y
c
n
e
r
r
u
c

EU R

DKK

EU R

EU R

EU R

EU R

GR D

EU R

EU R

EU R

EU R

EU R

EU R

EU R

EU R

EU R

SEK

GBP

GBP

Ex change rate
(EUR 1 = )

B EF 40,3399

DKK

DEM 1,95583

DEM 1,95583

DEM 1,95583

DEM 1,95583

GR D

ESP 166,386

F R F 6,55957

IEP 0,787564

IT L

IT L

1936,27

1936,27

N LG 2,20371

AT S 13,7603

PT E 200,482

F IM 5,94573

SEK

GBP

GBP

12

11

D : Germ any ex c ept Bonn, Karls ruhe and M unich

CONVERSION INTO EUROS:

I : Italy ex cept Vares e

U K: U nited Kingdom ex cept C ulham

5.4.

Recovery of overpayments

The economic parity in euros is equal to the economic parity

in force ex pressed in BEF multiplied by the BEF ex change

rate (and div ided, for the euro countries,by the exchange rate

for the national currency).

Fixing, at the end of the year, new weightings backdated to 1 July may entail
retroactive adjustments - upwards or downwards - to salaries and pensions.
Since 1994 the regulations adjusting salaries have thus made provision for back
payments or the recovery of overpayments, as the case may be, where salaries
and pensions have risen or fallen.

35

6.

CONCLUSIONS

The system of remuneration laid down in the Staff Regulations guarantees
equivalence of purchasing power between Community officials taking account
of their family situation and the cost of living in their place of employment.

The 1991 method was the result of negotiations between the Council,
the
administrations of the Community institutions and representatives of the staff of
the institutions. It is applicable from 1 July 1991 to 30 June 2001,88 and has
produced the following results:

(1)

(2)

(3)

(4)

(5)

(6)

Since 1991, national civil servants have seen the purchasing power of
their salaries fall (by an average of -2% for EU-15).

The inclusion of
automatically applied this reduction (-2%)
Community officials.

the principle of parallelism in the method has
to the net salaries of

The quid pro quo for the method has meant an additional
loss of
purchasing power (-4.2%) by way of the temporary contribution and
increased pension contributions.

The effect has thus been a substantial loss of purchasing power for
Community officials (-6.1% in 8 years).

Only the fact that the method works automatically has enabled conflicts
over annual negotiations to be avoided.

It can thus be said that Community officials' salaries have moved in line
with changes in the economic and social situation, with a loss of
purchasing power going beyond parallelism with national civil servants.

For the above reasons, the Commission takes the view that the method has
achieved its objectives.

88

The method (Annex XI to the Staff Regulations) and the temporary contribution (Article 66a of
the Staff Regulations) are applicable until 30 June 2001. The increased pension contributions
continue to apply after 30 June 2001.

36