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# 52011SC1436

**COMMISSION STAFF WORKING PAPER Eurostat Report on the annual adjustment of remuneration and pensions /\* SEC/2011/1436 final \*/**

  

TABLE OF CONTENTS

Executive Summary....................................................................................................................... 3

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

1........... Evolution of the purchasing
power of national officials...................................................... 5

1.1........ Specific Indicator............................................................................................................ 5

1.2........ Control Indicator............................................................................................................ 5

2........... Changes in the cost of living in
Brussels (Brussels International Index).............................. 6

3........... Adjustment of remuneration and
pensions in Belgium and Luxembourg............................. 7

4........... Adjustment of remuneration and
pensions outside Belgium and Luxembourg..................... 8

4.1........ Correction coefficients for staff
outside Belgium and Luxembourg.................................... 8

4.2........ Correction coefficients for
pensioners outside Belgium and Luxembourg......................... 11

ANNEX..................................................................................................................................... 14

Executive
Summary

The report presents all the information
required for the annual adjustment of remuneration and pensions in
Belgium/Luxembourg and in other places, including:

- evolution of the
purchasing power of national officials;

- changes in the
cost of living in Brussels;

- correction
coefficients for staff and pensioners.

For the period July 2010 – July 2011 the
global specific indicator (average change in real net remuneration in the
sample of 8 countries) is. 98.2 (-1.8 %). Details are provided in Table 1.

For the same period, the Brussels
International Index (cost of living measured for the EU officials) is 103.6
(+3.6%). Details are provided in Table 3.

As a consequence the adjustment of the
nominal net remuneration and pensions of European officials in Belgium and
Luxembourg which is necessary to maintain a parallel development of purchasing
power with the national civil servants in the Member States is equal to +1.7%.

The correction coefficients which apply to
remuneration and pensions outside Belgium and Luxembourg in order to maintain
equality of purchasing power, are provided in Tables 5 and 7 respectively.

Introduction

In accordance with the Articles 64, 65 and
Annex XI of the Staff Regulations applicable to officials and other servants of
the European Communities, Eurostat hereby presents its report for the twelve
months to July 2011.

Article 64, 65 and Annex XI of the Staff
Regulations, which are in force since 1 May 2004, define the method for the
annual adjustment of remuneration and pension of Community officials. The
annual adjustments shall accordingly be determined by the following factors:

·
average change in the purchasing power of
salaries of national civil servants in central government (global specific indicator);

·
change in the cost of living in Brussels (Brussels International Index);

·
economic parities between Brussels and the other
places of employment in the Member States (correction coefficients).

The value of the annual adjustment is equal
to the product of the global specific indicator and the change in the Brussels
International Index. Changes in the cost of living in places of employment
other than Brussels and Luxembourg are derived indirectly from the value of the
adjustment for Brussels and any changes in the economic parities between Brussels and those other places.

Chapters 1 to 4 of this report examine
respectively:

·
Evolution of the purchasing power of national
officials in the central governments,

·
Changes in the cost of living in Brussels,

·
Adjustment of remuneration and pensions in Belgium and Luxembourg, and

·
Adjustment of remuneration and pensions outside Belgium and Luxembourg.

All figures and calculations contained in
this report are based on data supplied by the responsible authorities in the
Member States. More information on methodology, detailed results and
statistical analysis is available in the annexes to this report and detailed
procedural manuals. For any information concerning this report, please contact
Eurostat in Luxembourg:

Eurostat, Unit C6

BECH – A2/004,

Bâtiment
Jean Monnet

L-2920 Luxembourg

Tel.: (352) 4301-34792

Email: estat-a64ia65@ec.europa.eu

1.
Evolution of the purchasing power of national
officials
1.1.
Specific Indicator

Article 1.4 of the Annex XI says that to
establish a global specific indicator for the European Union, Eurostat shall
use a sample composed of the following 8 Member States: Belgium, Germany, Spain, France, Italy, Luxembourg, the Netherlands and the United Kingdom.

Table 1 shows the changes in the net
remuneration, both in nominal and real terms, in each of the above mentioned
eight Member States. Changes in the harmonized consumer price indices
(inflation rates) during the period June 2010 to June 2011 have been used to
transform nominal changes in the remunerations into movements in real terms. In
order to get the global specific indicator the results per country have been
weighted in proportion to their national GDP for the year 2010 expressed in
purchasing power parities. The global specific indicator (average change in
real net remuneration) for the year 2011 is 98.2 (-1.8%).

1.2.
Control Indicator

In accordance with Article 1.4 (c) of Annex XI
of the Staff Regulations, Eurostat compiles data concerning the real per capita
emoluments in central government. These data serve as control indicators for
individual countries and a weighted average is also calculated. As the control
indicator is expressed in gross terms, it is compared with the gross specific
indicator.

Table 2 compares the changes in real gross specific
indicator to July 2011 with those of per capita real wage bills for 2011, where
the respective values for 2010 are taken as 100. The table also shows the
differences (in percent) between these two indicators.

Relatively big differences are apparent for
some Member States. They result from conceptual and statistical differences
between the gross specific indicator and the control indicator.

2.
Changes in the cost of living in Brussels (Brussels International Index)

Article 64 and Annex XI of the Staff
Regulations state that Eurostat shall draw up an index, based on the data
provided by the Belgian authorities, to measure the changes in the cost of
living for officials of the Communities in Brussels. This index, known as
Brussels International Index, shall take into account the changes between June
of the previous year and June of the current year and shall be based on the
methodology defined by the Working Group on Article 64 of the Staff Regulations.

The details of the calculation of this index
corresponding to the 2011 annual salary adjustment are set out in table 3. The
table shows that the cost of living for the EU officials in Brussels during the
period June 2010 – June 2011 has increased, on average by 3.6%.

3.
Adjustment of remuneration and pensions in Belgium
and Luxembourg

Taking into account the figures reported in
chapter 1 and 2 the adjustment of the nominal net remuneration of EU officials
in Belgium and Luxembourg, necessary to maintain a parallel development of
purchasing power with the civil servants in the Member States, is equal to:

4.
Adjustment of remuneration and pensions outside
Belgium and Luxembourg
4.1.
Correction coefficients for staff outside
Belgium and Luxembourg[1]

The object of the economic parities is to
compare the relative costs of living of EU officials in Brussels (reference
city) with each of the European capitals and other places of employment for
which a correction coefficient has been set. The method used is to compare the
price of a "basket" of goods and services in Brussels with the prices
of similar goods and services in each of the other places of employment. The
weighted average of all the price ratios is the "economic parity".
The average consumption expenditure pattern of EU officials are used as
weights, identified by means of periodic surveys of household expenditure. In
places of employment outside Brussels with very few officials, a common
structure pooling all the questionnaires from similar locations is derived
instead.

The changes in the cost of living in the places
of employment outside Belgium and Luxembourg are measured by the implicit price
indices which are calculated as the product of the Brussels International Index
and the changes in the economic parities between Brussels and those other
places. Table 4 shows these changes.

The correction coefficients applicable to the
salaries of the European institution officials working in the capitals and
places of employment other than Brussels and Luxembourg are determined on the
basis of the relationships between the economic parities and the exchange rates
for the month of July.

The correction coefficient operates as a
percentage adjustment to salaries to take account of the cost of living
differences between Brussels and the various duty stations. Table 5 shows the
calculation of the correction coefficients for July 2011 for places of
employment situated in the European Union territory for which correction
coefficients have been set.

The value of the adjustment outside Belgium and
Luxembourg derives from the value of the adjustment for Belgium/Luxembourg and
from the changes in the economic parities between Brussels and those other
places.

4.2.
Correction coefficients for pensioners outside
Belgium and Luxembourg

The Staff Regulations, which are in force since
1 May 2004 stipulate the creation of correction coefficients for pensioners
separate from those used for staff remuneration. The difference is that instead
of being based on capital city price comparisons they relate to national
comparisons, with Belgium as the base country.

This section presents the calculated values of
the economic parities and the correction coefficients for pensioners, with a
reference date of July 1, 2011. The changes in the cost of living in Member
States other than Belgium and Luxembourg are measured by the implicit indices
which are calculated as the product of the Brussels International Index and the
changes in the economic parities between Belgium and the Member States. Table 6
shows these changes.

Table 7 shows the correction coefficients for
all member States (relative to Belgium) calculated for the pensioners. Their
use is subject to specific rules set out in the Staff Regulations.

ANNEX

Appendix 1 to the

Eurostat Report on the
Annual Adjustment of Remuneration and Pensions
Explanations and statistical analyses

Reference period:

Year to 1 July 2011

Commission Staff Working Paper

Introduction

This document is
an appendix to the 2011 Eurostat report on the annual adjustment of
remuneration and pensions. While the principal results concerning specific
indicators and correction coefficients for staff and pensioners are presented
in the main report, the purpose of this appendix is to give some explanations
and statistical analyses of the results as well as detailed tables with
statistical information.

Articles 64 and 65
and Annex XI of the Staff Regulations, which are in force since 1 May 2004,
define the method for the annual adjustment of the remuneration and pension of
Community officials.

The value of the
adjustment is equal to the product of the specific indicator and the change in
the cost of living index in Brussels. Changes in the cost of living in places
of employment other than Brussels and Luxembourg are derived indirectly from
the value of the adjustment for Brussels and changes in the economic parities
between Brussels and those other places.

Chapters 1, 2, 3
and 4 of this document examine respectively:

·
the changes in the
purchasing power of salaries of central government civil servants in the eight
Member States belonging to the sample: Belgium, Germany, Spain, France, Italy,
Luxembourg, Netherlands and United Kingdom (specific indicator);

·
the changes in the cost
of living for Brussels;

·
the economic parities and
correction coefficients for staff;

·
the economic parities
and correction coefficients for pensioners.

In Chapter 5 some
information about working time in Central Governments of the eight sampled
Member States is given.

All figures and
calculations contained in this report are based on data supplied and validated by
the responsible authorities in the Member States. For any information
concerning this appendix, please contact Eurostat in Luxembourg:

Eurostat, Unit C6

BECH – A2/004

Bâtiment Jean Monnet

L-2920 Luxembourg

tel.: (+352) 4301-34792

Email: estat-a64ia65@ec.europa.eu

1.
Evolution of purchasing power of national officials
1.1.
General remarks on the
calculation of the specific indicator

The specific
indicator is a measure to represent the average change in the
purchasing power of central government civil servants in Member States of the
European Communities. It is measured by the real net salary increase in the
central government civil service.

One of the basic
elements of the annual salary adjustment procedure is the principle of parallel
development of the salaries, in terms of purchasing power of national
central government civil servants and of officials of the European Communities.
The specific indicator is the methodological tool allowing the
implementation of this principle of parallelism.

Article 65 and
Annex XI determine the basic principles of the method, but these have to be complemented
with practical procedures[2]. Therefore, we provide here a set of commonly
agreed basic definitions. If a specific situation in a given country makes it
meaningful to deviate from these definitions to ensure a better application of
the spirit of the method, then Eurostat, in agreement with that country may do
so.

1.1.1.
Elements of
remuneration

All elements of remuneration that affect the
purchasing power of civil servants should be taken into account in calculating
the gross remuneration. All general bonuses and premiums, which are part of the
salary, should be reported. In general the following elements should be taken
into account:

·
basic salaries,

·
all allowances and
bonuses (e.g. general premiums, child benefit, family allowances),

·
non-pensionable
lump-sum payments (e.g. annual holiday pay, Christmas bonus).

Not to be included:

·
regional allowances
granted to compensate for 'cost-of-living' differences,

·
increase due to
promotion or seniority,

·
person-specific special
allowances, for example individual bonuses for exceptional performance.

1.1.2.
Net remuneration

In order to get the net remuneration the following
elements should be deducted from the gross remuneration:

·
the amount of
compulsory social deductions (social security and occupational pension scheme
contributions),

·
general taxes on income
and

·
other compulsory
deductions (mutual assistance contribution, temporary contribution, etc.).

Not to be included:

·
voluntary
contributions.

1.1.3.
Reference period

In order to
calculate the specific indicators for the year (t) the remuneration of central
government civil servants on a fixed month of the year (t-1) is to be compared
with the remuneration on the same date of the year (t).

The method is
based on the comparison of a snapshot of a national remuneration system in the
month of July of the current year with the equivalent snapshot in the month of
July of the previous year. A snapshot of the system, however, does not simply
mean the remuneration grid in a particular month; rather, the remuneration
level of the reference population employees in that month, including 1/12 of
all annually paid elements such as Christmas bonuses, annual holiday pay,
lump-sum payments etc.

If Member States report remuneration data of a given month/year again
(e.g. data concerning remuneration of July 2010 sent in 2010 and re-sent in 2011),
the data should be exactly the same. If not, they have to provide Eurostat with
a clear justification (e.g. change in the structure of grades and categories in
the public administration).

1.1.4.
Reference
population

The reference
population relates to permanent statutory staff of the sub-sector “central
governments” (S.1311 of ESA95) of Member States. It should be noted that
the sub-sector S.1311 in ESA 95 is defined as follows:

“The sub-sector
central government includes all administrative departments of the State and
other central agencies whose competence extends normally over the whole
economic territory, except of the administration of social security funds.”

The reference population should however exclude the
following groups:

·
regional/state and
local governments

·
the armed forces,
security forces, police forces, frontier guards, etc.;

·
teachers, staff of
national health services;

·
ministers of religion,
if directly paid by central government;

·
diplomats and
magistrates.

1.1.5.
Sample of family
types

The specific
indicator for each country is calculated on the basis of remuneration data of
officials of two different family statuses - single and married with
two dependent children, and each with a weight of 50%.

1.1.6.
Function groups

According to Annex XI Eurostat is obliged to provide a
specific indicator for each of the two function group: Administrator (AD) and
Assistants (AST). Therefore, the posts in the national reference population
should be classified, according to the nature of the duties to which they
relate, in these two function groups – each should comprise several grades.

·
Function group AD
relates to staff engaged in administrative, advisory, linguistic and scientific
duties that require university education or equivalent professional experience.

·
Function group AST
relates to staff engaged in executive, technical and clerical duties that
require an advanced level of secondary education or equivalent professional
experience.

1.1.7.
Sample of grades

Out of the
reference population the Member States may select a sample of the more
important grades in terms of staff numbers for each of the above mentioned
function groups. Grades having only a small proportion of the total number of
staff may be excluded from the sample.

The sample should
be representative of the reference population. The ratio between the number of
staff in the grades covered by the sample and the number in the reference
population should normally be more than 75%.

1.1.8.
Sample of
countries

Article 1.4 of
Annex XI specifies that to establish a global specific indicator for the
European Union, Eurostat shall use a sample composed of the following 8 Member
States: Belgium, Germany, Spain, France, Italy, Luxembourg, Netherlands and
United Kingdom.

1.1.9.
Calculation of
country specific indicator

On receipt of the data from the Member States Eurostat
calculates specific indicators for each of the countries separately. The steps
leading to these calculations are:

·
For each grade,
Eurostat will calculate average gross and net remunerations for the available
steps (eg. minimum, maximum, median) and the family types.

·
Average gross and net
remunerations for each grade are then aggregated to two function groups (AD and
AST). They are calculated by taking weighted averages of the grades belonging
to these groups. The sample size (number of civil servants in the sample of
each grade) is taken as weight.

·
The average gross and
net remunerations for the two function groups are then aggregated to overall
gross and net remunerations in the central government civil service by taking
the weighted average of the remunerations of these two groups, where the total
actual number of civil servants in each of the groups is taken as weights.

·
For each of the
function groups as well as for the overall remunerations the following changes
for the period July – July are calculated:

o
Gross nominal

o
Net nominal

o
Gross real

o
Net real

·
The increases in real
terms are calculated by taking into account the increase in the harmonized
index of consumer price (HICP) for this period.

·
The overall real net
increase in remuneration is called the country specific indicator.

1.2.
Specific indicator -
results by functional groups

Table
1.1 sets out the gross and net specific indicators both in nominal and real
terms for each of the two function-groups.

1.3.
Remuneration and taxes

Table
1.2 provides comparative information on gross and net remuneration as well as
on the HICP inflation rate over 12 months.

1.4.
Cumulative specific
indicators

Table 1.3a
illustrates the changes in the remuneration of central government civil
servants since 2003. This table shows the evolution of gross and net specific
indicators at current prices, the development in consumer price indices as well
as gross and net specific indicators in real terms. Over the period 2003-2011
the real net specific indicator for the European Union has decreased by 1.6%.

1.5.
Control Indicators

Annex XI mentions
explicitly, between the possible control indicators, the real per capita
emoluments in central government. Eurostat measures the variation, at constant
prices, in the per capita wage bill in sub-sector S.1311 of the national
accounts (per capita salary of central government). As this indicator is
expressed in gross terms, it is compared with the real gross specific
indicator.

The gross specific
indicator and the control indicator are different by definition and it is
natural to expect them to show some differences. Indeed, 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.

Furthermore, there
are certain factors which distort the statistical comparability of the two
indices (the quality of the sample used to calculate the specific indicator,
differences in the reference populations, part-time work, employers' social
contributions, etc.). The deflator used for the control indicator is the consumers'
expenditure deflator in the national accounts; the deflator for the specific
indicator is the consumer price index (until 2004, the national index; since
2005 the harmonized index). In addition, control indicator values for the
reference period are often estimates.

Eurostat identifies
differences between the two indicators during the reference period, and therefore
puts a greater emphasis on the medium-term trend analysis. For some Member
States there are in fact divergences. However, if the conceptual and
statistical differences between the gross specific indicator and in the control
indicator are netted out, they show a parallel development.

Table 1.4a presents the changes in these two
indicators for the period 2003-2011.

2.
Changes in the cost of living in Brussels

Article
64 and Annex XI of the Staff Regulations state that Eurostat shall draw up an
index, based on the data provided by the Belgian authorities, to measure the
changes in the cost of living for officials of the Communities in Brussels.

This
index, known as Brussels International Index (BII), shall take into
account the changes between June of the previous year and June of the current
year and shall be based on methodology defined by the Working Group on Article
64 of the Staff Regulations.

The
following price indices are used to calculate Brussels International Index:

1)   For all 80 basic headings except for those stated in points 2) and
3) the Belgian harmonised indices of consumer prices (HICP).

2)   In order to take account of the specific situation in Brussels,
for the following 9 basic headings the Brussels specific consumer price indices
are used. These indices are provided by the “Service public federal
Economie, P.M.E.”

·
Water supply

·
Electricity

·
Gas

·
Other services in
respect of personal transport equipment

·
Passenger transport by
road

·
Combined passenger
transport

·
Restaurants, cafes and
the like

·
Accommodation services

·
Hairdressing salons and
personal grooming establishments

3)   The basic headings figures for
accommodation costs for tenants (rents index) and owner-occupiers (imputed
rents index) are replaced in the Brussels International Index by an index
calculated by Eurostat based on the results of an annual survey carried out
among EC staff employed in Brussels.

The
weights used to aggregate the 80 basic headings of this index are derived from surveys
of household expenditure (SHE) carried out among EU officials in Brussels. The
details of the calculation of the BII corresponding to this annual review are
given in the Eurostat Report. Table 2.1a shows both the annual and cumulative
changes in the Brussels cost-of-living index since 2004 (ie. 2003 = 100).

During
the years 1990-2003 the cost of living in Brussels was calculated as a weighted
index composed of the Joint Index and the Brussels capital component index.
Since 2004, according to the Staff Regulations it is calculated as described
above (Brussels International Index). Table 2.1 shows both the annual and
cumulative changes in the Brussels cost-of-living index since 1991 (ie. 1990 =
100).

3.
Equivalence of purchasing power of EC officials in
the Member States
3.1.
Economic parities and
correction coefficients

The
object of the economic parities is to compare the relative cost of living of
European officials in Brussels (reference city) and in each of the capitals and
other places of employment for which a correction coefficient has been set. The
method used is to compare the price of a "basket" of goods and
services purchased by the average official in Brussels with the price of the
same basket in each of the other places of employment. The average of all the
price ratios is the "economic parity".

The
system works as follows: the total range of goods and services constituting the
consumption of the average European institution official is divided into 80
basic headings (such as meat, footwear, motor cars, books). A price ratio
between the place of employment and Brussels is established for each of these
headings; this is called the basic parity. Price surveys are conducted on products
selected to represent the basic heading and specified in the necessary detail
to enable prices in a sufficiently narrow range to be collected.

The
Staff Regulations require each basic parity to be checked by direct survey at
least once every five years. In practice checks are carried out at shorter
intervals as part of the European Comparison Programme (ECP). At each annual
salary review around one third of the basic price parities are replaced by new
parities produced by the latest price surveys.

For the 2011 annual
review, new parities obtained from price surveys have been integrated for the
following groups:

· Personal appearance (survey 2009)

· House and Garden (survey 2010)

· Transport, Horeca (survey 2010)

The
80 basic parities are then updated using the price index ratio between the
place of employment and Brussels.

Housing
is dealt with differently. Special rent surveys of estate agents are carried
out each year at each place of employment, including Brussels, to
calculate an economic parity for the basic heading "accommodation costs
for tenants". The calculation follows a methodology that has been
developed by Eurostat in collaboration with the national statistical institutes
of the Member States, based on the principle that the parity used should be calculated
in such a way to allow European institution officials outside Brussels to live
in dwellings of comparable quality to those occupied by European institution
officials in Brussels. The basic parity "accommodation costs of
owner-occupiers" is calculated by reference to the rent the
owner-occupiers would pay if they were tenants (these are known as
"imputed rents").

In
order to calculate the overall economic parities weights have to be applied to
each basic heading according to its relative importance in the consumption
basket. These weights are calculated directly from the results of the special
family budget surveys conducted among European and international civil servants
every five to seven years. The resulting structure reflects the consumption of
the average international civil servant in Brussels and in each country or
place of employment.

Using
the 80 basic parities and the specific weights the overall parity is calculated
in two ways: the first uses the consumption pattern for the reference city
(Brussels) (this is a type of Laspeyres index); the second uses the consumption
pattern for the place of employment (this is a type of Paasche index). In
accordance with the standard practice for international comparisons both types
of index are calculated and the geometric mean of the results (the Fisher
index) is used as the economic parity.

The
correction coefficients applicable to the salaries of the European institution
officials working in the capitals and places of employment other than Brussels
and Luxembourg, which are calculated for the month of July, are determined on
the basis of the relationships between the economic parities and the exchange
rates fixed by the Commission and specified in the Staff Regulations for the
relevant countries. The correction coefficient operates as a percentage
adjustment to salaries to take account of the cost of living differences
between Brussels and the various duty stations.

The details of the economic parities calculation, at
the level of 12 main consumption groups, are shown in table 3.1 for all
capitals and other places apart from Brussels and Luxembourg. This table also
includes information about the consumption weights by country and by
expenditure groups.

3.2.
Rents and rent parities

Changes in the
rent parities are provided in the Table 3.2 which shows also the average rents
by type of dwelling on which the calculation is based. The average rents used
to compute the rent parities are in fact weighted moving averages, based on a
six-year model, to take into account the average occupancy length, which is
estimated to be six years. Any annual updating of rents during the life of the
typical lease is included in the model by using the appropriate adjustment
indices.

3.3.
Purchasing power
parities - analysis of results
3.3.1.
Major changes in
the economic parities from 2010 to 2011

The
calculation of correction coefficients used for salary adjustment in places
other than Brussels and Luxembourg involves the revision of some elementary
parities each year. For the 2011 salary adjustment three new price surveys have
been incorporated: Personal Appearance (conducted in 2009), House and Garden
(conducted in 2010) and Transport, Horeca (conducted in 2010). The weighting
structure used to aggregate the parities have not been updated. The weighting
structure used to aggregate the rent parities have been updated in Brussels and
in twenty eight duty stations. The rent parities have been calculated for 2011
according to the moving average model approved by the Article 64 Working Party.

The
introduction of new prices from the latest consumer price surveys this year
affects 32 (out of 80) elementary parities, which together account for about
37% (EU average) of the consumption weight.

Moreover, rent
surveys are carried out every year in all Member States. A six-year moving
average model is used for calculating rent parities: the rent parities for 2011
are based on the relative trend in the real-estate markets in Brussels and
other places of employment between 2006 and 2011. These parities are,
therefore, affected by the following factors:

·
introduction of rent
data for year 2011,

·
deletion of the rent
data for 2005,

·
price indices used for
updating the rents for 2006 - 2010 to price of 2011.

All
these effects, as well as the total change in rent parities, are shown in table
3.4.

Details
of the changes in the rent parities from 2010 to 2011, including a
decomposition of all the effects, are given in table 3.4. The largest increases
in the rent parity could be observed in London (+6.1%), Helsinki (+3.5%) and
Stockholm (+3.1%). The largest decreases in the rent parity were recorded in
Sofia (-12.2%), Ljubljana (-7.6%), The Hague (-7.3%) and Riga (-6.6%). Changes
in the global parities from one year to the next come mainly from survey prices
and rent revisions, but may also be affected by the trend in the price indices
used to update the elementary parities at the date of the adjustment (1.7.2011)
and by changes in the consumption structures (updated every five to seven years
by the introduction of new SHE results)[3]. Details of the changes
in the economic parities from 2010 to 2011, including a decomposition of all
the effects, are given in table 3.3.

The
biggest increases in global economic parities during the period under review
can be observed in London (+5.7%), Culham (+4.3%) and Stockholm (+1.2%). The
biggest decreases in the parities can be observed in Prague (-4.3%), Ljubljana
(-3.8%) and Sofia (-3.3%).

As
regards price indexation, the impact of official indices for the year to July
2011 on the PPP at the level of total consumption were lower than Brussels in
22 places and higher than Brussels in the remaining 8 places. Here it should be
recalled that there are important differences between HICP and PPP
methodologies (eg. use of different weights for aggregation purposes). For this
reason, the "price updating effect" presented in the table cannot be
directly compared with the relative movement of the all-items HICP published
separately on the Eurostat website – although other things being equal that
movement should also give an indication of the likely magnitude and direction
of change.

3.3.2    Major changes in the economic parities from
2010 to 2011

The
rent and imputed rent parities, due to their associated high consumption weights
(around 22% on average across the EU) influence in a quite significant way the
global parities and consequently the correction coefficients. The analysis of
correction coefficients calculated with and without the rent element for the
same place of employment makes it easier to isolate the effect of rent
differences separately from differences arising from other causes.

The
correction coefficient for rents (compared to Brussels =100) is very high in
London (278.0), Paris (178.0), Stockholm (161.2), and Copenhagen (157.5),
whereas they are quite low in Sofia (58.1), Nicosia (62.1), Valletta (76.2) and
Tallinn (77.4).

For
the overall correction coefficient, however, the range is smaller: Copenhagen
(134.2), London (128.0) and Stockholm (124.1) compared to Sofia (60.6),
Bucharest (72.7) and Vilnius (72.7).

When
rents are added to the computation, the correction coefficient is increased by
10% or more in London (+35.0%), Bucharest (+16.1%), Budapest (+14.7%), Paris (+14.2%),
Warsaw (+12.7%), Prague (+11.2%) and Rome (+10.2%). By contrast the impact is
negative in Nicosia (-7.4%), Karlsruhe (-3.3%), Bonn (-2.7%), Varese (-2.5%),
and Valletta (-2.4%) and the impact is near zero in Berlin.

More
details on the effect of rent on the 2011 correction coefficients are given in
table 3.5.

4.
Equivalence of purchasing power of EC pensioners in the Member States
4.1.
Economic parities and
correction coefficients for pensioners

The correction coefficients for pensioners with a
reference date of 1 July 2011 have been calculated in accordance with the
agreed methodology on the basis of the following information:

Ø Parities for all goods and services, except
for rents, as used for the calculation of the correction coefficients for
active staff. These parities are based on bilateral comparison of prices of
about 3000 goods and services between different capital cities and Brussels
(for more details see point 3.1 above).

Ø Country rent parities: For calculating
country rent parities the following procedure has been applied in most of the
countries. Calculate a spatial adjustment factor in the form of
national/capital ratio of market rents derived from an official database like
CPI, household budget survey, housing register, etc. With the help of this
adjustment factor transform the capital city rent parity from Article 64 estate
agency rent surveys to the country rent parity. The following exceptions to
this general rule were agreed with the respective NSIs:

1.
Netherlands: No such
adjustment factors were available for Netherlands, for which average country
rents were compared directly with the average rents in Belgium (all derived
from ECP-PPP rent surveys). A similar approach is used in Bulgaria and Romania.

2.
Germany: As information
on rents for four German cities (Berlin, Bonn, Karlsruhe and Munich) is
available the ratio between the average of those cities and Berlin is used.

3.
Denmark: Due to the
specificities of the rental market in Copenhagen, which is completely different
from the market in the rest of the country, an estimate of the Copenhagen rent
parity different from the one for staff is used as basis for the spatial
adjustment factor. The new estimate is obtained averaging the staff rent parity
with a rent ratio for the general population obtained from the NSI.

4.
Malta and Estonia: As
no reliable information on the adjustment factors were available for Malta and
Estonia a ratio equal 1 was used.

Each National Statistical Institute is
required each year to check and, if possible, to update their spatial
adjustment factor.

Ø Consumption weights for the pensioners
calculated on the basis of a wide scale family budget survey carried out in
2002.

The
details of the economic parities calculation, at the level of 12 main
consumption groups, are shown in table 4.1 for all countries apart from Belgium
and Luxembourg. This table also includes information about the consumption
weights by country and by expenditure groups. Table 4.2 presents the rent
ratios used in 2010 and 2011.

The
correction coefficients applicable to the EC pensioners are determined on the
basis of the relationships between the economic parities and the exchange rates
fixed by the Commission and specified in the Staff Regulations for the relevant
countries. The correction coefficient operates as a percentage adjustment to
pensions (only for the pension rights acquired before 1 May 2004; being the
correction coefficient 100% for the pension rights acquired from that date) to
take account of the cost of living differences between Belgium and the Member
States, except Luxembourg where, according to the Staff Regulations, a
correction coefficient of 100% is applied.

4.2.
Purchasing power
parities for pensioners – analysis of results

In
2011, for 14 out of 25 member states (ie. excluding BE and LU), the rent
correction coefficient (ratio between the rent parity and the exchange rate) is
under 100. This means that the average rents are lower in these places than in
Belgium. Moreover, for 10 of these countries, the rent correction coefficient
is also lower than the correction coefficient without rent. This means that,
for these places, the rents lead to a reduction of the global correction
coefficient.

For
the remaining 11 member states, the rent correction coefficients is both
greater than 100 and higher than the correction coefficient without rent.

4.3.
Comparison of
correction coefficients for staff and pensioners

Table 4.5 compares the pensioners’
correction coefficients with those for active staff. Among all Member States,
Denmark has the highest country-based CC and the highest capital-based
CC. The biggest differences between capital city CCs and country CCs can be
observed in the United Kingdom, Romania, Hungary, Poland and France. By
contrast, in Portugal, Austria, Greece, and Germany the two CCs are nearly at
the same level.

In all countries except Germany, Estonia,
Cyprus, and Malta the country CCs are lower than the capital city CCs. Without
rents, the two sets of CCs are closer – and the country CC without rent is
slightly higher than the capital city CC in 19 out of 25 Member States.

It should be mentioned that the Staff Regulations set
out specific rules for the application of the pensioner CC.

5.         Information about working time

Through
the standard remuneration questionnaire, Eurostat also collects statistical
information on differences in the working hours of national officials in all
Member States. Information about statutory or contractual weekly working hours
in central governments (Table 5.1), number of days of annual leave (Table 5.2)
and number of public holidays per year (Table 5.3) are shown below. In all
these tables the situation in July 2011 has been compared with that in July 2010.

Similarly,
information is also collected about retirement age in central government. The situation
at July 2011 is shown in Table 5.4.

[1] A separate report
is prepared concerning correction coefficients for duty stations outside the
European Union, to which the additional provisions of Annex X to the Staff
Regulations apply.

[2] The latest version of the relevant methodology manuals are
available as documents A65/08/08, A64/11/27, and A64/11/28.

The periodicity of
SHE ("Survey of Household Expenditures"), formerly known as FBS
("Family Budget Survey"), is set by Article 64 Working Group
decision.

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