Brussels, 5 December 2012
EU officials face -1.1% loss in purchasing power in annual pay adjustment
Reflecting the difficult economic situation, EU officials face a loss of -1.1% in 2012. This is the result of the formula for calculating annual pay adjustments. It follows an effective fall in purchasing power of -3.6% in 2011. In total, the loss in EU officials' purchasing power between 2004 and 2011 is -7.6%.
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 and Luxembourg – a sample explicitly chosen by the Member States in 2004 and representing 76% of EU GDP). In other words, it applies the political decisions taken by those national governments concerning the salaries of their own civil servants to the salaries of EU staff.
This year, the result exactly reflects the difficult economic situation and its very diverse impact on national civil services: it takes into account the salary increases in Germany (+4.3%), Belgium (+2.5%), Luxembourg (+2.5%), France (+1.8%) and the UK (+0.9%) but also the decreases of -3% in Spain, -1.9% in the Netherlands and the freeze in Italy (0%). The combined change in purchasing power of these national civil servants is -1.1%. So exactly the same loss of purchasing power is applied to EU civil servants, wherever they are based and whatever EU institution or agency they work for.
Inflation in Belgium means the nominal pay adjustment for those EU officials based in Brussels is 1.7%. This is a below inflation rise that implements the -1.1% loss of purchasing power. As outlined above, this is lower than the nominal pay adjustments for civil servants in half the Member States in the sample.
An exception clause 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. However, an in-depth analysis showed those conditions have not been met, and the -1.1% proposed cut in purchasing power fully captures the changed circumstances of national civil servants.
Nevertheless, it is the Commission's firm belief that in the current economic situation the EU administrations should contribute with an extra effort. That is why already last year the Commission made a proposal to the Council and the European Parliament for a 5% cut in staff in all EU institutions and agencies between 2013 and 2017. To deal with the increased work load resulting from that, the staff cut would be complemented by an increase in the minimum working week to 40 hours for staff without any salary compensation. In addition, the Commission proposed an increase in the retirement age from 63 to 65 while making it easier to work until 67, as well as a significant lowering of starting and end of career salaries for certain functions of between -18% and -45%.
This 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 due to the long-term effects of these measures.
In addition, the Commission also proposed last year not only to maintain a special tax which is due to expire on 31 December 2012, but also to increase this so-called 'solidarity levy' (which is applied in addition to income tax of up to 45%) from 5.5% to 6%. A reform and extension of the Method, also due to expire at the end of 2012, was proposed as well to address concerns voiced by the Member States.
The Commission highly regrets that the Council has not yet reached a common position on these proposals, although it has been public for more than 17 months. The Commission also regrets that the Council has therefore not been in a position to mandate its Presidency to start talks with the European Parliament and the Commission on the proposal. As a result, EU officials could see their net salaries increase in January due to the expiry of the special levy.
In a last attempt to prevent this, Vice-President Maroš Šefčovič has written to Minister Andreas Mavroyiannis of the Cypriot Presidency and European Parliament President Martin Schulz reminding them again of the situation, and of how Council and Parliament can avoid this by adopting an extension of the special levy and the Method for one year. The Commission would then submit to the co-legislators all the initially proposed austerity measures again in 2013.