COMMUNICATION FROM THE COMMISSION - REVIEW OF THE METHOD FOR ADJUSTING REMUNERATION
COMMISSION OF THE EUROPEAN COMMUNITIES Brussels, 11. 06. 1996 COM(%) 258 final COMMUNICATION FROM THE COMMISSION REVIEW OF THE METHOD FOR ADJUSTING REMUNERATION CONTENTS REVIEW OF THE METHOD 1. INTRODUCTION 1. 1. Terms of reference 1. 2. Background: the need to adjust remuneration 1. 3. Remuneration: the underlying principles 1. 4. The 1991 method 1. 5. Results 2. COMPONENTS OF THE METHOD 2. 1. Changes in the purchasing power of remuneration in the national civil services 2. 2. Change in the cost of living in Brussels 2. 3. Changes in the cost of living in other places in relation to Brussels 3. APPLICATION OF THE METHOD Interim review 3. 1. Annual review 3. 2. Arrangements for recovering overpayments 3. 3. 3. 4. Recruitment requirements 3. 5. Exception clause 3. 6. Results of the application of the 1991 method 4. QUID PRO QUO FOR THE METHOD 4. 1. Temporary contribution 4. 2. Increase in pension contributions 5. CHANGES IN REMUNERATION 1991 TO 1995 5. 1. Changes in remuneration in Brussels and Luxembourg 5. 2. Remuneration in other places of employment in relation to Brussels 5. 3. Change in the purchasing power of remuneration 5. 4. Comparison with the change in purchasing power of national civil servants 6. CONCLUSION 1. INTRODUCTION 1. 1. Terms of reference Article 15(2) of Annex XI to the Staff Regulations provides that the provisions of the Annex «shall be reviewed at the end of the fifth year and revised, if appropriate, on the basis of a report transmitted to the European Parliament and the Council and a proposal from the Commission after consulting the other institutions within the framework of the Staff Regulations». 1. 2. Background: the need to adjust remuneration The need to recruit from a wide geographical base and to preserve the quality and independence of the European public service calls for competitive remuneration with regular adjustments to keep pace with trends in the purchasing power of remuneration on the labour market. In order to maintain harmonious staff relations, the general principles applied must be established by consensus. The Council has long favoured the principle of parallel development with remuneration in the national public services. This calls for a rigorous procedure. Hence the adoption by the Council of a method based on detailed and binding principles (Annex XI to the Staff Regulations) which has the advantage of not requiring annual negotiations and of avoiding the risk of dispute. The Council decision combines a negotiated approach and a procedural approach with a view to limiting conflict. Periodic negotiations since 1971 have produced a series of agreements spelling out the rules for implementing Articles 64 and 65 of the Staff Regulations: the 1971 and 1976 agreements; the 1981 method adopted for a period of 10 years, introducing a crisis levy; the 1991 method adopted for a period of 10 years, introducing a temporary contribution; staff contributions to the pension scheme were also increased. 1. 3. Remuneration: the underlying principles Remuneration, legally grounded exclusively in the Staff Regulations of Officials of the European Communities, comprises basic salary, and family and other allowances, from which are deducted social security contributions, tax and the temporary contribution. Adjustments are governed by a system based on two principles: parallel development of the remuneration of officials of the European institutions and that of civil servants in the Member States of the European Union; purchasing power parity for the remuneration paid in the various places of employment and in Brussels. 1. 4. The 1991 method The 1991 method was adopted following lengthy negotiations involving both the trade unions and staff associations representing the staff of the Community institutions (also consulted by referendum) and the institutions themselves. At its 1528th meeting, the Council endorsed the compromise produced by the Concertation Committee, subsequently confirming its agreement by adopting the corresponding regulations on 19 December 1991. The note transmitted by Coreper to the Council prior to its decision describes the compromise as a comprehensive solution comprising several interdependent components: the method, applying from 1 July 1991 to 30 June 2001; and its «quid pro quo», namely the temporary contribution and the increase in staff contributions to the pension scheme. In other words, the final compromise not only introduced a procedure for adjusting remuneration but also had an impact on its level through these two additional components which have reduced purchasing power. The method negotiated with the Council and adopted by it in December 1991 is valid for ten years (till 2001) with provision for a review in 1996 and, if appropriate, revision on a proposal from the Commission. The Staff Regulations also had to be amended to make provision for the temporary contribution; it too is payable until 30 June 2001 and is equivalent to a gross rate of 5. 83% of the base to which it is applied. In addition, staff contributions to the pension scheme were increased from 6. 75% to 8. 25% of basic salary. 1. 5. Results Since 1991 civil servants in the Member States - and consequently the officials of the European Communities - have suffered a 3. 1% loss in purchasing power, a 13. 8% rise in the cost of living in Brussels producing a 10. 4%1 increase in the salary scale. The two binding measures introduced as the quid pro quo for the method have led to an additional 4. 2% reduction in purchasing power: 2. 9% as a result of the temporary contribution and 1. 3% as a result of the increase in staff contributions to the pension scheme. So, if the impact of this quid pro quo is added to the above, the result is a 5. 7% increase in net remuneration, which actually represents a 7. 1% loss in purchasing power for officials of the European institutions over five years, 4. 2% more than for national civil servants. 1 96,9/100 x 113,8/100 = 110,4/100 = +10,4 4 2. COMPONENTS OF THE METHOD Article 1(1) of Annex XI provides that each year Eurostat «shall draw up. a report on changes in the cost of living in Brussels, the economic parities between Brussels and the other places of employment in the Member States, and changes in the purchasing power of salaries in the national civil services». 2. 1. Changes in the purchasing power of remuneration in the national civil services 2. 1. 1. The specific indicator measures changes in the purchasing power (increase minus inflation) of the remuneration of national civil servants in the Member States of the European Union. Table 1 shows that between 1991 and 1995 they suffered an average loss in purchasing power of 3. 1%. Table 1 SPECIFIC INDICATOR Average change in the purchasing power of remuneration in the national civil services of the Member States of the European Union (1) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 (3) (2) Adjustment of remuneration % t/t-1 cumulative % +4,1 +4,8 +1,9 +1,0 +3,1 +4,1 +9,1 +11,2 +12,3 +15,8 % t/t-1: percentage change year on year (4) (5) (6) (7) Consumer price index Purchasing power (specific indicator) % t/t-1 cumulative % +4,8 +4,2 +3,2 +3,0 +2,9 +4,8 +9,2 +12,8 +16,1 +19,4 % t/t-1 -0,7 +0,6 -1,3 •1,9 +0,2 cumulative % -0,7 -0,1 -1,4 -3,3 -3,1 cumulative %: cumulative values are calculated by multiplying the year-on-year changes 20 10 -10 -20 CUMULATIVE % CHANGE Consumer price index. -~r»^FT&;4 _ - * + i 5 ,8. - • - + i 6 ; i*. ^**9X _M - - 'X+§$ *-*l?Z Adjustment of remuneration Purchasing power (specific indicator) T ^ —r -3,1 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 - 4- The method for calculating the specific indicator derives essentially from decisions taken by the Council (Annex XI to the Staff Regulations). The rules for its practical application are laid down by the Article 65 Working Party, chaired by Eurostat. All calculations are based on the data sent to Eurostat by the national administrations in the Member States relating to the remuneration of central government staff on 1 July of the current year. The data are for a sample population, relating as a rule to the first and last steps of the main grades. Figures are provided for unmarried staff and married staff with two dependent children. The 1994-95 specific indicator already takes account of changés in Finland, Austria and Sweden but with a weighting of only 50% (membership of the European Union from 1 January 1995). Table 2 shows the changes in purchasing power by country. Table 2 SPECIFIC INDICATOR BY MEMBER STATE (1. 7. 90 -1. 7. 95) Change in the purchasing power of remuneration in the national civil services of the Member States of the European Union (D Country (2) Nominal change in net remuneration (3) Change in consumer price index (4) Real change in net remuneration B DK D GR E F IRL 1 L NL P UK (%) +17,7 +12,7 +13,5 +44,9 +21,7 +13,8 +26,7 +13,5 +35,6 +10,8 +46,9 +19,1 (%) +13,6 +10,9 +18,1 +90,3 +29,5 +12,2 +13,6 +28,7 +15,8 +15,7 +42,6 +18,0 SPECIFIC INDICATOR (1. 7. 94 -1. 7. 95) +2,3 +1,4 +1,3 A FIN s +2,6 ~ +1,0 +3,0 SPECIFH EU C INDICATOR +15,8 +19,4 ' (%) +3,8 +1,6 -3,8 -23,8 -5,8 +1,5 -11,9 +17,1 -4,3 +3,0 +1,0 -0,3 +0,4 -1,7 -3,1 (5) Weighting factor 95. (%) 4,1 1,7 26,3 0,8 ~ ^ \ 5 ,0 24,6 0,7 16,1 0,2 3,0 2,3 13,2 1,2 0,4 0,7 100,0 EUR12 until 1. 1. 1995 then EUR 15 Cumulative real values (4) are calculated by multiplying the year-on-year changes Rounding can produce discrepancies between these cumulative values and the relationship (2)/(3). 2. 1. 2. Control indicator Annex XI provides for the year-on-year change in real per capita emoluments in the national civil services to be used as a control indicator to check the gross specific indicator. Table 3 compares the changes in the two indicators. Table 3 CONTROL INDICATOR Change in the purchasing power of gross remuneration in the national civil services of the Member States of the European Union (1) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 (2) (3) Gross specific indicator cumulative % +0,0 +0,1 -0,4 -2,8 -1,0 % t/t-1 +0,0 +0,1 -0,5 -2,4 +1,8 (4) Control indicator (5). (6) (7) Difference % t/t-1 +2,7 +4,5 +2,6 -0,1 +0,9 cumulative % +2,7 +7,3 +10,1 +10,0 +11,0 % t/t-1 -2,6 -4,2 -3,0 -2,3 +0,9 cumulative % -2,6 -6,7 -9,5 -11,6 -10,8 Cumulative values are calculated by multiplying the year-on-year changes [--ngrjiauonwE %7^TARgE 20 10 -10 -20 Control indicator. -•-+1Q. -1- - - * H H ^ ^ ^ ^ ^ t i1- -Q Gross specific indicator -"--•--•2,$"" OT5 _ - •++#• TOT Difference 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 —\ 2. 2. Change in the cost of living in Brussels Changes in the cost of living in Brussels are measured by the composite index, which is constituted as follows: 75% by the joint index for European officials in Brussels; 25% by the Brussels consumer price index. Table 4 CHANGE IN THE COST OF LIVING IN BRUSSELS d) (2) (3) (4) (5) (6) (7) Date Brussels joint index Brussels consumer price index Brussels composite index cumulative % +4,2 +8,0 +10,2 +12,8 +13,7 Brussels composite index(6) = 75% Brussels joint index(2) + 25% Brussels CPI(4) cumulative % +3,9 +7,3 +9,9 +12,9 +14,3 % t/t-1 +4,2 +3,6 +2,1 +2,3 +0,8 % t/t-1 +3,9 +3,3 +2,4 +2,7 +1,3 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 Cumulative values are calculated by multiplying the year-on-year changes 30 20 Cumulative. 0/? change — -• — Brussels joint index - - • - - Brussels consumer price index —•— Brussels composite index % t/t-1 +4,1 +3,5 +2,2 +2,4 +0,9 cumulative % +4,1 +7,7 +10,1 +12,8 +13,8 + 13,8 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 — f— These two indices are calculated in agreement with the Belgian Ministry of Economic Affairs. The joint index measures the change in the cost of living for officials of the European institutions in Brussels, while the consumer price index measures the overall cost of living in the Belgian capital. The weighting used to aggregate the 173 basic indices into the joint index is obtained from a survey of the family budgets of Community officials in Brussels, while the weightings used for the Belgian index are derived from a sample survey of Belgian family budgets conducted by the Belgian National Statistical Institute. And, for the purposes of calculating the joint index, the rent index is replaced by a corresponding index calculated by Eurostat on the basis of an annual survey of Community officials employed in Brussels. 8 2. 3. Changes in the cost of living in other places in relation to Brussels 2. 3. 1. Economic parities Article 1(3)(a) of Annex XI provides that «the Statistical Office, in agreement with the national institutes, shall calculate the economic parities which establish the equivalence of purchasing power of the salaries of European officials serving in the capitals of the Member States and in certain other places of employment specified in Article 9 with reference to Brussels». The economic parity is thus the amount in national currency needed to purchase in the place of residence the equivalent in goods and services to what could be purchased in Brussels with 1 Belgian franc. Table 5 shows the change in economic parities. Table 5 (1) COUNTRY/PLACE B DK D(Berlin) Bonn Kaisruhe Munich GR E F IR I Varese NL A P FIN S UK Culham ECONOMIC PARITIES (2) 1. 7. 91 1 0,23145 0,051095 * 0,045743 0,044747* 0,050291' 4,1453 3,1897 0,18617 0,017600 40,556 37,424 0,053563 (3) 1. 7. 92 1 0,22602 0,052053 * 0,046686 0,045974 * 0,051495 4,7891 3,3062 0,18703 0,017838 41,694 38,893 0,055358 (4) 1. 7. 93 1 0,23175 0,054986 * 0,048548 0,048764 * 0,053788 5,5159 3,4770 0,19031 0,018256 44,756 41,709 0,055442 3,6093 3,8702 4,1109 0,019399 0,016929 0,020171 0,017241 0,020582 0,018072 (5) 1. 7. 94 1 0,22931 0,054036 0,049267 0,048398 0,053520 5,8780 3,5112 0,18840 0,018464 45,218 43,315 0,056037 0,37963 4,0149 0,17527 0,24010 0,021103 0,018030 (6) 1. 7. 95 (7) % 95/91 1 0,23354 0,053954 0,049032 0,048641 0,053612 6,3003 3,6192 0,18894 0,018926 46,671 44,812 0,056253 0,38860 4,1809 0,17760 0,24490 0,022178 0,018502 +0,9 +5,6 +7,2 +8,7 +6,6 +52,0 +13,5 +1,5 +7,5 + 15,1 +19,7 +5,0 +15,8 +14,3 +9,3 * Commission proposal not adopted by the Council; Bonn parity is applied Article 1 (3)(b) provides that «the economic parities shall be calculated in such a way that each basic component can be checked by a direct survey at least once every five years». In practice: one third of the basic parities are checked each year and replaced by the new parities produced by the latest price survey; the basic parities are then updated using detailed indices. The economic parity determines remuneration in national currency arrived at by updating the following two components: the annual exchange rate applied to remuneration (July exchange rate); the weighting (ratio economic parity/exchange rate). 2. 3. 2. Exchange rates Table 6 shows that certain currencies fluctuated strongly against the Belgian franc during the period under consideration. Table 6 (D REMUNERATION EXCHANGE RATE* (6) 1. 7. 95 (7) % 95/91 (2) 1. 7. 91 (3) 1. 7. 92 (4) 1. 7. 93 (5) 1. 7. 94 1 0,18665 0,048593 5,9133 3,0703 0,16337 0,018230 36,767 0,054765 1 0,18774 0,048544 5,3189 3,0482 0,16479 0,018151 36,148 0,054692 1FB= FB DKR DM DRA PTA FF IRL LIT HFL OS ESC FMK SKR UKL Article 63 of the Staff Regulatbns: exchange rate used for the implementation of the EC general budget on 1 July* 1 0,18984 0,048638 7,9001 4,2517 0,17057 0,021333 57,113 0,054490 0,34204 5,13901023 0,14923 0,25372 0,022033 1 0,19059 0,048515 7,3282 3,9920 0,16642 0,020048 47,987 0,054413 0,34123 4,9903 0,16114 0,23386 0,019784 1 0,18699 0,048650 6,6260 3,7205 0,16389 0,019945 44,236 0,054558 0,016567 0,016756 0,019187 4,2335 4,0512 4,6281 +1,1 +0,2 +48,5 +39,5 +3,5 +17,5 +58,0 -0,4 +21. 4 +33,0 10 2. 3. 3. Weighting The weighting equals the ratio economic parity/exchange rate. In other words, it is the amount in Belgian francs at the July remuneration exchange rate needed in another place of employment to purchase articles which would cost Bfrs 100 in Brussels. The weightings set out in Table 7 show the relationship in July of each year between the salaries paid in the other places of employment and those paid in Brussels. Table 7 (1) COUNTRY/PLACE B /L DK D(Berlin) Bonn Kalsruhe Munich GR E F !R I Varese NL A P FIN S UK Culham (2) 1. 7. 91 100,0 123,3 105,3 * 94,2 92,2 * 103,6 77,9 104,6 113,0 97,0 112,2 103,5 97,9 WEIGHTINGS (3) 1. 7. 92 100,0 121,1 107,1 * 96,1 94,6 * 106,0 81,0 107,7 114,5 97,8 113,4 105,8 101,1 (4) 1. 7. 93 100,0 123,9 113,0 * 99,8 100,2 * 110,6 83,2 93,5 116,1 91,5 101,2 94,3 101,6 85,3 95,5 88,8 117,1 102,2 120,4 102,9 107,3 94,2 (5) 1. 7. 94 100,0 120,3 111,4 101,6 99,8 110,3 80,2 88,0 113,2 92,1 94,2 90,3 103,0 111,3 80,5 108,8 102,7 106,7 91,1 (6) 1. 7. 95 100,0 123,0 110,9 '100,8 100,0 110,2 79,7 85,1 110,8 88,7 81,7 78,5 103,2 113,6 81,4 119,0 96,5 100,7 84,0 (7) % 95/91 -0,2 +5,3 +7,0 +8,5 +6,4 +2,3 -18,6 -1,9 -8,6 -27,2 -24,2 +5,4 -4,6 •14,0 •17,8 * Commission proposal not adopted by the Council; Bonn weighting is applied With effect from 1 July 1994, the Berlin weighting became the weighting for Germany; this led to the introduction of weightings for Karlsruhe and Bonn. As of 1 January 1995, the weightings for Finland, Austria and Sweden were calculated in accordance with Annex XI. The substantial reductions in a number of weightings were basically caused by increases in the exchange rates (national currency/Belgian franc). 11 3. APPLICATION OF THE METHOD 3. 1. Annual review Article 3(1) of Annex XI provides that «with effect from 1 July and pursuant to Article 65(3) of the Staff Regulations, the Council, acting on the Commission proposal and on the basis of the criteha set out in Section I, shall take a decision before the end of each year adjusting remunerations». These adjustments (see 3. 6) were generally made in December. 3. 2. Arrangements for recovering overpayments The establishment of new weightings at the end of the year effective from 1 July can lead to retroactive upward or downward adjustments to remuneration and pensions. Hence the inclusion in regulations adjusting remuneration, from 1994 onwards, of a provision for the payment of arrears in the event of an increase and for the recovery of sums overpaid in the event of a reduction. The institutions have introduced the necessary implementing measures. 3. 3. Interim review Article 4(1) of Annex XI provides that «interim adjustments of remuneration pursuant to Article 65(2) of the Staff Regulations, taking effect on 1 January, shall be made in the event of a substantial change in the cost of living if the sensitivity threshold is reached and with due allowance being made for the forecast of the change in purchasing power during the current annual reference period». During the period under consideration interim adjustments were made for Italy, Greece, Spain and Portugal. 3. 4. Recruitment requirements Article 2 of Annex XI provides that «the Commission shall produce, before the end of 1992 and every three years thereafter, a comprehensive report on the recruitment requirements of the institutions and transmit it to the European Parliament and the Council. On the basis of this report the Commission shall, if necessary, present proposals based on all relevant factors to the Council after consulting the other institutions within the framework of the Staff Regulations». The second report (SEC(95)2298) was transmitted to the Council and Parliament on 27 December 1995. 12 3. 5. Exception clause Article 10 of Annex XI provides that «if there is a serious and sudden deterioration in the economic and social situation within the Community, assessed in the light of objective data supplied for this purpose by the Commission, the Commission shall submit appropriate proposals on which the Council shall act by qualified majority after consulting the other institutions concerned in accordance with the procedure laid down in the second subparagraph of Article 24(1) of the Treaty establishing a Single Council and a Single Commission of the European Communities». In its report (SEC(94)1027) transmitted to the Council on 27 June 1994, the Commission concluded that the economic situation had already impacted on the remuneration of national civil servants and, through the specific indicator, on the remuneration of Community officials. 13 3. 6. Results of the application of the 1991 method 3. 6. 1. The purpose of the adjustment of the basic salary table is to ensure that the purchasing power of Community officials develops in parallel with that of national civil servants. The change in the cost of living in Brussels as measured by the composite index was+13. 8%. The average change in the purchasing power of the national civil services in the European Union as measured by the specific indicator was -3. 1%. The resulting adjustment to the basic salary table (in Belgian francs) was +10. 4%. Table 8 shows the year-on-year calculations as well as the cumulative results. Table 8 Adjustment of the table of basic salaries of officials of the EU institutions (7) (1) (2) (3) (4) (5) (6) (7) Date Brussels composite index Specific indicator Adjustment of basic salary table 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 cumulative % +3,4 +7,6 +8,6 +9,2 +10,4 (7) Basic salary adjustment = (100+ Brussels composite index (2)) x (100+ specific indicator (4)) /100 ) -100 (3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes cumulative % +4,1 +7,7 +10,1 +12,8 +13,8 cumulative % -0,7 -0,1 -1,4 -3,3 -3,1 % t/t-1 -0,7 +0,6 -1,3 -1,9 +0,2 % t/t-1 +3,4 +4,1 +0,9 +0,5 +1,1 % t/t-1 +4,1 +3,5 +2,2 +2,4 +0,9 20 10 -10 -20 i IL^CUMI^ATIVE°/o- CHANGE Brussels composite index. --•• +>2,8-. ^ • +4 Adjustment of basic salary table - • + 1 3 ,8 i j-1Û,4 - ^ e ^— -9rt^--~^-_ ,4 _ " ! _ _ "_ ^SpecificjndicatQr. -3;3- 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 H 14 3. 6. 2. The adjustments in national currency made it possible to guarantee the principle of purchasing power parity with Brussels. In most countries devaluation against the Belgian franc was greater than the inflation differential with Belgium (see Tables 5 and 6). The result was a reduction in the price ratio between the other places of employment and Brussels, reflected in the 102. 5% to 86. 6% reduction in the average weighting for the other places of employment. In order to ensure the principle of purchasing power parity, this reduction also has to be reflected in the relationship between remuneration paid in the other places of employment and that paid in Brussels. This is shown in Table 9. Table 9 120 115 110 105 100 95 90 - 85 - 80 Average weighting weighted by the number of officials outside Belgium and Luxembourg 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 86,6 15 4. QUID PRO QUO FOR THE METHOD 4. 1. Temporary contribution When it adopted the method, the Council introduced a temporary contribution as one of the interdependent components of a comprehensive solution. The level of the contribution, the rules for its application, and its commencement and expiry dates were negotiated in this context. The temporary contribution was introduced by inserting Article 66a into the Staff Regulations (Council Regulation (ECSC, EEC, Euratom) No 3831/91 of 19 December 1991) and terminates at the same time as the method. Article 66a(1) and (2) provides that: «1. By way of derogation (EEC, Euratom, ECSC) No 260/68, a temporary measure regarding remuneration paid by the Communities to staff in active employment, to be known as the "temporary contribution", shall be applied for a period running from 1 January 1992 to 1 July 2001. from Article 3(1) of Regulation 2. (a) The rate of this temporary contribution, which shall apply to the base defined in paragraph 3, shall be 5. 8%. (b) The Council, acting in accordance with the procedure laid down in Article 24(1) of the Treaty establishing a Single Council and a Single Commission of the European Communities after consulting the other institutions concerned, may, if appropriate, in the context of the review provided for in Article 15(2) of Annex XI to the Staff Regulations, alter the rate of the temporary contribution referred to in point (a) on the basis of a report and proposal from the Commission». This measure resulted in an average loss in purchasing power of approximately 2. 9%. 4. 2. Increase in pension contributions The Council considered it advisable, in the course of negotiations for a comprehensive solution, in the interests of longer-term stability of the pension scheme to raise the rate of In Article 83(2) of the Staff Regulations, the rate of staff contributions to the scheme. 6. 75% was accordingly replaced by 8. 25% by Council Regulation (ECSC, EEC, Euratom) No 3832/91 of 19 December 1991. This measure resulted in an average loss in purchasing power of approximately 1. 3%. 16 5. CHANGES IN REMUNERATION 1991 TO 1995 5. 1. Changes in remuneration in Brussels and Luxembourg The economic situation has impacted on the salaries of national civil servants in the Member States of the European Union and consequently, through the parallel development principle, on the salaries of officials of the European institutions. Moreover, the purchasing power of officials has been reduced beyond what would be required by this principle, as a result of the supplementary measures (temporary contribution, increased pension contributions). The change in the remuneration in Belgian francs of officials in Brussels and Luxembourg was therefore as follows: Change in the remuneration of officials of the EU institutions (1) (2) (3) (4) (5) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 Adjustment of basic salary table % t/t-1 +3,4 +4,1 +0,9 +0,5 +1,1 cumulative % +3,4 +7,6 +8,6 +9,2 +10,4 Change in deductions % t/t-1 cumulative % -2,9 •1,3 -2,9 -4,2 -4,2 -4,2 (6) (7) Adjustment of remuneration % t/t-1 +3,4 +1,1 -0,5 +0,5 +1,1 cumulative % +3,4 +4,5 +4,0 +4,5 +5,7 (4) Temporary contribution: payable from 1. 1. 92 Increased pension contributions: payable from 1. 1. 93 (6) Adjustment of remuneratbn = ( (100+ basic salary adjustment (2)) x (100+adjustment of deductbns (4)) /100 ) -100 (3) (5) (7)Cumulath/e values are calculated by multiplying the year-on-year changes J CUMULATIVE % CHANGE „ - ^-+7+3 " —B + 4 ,5 ^QiQrr Adjustment of basic salary table ,6 f=f9^ , ^*-M0A +5,7 Adjustment of remuneration -•--2,9- -4,2- •--•••-42- Change m deductions «-4,2 •i 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 20 10 •10 -20 Table 10 17 5. 2. Remuneration in other places of employment in relation to Brussels Average remuneration in the other places of employment in relation to Brussels was as follows: Table 11 Average weighting weighted by the number of officials outside Belgium and Luxembourg 1. 7. 91 102,5 1. 7. 92 104,6 1. 7. 93 97,5 1. 7. 94 94,5 1. 7. 95 86,6 5. 3. Change in the purchasing power of remuneration If the change in remuneration of officials in Brussels (+5. 7%) is set against the change in the cost of living (+13. 8%), the result is a 7. 1% reduction in purchasing power. This is shown in Table 12. Table 12 Relative change in the purchasing power of the remuneration of officials of the institutions of the European Union (1) Date 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 (2) (3) Adjustment of remuneration (4) (5) (6) (7) Brussels composite index Purchasing power % t/t-1 +3,4 +1,1 -0,5 +0,5 +1,1 cumulative % +3,4 +4,5 +4,0 +4,5 +5,7 % t/t-1 +4,1 +3,5 +2,2 +2,4 +0,9 cumulative % +4,1 +7,7 +10,1 +12,8 +13,8 % t/t-1 -0,7 -2,3 -2,6 -1,9 +0,2 cumulative % -0,7 -3,0 -5,5 -7,3 -7,1 (3) Temporary contribution: payable from 1. 1. 92 Increased pension contributions: payable from 1. 1. 93 (7) Purchasing power - 100 x (100+adjustment (3)) / (100+ Brussels composite index(5))-100 (3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 20 10 -10 -20 CHANGE IN CUMULATIVE %. - • " + 7 ; 7" * * é pT - • + i t J , 1- -»-»-4,e- Brussels composite index. -••-+Î2& « + 1 3. 8 Adjustment of remuneration -•-^4r5- • +5,7 Purchasing power -7r3 "-7,1 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 H —\ 18 5. 4. Comparison with the change in purchasing power of national civil servants Since 1991 there has been a 3. 1% loss in the purchasing power of national civil servants in the Member States and, as a result of the method, in that of officials of the European institutions. If the impact of the temporary contribution (-2. 9%) and of the increase in pension contributions (-1. 3%) is added to the above, the result is a 7. 1% loss in the purchasing power of officials over five years. These figures show that the remuneration of officials of the European institutions has closely followed trends in the social and economic situation, changing at the same rate as national civil service salaries but with an additional reduction in purchasing power. Table 13 Change in the purchasing power of the remuneration of officials of the Member States and of the EU institutions (6) (4) (3) (2) (7) (5) (1) Remuneration of civil servants in the Member States of the EU Remuneration of officials of the EU institutions Date Difference % t/t-1 -0,7 -2,3 -2,6 -1,9 +0,2 (6) Temporary contribution: payable from 1. 1. 92 cumulative0/ •0,7 •0,1 -1,4 •3,3 •3,1 % t/t-1 -0,7 +0,6 -1,3 -1,9 +0,2 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 cumulative % •0,7 •3,0 •5,5 -7,3 -7,1 % t/t-1 +0,0 -2,9 -1,3 +0,0 +0,0 cumulative % +0,0 -2,9 -4,2 -4,2 -4,2 Increased pension contributions: payable from 1. 1. 93 (3) (5) (7) Cumulative values are calculated by multiplying the year-on-year changes 20 10 •10 -20 CUMULATIVE % CHANGE IN PURCHASING POWER _J Remuneration of civil servants in the Member States of the EU " " " • • - - • - 3 , 0. •A A -•-5,5 _ "•-3:3 -•-7-,3 *-3,1 «-7,1 Remuneration of officials of the EU institutions 1. 7. 91 1. 7. 92 1. 7. 93 1. 7. 94 1. 7. 95 +- - 19 6. CONCLUSION Annex XI to the Staff Regulations (the method) was adopted by the Council for a period of ten years (until 30 June 2001). As such, in common with all other regulations, it is part of the acquis communautaire, with which the Community institutions and all Member States must comply. There is provision for it to be reviewed after five years - an objective review to check that the principle of parallel development has been properly applied. Only if it were established that the method had failed to operate properly could the Commission present a proposal for revision of the Staff Regulations to the Council after consulting the other institutions. The review shows that: there has been a reduction (3. 1%) in the purchasing power of the remuneration of officials of the European institutions, the same as for the salaries of national civil servants; there has been a further reduction (4. 2%) in purchasing power as a result of the temporary contribution and the increase in pension contributions; staff relations have remained conflict-free as a result of the introduction of the procedure. The Commission therefore feels that any proposal to amend the method would affect the very substance of the final compromise resulting from the 1991 negotiations and the commitments entered into by the parties to it. Any departure from this compromise, which has attained its objectives, would undermine the legitimate expectations of staff as regards the institutions' compliance with the commitments entered into and would have grave consequences for the operation of the institutions. The Commission consequently considers that there are no grounds for any proposal to amend any of the components of the compromise. 20 ISSN 0254-1475 COM(96) 258 final DOCUMENTS EN 01 Catalogue number : CB-CO-96-268-EN-C ISBN 92-78-05235-3 Office for Official Publications of the European Communities L-298S Luxembourg 2/)