Opinion of the European Central Bank of 4 January 2012 on the salaries of civil servants (CON/2012/1)
Date: 2012-01-04
Institutions: European Central Bank
Subjects: Cyprus, allowances and expenses, central bank, civil servant, national law, pay

EN 

ECB-PUBLIC 

OPINION OF THE EUROPEAN CENTRAL BANK 

of 4 January 2012 

on the salaries of civil servants 

(CON/2012/1) 

Introduction and legal basis 

On 15 December 2011, the European Central Bank (ECB) received a request from the Cypriot Ministry of 
Finance for an opinion on a draft law relating to the salaries of civil servants (hereinafter the ‘draft law’)1.  

The ECB’s competence to deliver an opinion is based on Articles 127(4) and 282(5) of the Treaty on the 

Functioning of the European Union and on the third indent of Article 2(1) of Council Decision 98/415/EC 

of 29 June 1998 on the consultation of the European Central Bank by national authorities regarding draft 
legislative provisions2, as the draft law relates to the Central Bank of Cyprus (CBC). In accordance with 

the first sentence of Article 17.5 of the Rules of Procedure of the European Central Bank, the Governing 

Council has adopted this opinion. 

1.  

Purpose of the draft law 

The ECB understands that the aim of the draft law is to freeze, for 2012-2013, the index-linked allowance 

to  which  all  officers  and  civil  servants,  and  persons  employed  in  the  wider  public  sector,  local 

government and school inspectorates in Cyprus, are entitled. It will also freeze, for the same period, the 

salaries of those categories of employees, and the pensions paid to those retired from the public and wider 

public  sector,  local  government  and  school  inspectorates.  The  draft  law  is  part  of  the  Government’s 

reform efforts, aimed at redressing public finances by arresting wage costs, thereby arresting any further 

increase in the public deficit.  

2.   General observations 

While  the  draft  law  does  not  refer  explicitly  to  the  CBC,  its  officers  or  staff  members,  either  in  its 

substantive provisions or in its Annex, the ECB understands that the CBC’s officers and staff members 

would  fall  within  the  draft  law’s  scope of  application.  Consequently,  the draft law  would  also  apply  to 

and directly affect the CBC’s decision-making bodies and its staff members. It follows that the draft law 

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2  

The corresponding law was published in the Official Gazette of the Republic of Cyprus on 30 December 2011. 
OJ L 189, 3.7.1998, p. 42. 

 
 
 
 
 
                                                 
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should  be  examined  from  the  perspective  of  central  bank  independence,  in  particular  institutional  and 

financial  independence,  as  well  as  that  of  the  personal  independence  of  the  members  of  the  CBC’s 

decision-making bodies.  

3. 

Institutional and financial independence 

3.1  Article 130 of the Treaty prohibits third parties, including the governments of the Member States, 

from issuing instructions to the national central banks (NCBs). Also, the principle of central bank 

independence means that third parties may not exercise direct or indirect influence over an NCB, 
whether  relating  to  the  performance  of  its  tasks  or  its  financial  ability  to  fulfil  its  mandate3.  As 
stated  in  the  ECB’s  convergence  reports  and  in  several  of  its  opinions4,  Member  States  may  not 

impair the autonomy of their NCBs in staff-related matters. Autonomy in such matters extends to 
issues relating to staff salaries and pensions5. It is therefore essential that measures such as those 

contemplated  in  the  draft  law  do  not  prevent  the  CBC  or  its  staff  members  from  performing 

independently the tasks conferred upon them by the Treaty, the Statute of the European System of 

Central Banks, the Constitution of the Republic of Cyprus or national law. 

3.2  Currently,  the  CBC  enjoys  statutory  autonomy  in  determining  its  staff  policy  (including  staff 

remuneration), with the CBC’s officers and staff being subject to individual employment contracts 

and  to  collective  bargaining  agreements  entered  into  between  the  CBC  and  the  banking  sector 

union. The measures contemplated in the draft law represent a departure from the current regime. 

3.3  The  ECB  understands  that  the  CBC  would  not  object  to  the  draft  law.  Moreover,  in  substantive 

terms, the impact of the measures contemplated is unlikely to prevent the officials or staff members 

of the CBC, or the CBC as a whole, from carrying out their tasks independently. In particular, the 

draft law is unlikely to limit the CBC’s ability to retain qualified staff, or otherwise to deprive its 

decision-making  bodies  of  their  powers  of  internal  organisation  and  control  over  staff.  The  ECB 

also  notes  that  the  measures  contemplated  in  the  draft  law,  which  are  intended  as  measures  of 

general  applicability,  are  strictly  limited  to  freezing  increases  in  salaries  with  the  objective  of 

reducing public expenditure, and do not impose a decrease in salaries or interfere with the CBC’s 

staff policy (e.g. its ability to increase salaries due to promotions or to recruit new staff). While the 

CBC’s remuneration structure differs from that of the rest of the public sector, equivalent measures 

could  also  be  adopted  autonomously  by  the  CBC  and  the  ECB  is  satisfied  that  the  measures 

contemplated in the draft law do not limit the CBC’s institutional and financial independence.  

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4  

5  

See, for example, the ECB’s Convergence Report of May 2007, p. 20. 
See Opinions CON/2008/9, CON/2008/10, CON/2009/15, CON/2009/45, CON/2009/47, CON/2010/42, CON/2010/51, 
CON/2010/56, CON/2010/58, CON/2010/59, CON/2010/69 and CON/2010/80. All ECB opinions are published on the 
ECB’s website at www.ecb.europa.eu  
See Opinion CON/2010/80, paragraph 3.2.1. 

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4. 

Personal independence 

Article  130  of  the  Treaty  requires  the  governments  of  the  Member  States  to  respect  the  principle  of 

central  bank  independence  and  not  to  seek  to  influence  the  members  of  the  NCBs’  decision-making 

bodies in the performance of their tasks. The ECB understands that the draft law would not only affect the 

remuneration of the CBC’s staff members, but also that of the members of its decision-making bodies. It 

also  understands  that  the  measures  contemplated  in  the  draft  law  are  intended  not  only  to  apply  to  the 

members  of  the  CBC’s  decision-making  bodies  but,  more  generally,  to  the  management  of  public 

institutions in Cyprus. Their aim, as stated in the explanatory memorandum to the draft law, would not be 

to directly or indirectly influence the CBC’s decision-making bodies in the performance of their tasks but, 

rather, to contribute to sound public finances by arresting wage costs. In the light of the above, the ECB 

considers  that  the  draft  law  does  not  limit  the  personal  independence  of  the  members  of  the  CBC’s 

decision-making bodies. 

This opinion will be published on the ECB’s website. 

Done at Frankfurt am Main, 4 January 2012. 

[signed] 

The President of the ECB 

Mario DRAGHI 

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