European Commission - Press release
EU officials face -1.8% loss in purchasing power in annual pay adjustment
Brussels, 24 November 2011 – At a time when the cost of living in Belgium has risen 3.6%, and Belgian civil servants are receiving a pay adjustment of 3.6%, the formula for calculating annual pay adjustments for EU officials has delivered a loss of -1.8% in purchasing power.
The formula, known as 'The Method', tracks the evolution of national civil servants' purchasing power, up or down, from a basket of 8 Member States (UK, Germany, France, Italy, Netherlands, Spain, Belgium, Luxembourg – representing 76% of EU GDP). In other words, it is based on political decisions taken by national governments in those Member States.
This year, while there were wide variations between the countries concerned, the combined change in purchasing power of national civil servants in the basket of Member States is -1.8%. So exactly the same loss is proposed for EU civil servants, wherever they are based in the EU and whatever EU institution or agency they work for. This would then be adjusted by the cost of living in the country in which the official is based.
High inflation in Belgium (3.6%) means the nominal pay adjustment for EU officials in Brussels would be 1.7% (compared to 3.6% for Belgian civil servants). EU officials based in Germany would see their pay adjusted by 0.6% (compared to 1.3% for German civil servants, who will also receive additional increases for the end of the year of up to 2.4%), 0.4% in the Netherlands (2% for Dutch civil servants) and 1.9% in France (2% for French civil servants).
Many EU officials working in other Member States would see a nominal pay cut, for example in Prague (-2.7%), Ljubljana (-2.2%), Sofia (-1.7%), Athens (-1.1%) and Rome (-0.1%).
On 4 November, Member States asked the Commission to invoke the exception clause, which effectively allows for the suspension of the Method if strict legal criteria related to 'a serious and sudden deterioration in the economic and social situation' - which cannot be gauged by the Method - are met. An analysis based on the 2011 Autumn European Economic Forecast, issued on 10 November, showed those conditions have not been met, and that the -1.8% proposed cut in purchasing power fully captures the changed circumstances of national civil servants. The proposal now rests with the Council for adoption before the end of the year.
However, this does not exclude structural reforms in the European civil service. That is why the Commission is also proposing a 5% reduction of staff in all institutions and agencies, an increase in the minimum working week to 40 hours without compensatory wage adjustments, an increase of the normal retirement age from 63 to 65, a significant restriction of early retirement rules as well as measures related to rules on careers, like a significant lowering of salaries for certain functions.
This is in line with measures taken or discussed for national civil services and would generate considerable savings of more than €1 billion during the next Multiannual Financial Framework, and of €1 billion every year in the long run. In addition, in order to address the recent financial turmoil and the ongoing concerns of realising savings in national administrations and cutting national budgets, the Commission has decided not only to maintain a special tax which is due to expire in 2013, but also to increase this solidarity levy (which is applied in addition to income tax) from 5.5% to 6%.
These proposed structural reforms include changes to the Method. If accepted, the proposals would see the Method simplified and extended for ten years. The representativeness of the basket of Member States would be broadened to include all Member States. A new exception clause would allow an appropriate reaction to an economic crisis when considering the annual adjustment.