Legal base	n/a
Document originated	(a) 29 October 2009 (b) 19 November 2009
Deposited in Parliament	(a) 5 November 2009 (b) 23 November 2009
Department	HM Treasury
Basis of consideration	(a) EM of 17 November 2009 (b) EM of 4 December 2009
Previous Committee Report	none
To be discussed in Council	n/a
Committee's assessment	(a) and (b) Legally and Politically Important
Committee's decision	(a) and (b) Cleared

Background

23.1 Article 65 and Annex XI of the Staff Regulations provides for the Council to review and, where appropriate, to adjust the level of remuneration and pensions of Community officials and other servants on a yearly basis. These provisions seek to ensure that the Community staff benefit from purchasing power adjustments of their salaries, which are comparable to those of civil servants in national administrations and in line with the increase in the cost of living over the course of each year.

23.2 Eurostat uses a complex methodology (la Méthode) as set out in Annex XI of the Staff Regulations to calculate the size of any adjustment applicable in any given year using data supplied by Member States.

The Document

23.3 This proposal (in its original and amended form) contains the adjustments for the annual period commencing 1 July 2009. The value of the annual adjustment proposed in respect of Community staff based in Belgium and Luxembourg is equal to the product of the global specific indicator[75] and the change in the Brussels International Index.[76] However, changes in the cost of living in other places of employment are derived indirectly from the value of the adjustment in Brussels and from changes in weightings[77] and in exchange rates.

Adjustment to the Remuneration and Pensions in Belgium and Luxembourg

23.4 During the latest reference period the purchasing power of civil servants in the sample of Member States has on average increased by 2.7% and the change in the cost of living for officials living in Brussels was calculated as 0.9%.

23.5 Based on these figures, the Commission proposes 3.7%[78] (+0.6 on 2008) as the necessary level to maintain a parallel development in purchasing power with national civil servants in the Member States.

Adjustment to the Remuneration and Pensions outside Belgium and Luxembourg

23.6 The rates of pay and pensions for the Community staff based in other countries are adjusted to give them equivalent purchasing power with those staff and pensioners in Brussels as of 1 July each year. The rates are calculated by multiplying the adjustment in Belgium and Luxembourg by the change in weightings and in the exchange rate.

23.7 The weightings applicable to the remuneration of officials (including temporary and contract agents) and pensioners based outside Brussels and Luxembourg are determined by ratios of the economic parities and the exchange rates at 1 July.

23.8 The new correction coefficients for the salary adjustments are detailed in column 2 of the table in Article 3 of the draft Regulation (page 8), with those for transfers and pensions set out in columns 3 and 4 respectively. These coefficients take effect from either 16 May (if the increase in the cost of living is greater than 16.5%) or 1 July (if the increase is greater than 12.6%).

The Government's view

23.9 In his Explanatory Memorandum of 17 November 2009, amplified by a Supplementary Explanatory Memorandum of 4 December 2009 on the amended proposal, the Economic Secretary at the Treasury (Ian Pearson) accepts the Commission's recommendations and comments as follows:

"This is an annual proposal for salary and pensions adjustment for the Community officials.

"The Government acknowledges that the 'Methode' has been an objective approach that has kept Community civil servants' pay rises modest — in line with public servants' pay in the eight sample Member States and slightly above inflation. However, the UK along with some other Member States (Germany, Netherlands, France and Denmark) has registered its concern about the proposed increase especially under the present economic conditions. Some Member States believe this period to be one of special circumstance and have urged the Commission to consider deviating from the 'Methode' so that a lower increase might be applied to reflect this.

"The Government anticipate more discussions on this increase and will work with others to achieve a better outcome in the way the Methode is applied to special circumstances in the future."

23.10 The Minister adds that the costs of the annual adjustments are largely anticipated in the relevant part of the Community budget (Heading 5 — Administration) and to any remaining extent can be partly offset by the increase in revenue generated from staff pension contributions from July 2009 and savings in other areas. The overall level of appropriations in this area should therefore not increase as a result of this adjustment. There will consequently be no impact on UK contributions.

23.11 In his later Supplementary Explanatory Memorandum the Minister reiterates his reservations about the scale of the proposed increase which he considers "too high especially under the present economic conditions."

Conclusion

23.12 We thank for the Minister for his comments on this proposal. We share the Government's concerns about the comparative generosity of the proposed purchasing power adjustments for EU staff. However, as the method of calculating the adjustments is well-established and may only be changed by a separate decision by Member States, we see no basis for withholding clearance of the document.

76   Change in the cost of living in Brussels. Back

77   Economic parities for remunerations and pensions establish the purchasing power equivalence of the remunerations and pensions paid in Belgium with that prevalent in the other places of employment/residence for which necessitates a correction coefficient to be set. Back

78   3.6% in the original proposal (a). Back