EU staff reform at a crossroads

The European Union is tightening its belt, and staff — including those working in international development — will bear some of the brunt. The question is how and when. In December 2011, the European Commission proposed a reform of its staff regulations that would shrink personnel, increase working hours and delay the retirement age, among other things. Put together, the changes would save the commission an estimated €1 billion (nearly $1.3 billion in current rates) by 2020, on top of the €8 billion resulting from reforms passed in 2004. The commission hopes to see the new staff policy take effect in January 2013. But that is in jeopardy as member states seek more staff sacrifices, prompting protests from trade unions. The reform at a standstill With the European Parliament on board, the ball is now in the European Council’s court. The council — a body comprised of heads of EU member states and the European Commission president — is divided on the issue, and this, according to insiders, has caused the parliament immense frustration. “There is a total division among all the member states, a division [that] is chronic on everything,” said an EU official who spoke to Devex on condition of anonymity, adding that the council is “a bit embarrassed” about its inability to reach a common position on the proposal. Frustrations have been running deep. Trade unions are complaining not only about the lack of dialogue but also about some member states’ insistence on more sweeping reform. Measures proposed by some member states are “wild” and would cause a serious problem to how EU institutions operate, according to Cristiano Sebastiani, representative of the trade union Renouveau et Démocratie. The proposals, he added, would deter staff growth and reduce salaries and pension. Staff representatives met Nov. 14 with European Council President Herman Van Rompuy to discuss the issue, but nothing definitive came out of that. More answers could come as soon as this week, however, as EU member state representatives negotiate the bloc’s next multiannual financial framework. Then again, that gathering, scheduled for Nov. 22-23 in Brussels, is expected to be heated, and many observers have expressed doubts about the leaders’ ability to compromise. Painful changes Though proposed by the commission, the EU staff reform is a bitter pill for its staff to swallow. EuropeAid along with other EU institutions will have to sustain a 5 percent cut in personnel under the proposal. This means additional work for EU civil servants — in the case of EuropeAid, 1,182 as of August 2012 — who have seen their salaries shrink over the years. In fact, the purchasing power of EU officials, after taxes and pension contributions, went down 4.2 percent between 2004 and 2010, the commission noted in its memo on the reform. For national civil servants, it decreased by 1.8 percentage points, on average. Compensation will take a further hit. A special levy imposed on salaries, currently set at 5.5 percent, was supposed to expire by the end of 2012 but under the reform, it would continue and rise to 6 percent. The reform would also bring major changes to the EU practice of adjusting salaries, which is done annually and is based on the purchasing power of national civil servants in member states. For one, the adjustment would be automatically blocked if there was a projected negative gross domestic product and the annual adjustment was positive and exceeded the change in the GDP by two percentage points. Currently, triggering the so-called exception clause requires the commission to submit a proposal to the European Parliament and European Council. The commission acknowledged that in the past, it didn’t see it necessary to trigger the exception clause because the procedure is “heavily bureaucratic and time-consuming.” Without a decision on the reform, the current method for salary adjustments will expire. “We’d have to go back to [a system based on] annual pay negotiations with all that waste of resources [and] social tensions that’s involved,” said Sebastiani. “Which is why the method was created in the first place — to make it very mathematical.” A new staff category The staff reform, according to its draft, would create a separate career path and salary grade for secretaries and clerk. This entirely new category, dubbed AST/SC, would be below assistants, thus lowering entry-level pay by around 18 percent. Moreover, the top two salary grades for assistants would only be accorded to the best performers “who successfully pass a selection procedure for a post with the highest level of responsibility in that category.” Antonio Gravili, spokesman of European Commission Vice President Maroš Šefčovič, said the procedure suggests that the commission would carry out internal competitions. The proposed measure risks tensions among staff, Sebastiani cautioned, noting that secretarial functions have all but disappeared since the 2004 staff reform. “The current organization is not anymore the one of the Fifties or Sixties when there was a secretary writing notes, answering phone calls, managing correspondence,” he said. “Now, everyone answers the calls, writes notes…” Working conditions The proposed regulations would increase the retirement age from 63 to 65 — “and even 67 on request,” according to the European Commission’s memo. The same goes for the early retirement threshold, which would rise from 55 to 58. The commission is also looking to halve the number of people who can apply for its early retirement scheme without reducing their pension rights, which is currently at around 80 people a year. Employees would have longer working hours. Currently, they have to work at least 37.5 hours each week. If the reform took effect, that would rise to 40 hours without additional compensation. Not surprisingly, commission staffers aren’t happy with the proposal. “[We] didn’t like it; even if it doesn’t change very much [our daily activity] because the staff already work much more,” Sebastiani said. “It is clear that there are some inconveniences for officers with families.” The commission estimates that combined extra hours of its staff that are not offset by the flexitime schedule now equal 400 full-time posts. With few exceptions, EU employees do not get compensation for overtime work. Officials can partially recoup the hours under a flexible time scheme. Managers, though, do get a small allowance because they work significantly longer hours compared with other staff members and they must be available even outside the standard working day, Gravili said. Managerial positions refer to directors-general, deputy directors-general, directors, principal advisers and heads of units. Based on EuropeAid’s organigram, more than 50 managers work at the agency’s headquarters in Brussels. The commission also plans to lower expenses by revising the method of calculating the distance to employees’ home country, the basis of the allowance for the annual return trip of officials to their countries. Sebastiani said this means a reduction in commission staff allowances, which are already lower than what diplomatic staff receive – a particularly stinging change for those working in international development, perhaps. Is the EU still attractive? The EU acknowledges its challenges attracting and retaining high-caliber professionals, and the staff reform has been positioned as the smart thing to do given tight budgetary constraints. Some foreign aid experts, though, fear that the reform would make it even harder for Brussels to find the seasoned experts and managers needed to improve the efficiency and effectiveness of development coopeartion. Salaries for administrators plunged by €500 per month on average following the 2004 reform, Gravili noted. With lower salaries and allowances on the horizon, experts may not be as keen to work for the commission, including the Directorate-General for Development and Cooperation, also known as EuropeAid, and its humanitarian counterpart, ECHO. A financial expert, for instance, could work in the private sector and receive an annual bonus that exceeds the entire annual salary at the commission, Gravili said. A lawyer could receive more generous remuneration and benefits packages at an international law firm or global organizations than the EU. Although EU competitions — including those for humanitarian and development jobs — continue to draw thousands of candidates, “daily we see colleagues that after being hired, leave the institutions to do other [assignments], especially [with regard to] specialized profiles such as law, auditing, IT,” Sebastiani told Devex. Beyond attracting candidates, the commission has to ensure the personnel’s geographical balance. Currently, very few candidates come from countries like France, Germany, the Netherlands and the United Kingdom, according to Gravili and Sebastiani. To rectify this, the commission is seeking to amend the law on competitions to allow for targeted examinations on a geographical basis.