Latest update on the reform

08/03/2013 , No comments
As you know, during the 2014-2020 Multiannual Financial Framework negotiations that took place early February, the European Council decided to cut the administrative spending by Euro 1.5 Billion. This comes on top of the Euro 1 Billion saving that the Commission proposed on a voluntary basis with the reform of the Staff Regulations tabled in December 2011 (see our previous message).
In order to find the extra 1.5 Billion saving, the Commission proposes to freeze the salaries and pensions of all the staff employed in the EU Institutions, agencies and other bodies over the next 2 years (2013 and 2014). This means that the provision of the method that expired on 31 December 2012 to align the evolution of EU staff remuneration and pensions to that of national civil servants will not be applied for 2 years, even when the method will be reinstated following the reform.  

The exact amount of purchasing power loss will depend on the combination of inflation and the evolution of national civil servants salaries during the next two years, but we expect that it will roughly correspond to one echelon. The effects of this salary freeze will be felt even after the 2 year period and when one enters retirement. We are following this point very closely but it seems that there is little that can be done to counter this perspective, the pressure of the Council on this aspect is very intense and in any case 1.5 Billion must be found within the administrative spending. During this freeze period, it is probable that the correction coefficient will be updated annually as usual.Another proposed measure is much more controversial: the negotiations in their current state foresee the introduction of a new 6% “crisis levy” in parallel with the salary freeze. We can’t accept this levy in the absence of method or if the reinstated method substantially diverges from the old one. As negotiated during the last reform of 2004, the levy was introduced in exchange for a stable and well defined method: one goes with the other. Our position is that during any salary and pension freeze, no levy can be applied. DG HR was receptive to this argumentation and will take it into account when negotiating with the Council. One point anyway seems clear: the levy cannot be retroactively applied. We will not have to pay back what we should pay now were the solidarity not having expired at the end 2012.
But there is even more!
The way the February Council conclusions are written is open to interpretation. Several members of the Council Status Working Group (with Austria as forerunner) wish to introduce in the new method after the 2 years freeze period a limitation in the salary evolution, until 2020 at least. It comprises a “dynamic cap” that consists in deducting 0.5 % from every annual salary adjustment, even if it results in a negative adjustment; and a “static cap” that limits any future positive annual salary adjustment to max. 2%.The Commission does not agree with this proposal that is not in line with the Council summit conclusions.
Since the Council summit, the Commission (DG HR) has met several times with the Council Status Working Group but discussions are difficult and the two parties don’t agree on how to implement the reform. Furthermore, the Status Working Group has no single common opinion and some of its members have a rather extreme position. The Commission requested to negotiate from now on at the COREPER level (the ambassadors of the Member States) and hopes that they will have a more realistic and reasonable approach.
The European Parliament will give its green or red light on the MFF proposal in June/early July. If the Parliament gives it OK, a trilogue will take place (Council-Commission-Parliament) to discuss the way forward to implement the MFF budget reduction, and it is thought that the Parliament will strengthen the Commission position against the Council.
To conclude, the negotiations on the reform are still in a very early stage and somewhat chaotic. Having reached an agreement for the MFF does not mean that everything is now clarified. A 2-year salaries and pension freeze seems unavoidable, but several Member States still want to attack the European public service even more.
In any case the reform won't entry into force before January 2014.
We must be very careful to defend our rights, and we need your continuing support!
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