4 Reform of the EU's Staff Regulations
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18638/11
COM(11) 890
| Draft Regulation amending the Staff Regulations of Officials and the Conditions of Employment of other Servants of the European Union
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| Legal base | Article 336 TFEU; QMV; co-decision
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| Document originated | 13 December 2011
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| Deposited in Parliament | 15 December 2011
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| Department | Foreign and Commonwealth Office
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| Basis of consideration | Minister's letter of 24 July 2013
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| Previous Committee Reports | HC 83-iv (2013-14), chapter 11 (5 June 2013); HC 86-xii (2012-13), chapter 3 (12 September 2013); HC 428-liii (2010-12), chapter 4 (7 March 2012)
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| Discussion in Council | June 2013
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| Committee's assessment | Legally and politically important
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| Committee's decision | For debate in European Committee B; further information requested.
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Background
4.1 The draft proposal seeks to amend the European
Union Staff Regulations of Officials and the Conditions of Employment
of Other Servants of the European Union. These two documents,
referred to as the "Staff Regulations", set terms and
conditions for all staff working within the European Institutions
— the first document covers permanent officials and the
second contract staff. The Staff Regulations constitute the legal
framework for employment and working conditions for approximately
55,000 officials and other agents employed by more than 50 institutions
and agencies in the European Union and in third countries.
4.2 We reported on this proposal on two occasions
last year and in June of this year. Those Reports set out the
relevant background to the proposals, and the Government's policy
on them, in further detail.
4.3 On the last occasion we asked the Minister a
number of questions on the progress of negotiations.
Minster's letter of 24 July
4.4 The Minister for Europe (Mr David Lidington)
wrote on 24 July with a further update on the negotiations, and
in response to the questions we posed in the conclusion of our
June Report.
CONCLUSION OF NEGOTIATIONS
4.5 Following the conclusion of the trilogue between
the European Parliament, Council (represented by the Irish Presidency)
and the Commission on 18 June, a vote took place in a hastily
scheduled COREPER meeting on 28 June. The haste was the result
of the European Parliament's insistence that there was a connection
between the Staff Regulations and the Multiannual Financial Framework
(MFF). The compromise that came out of the trilogue, which the
Minister sets out below, does contain some useful reforms, but
was unacceptable to the UK overall, and it voted against it at
COREPER. Whilst it did not take this action alone, it was not
able to secure enough support from other Member States to halt
endorsement of the proposals at COREPER. The package will now
be sent to the Council for agreement, likely in October.
4.6 The Minister comments on the compromise as follows:
"Let me be frank, these proposals do not
go nearly as far as we would have liked, and whilst they will
produce some savings over the seven years of the next MFF, they
will not reform the EU Institutions to a level acceptable to the
UK. The Government will continue to champion this cause at every
possible opportunity, including in the EU's annual budget process.
We will not, however, be able to achieve either the savings or
the reforms through the annual budget process that we could have
achieved through the reform of the Staff Regulations. I deeply
regret this state of affairs."
4.7 The Commission has provided an initial, unofficial
estimate of the savings it expects to see from the reforms in
this compromise proposal, which includes a two year salary freeze,
as agreed at the February European Council. Savings of €2.8
billion are envisaged to result from these proposals, although
this does not include any hypothetical savings from changes to
the Salary Adjustment Method or Exception Clause.
4.8 The Minister then responds to the questions we
raised, before turning to the detail of the package endorsed by
COREPER on 28 June.
"Legal constraints
to reform of the EU Staff Regulations
"In your Committee's report, you referred to
an article from The Daily Telegraph of 16 May 2013 that highlighted
the legal constraints within which the negotiations were taking
place. I am afraid that I cannot comment in detail on the legal
situation, particularly given the potential impact that such comments
could have on ongoing cases concerning the 2011 and 2012 salary
adjustments for EU officials. However, I agree with the Committee
that, given the current economic circumstances and the need for
financial restraint, it would be incorrect, in this Government's
view, to state that ambitious reforms were incompatible with the
needs of the Institutions.
"UK applicants to the EU institutions
"Your Committee asked whether a lack of desire
to work in the EU Institutions was a greater factor than the drawn-out
recruitment process in explaining the UK's low representation.
The number of UK nationals working in the EU Institutions is clearly
too low, at less than 5% of the total, than where we should be
given our share of EU population. There are a number of reasons
for this. The need for fluency in another language is a limiting
factor, as is the time taken to process applications — candidates
can wait over a year from applying before actually receiving a
job offer. However the key factor the FCO identified was a lack
of awareness of job opportunities available in the EU Institutions.
Our efforts have, as the Committee are aware, focused on tackling
this issue. Whilst there is still a long way to go, applicant
numbers have increased considerably in recent years, with 2012
seeing a new high watermark for the UK. The Government is committed
to increasing the number of UK nationals working in the EU, and
wants to see as many UK citizens taking advantage of this opportunity
as possible."
STAFF REGULATIONS PROPOSAL ENDORSED BY COREPER —
DETAILS OF THE PACKAGE
Salary Adjustment Method
4.9 One of the Government's primary aims was to break
the connection between EU salary awards and changes in Member
State civil services. This would have helped to achieve pay moderation
and provide significant savings over the long-term. The compromise
agreement achieves neither of these goals. The salary adjustment
method remains directly connected to pay progression in a number
of Member States' civil services (through a sample taken from
the civil services of Belgium, Germany, Spain, France, Italy,
Luxembourg, Netherlands, Austria, Poland, Sweden and United Kingdom
— the 'specific indicator'), and reflects the previous system
that has generated an increase of over 20% since 2004. The new
method does create a limited capping of pay awards by creating
a corridor (i.e. a margin) of -2% to 2%, within which the 'specific
indicator' can fluctuate. This is, however, a very limited moderation.
The 'specific indicator' is then multiplied by a 'joint inflation
index' (this combines the HICP (a European Central Bank indicator
of inflation, the Harmonised Indicator of Consumer Prices) in
the case of Belgium and CPI (Consumer Price Index) in the case
of Luxembourg) to create an update for the pay and pensions of
EU officials. The proposal therefore only caps half of the pay
update, and, moreover, any moderation that was achieved would
only be deferred until the following year (although it would still
be subject to the 2%/-2% corridor).
Exception Clause
4.10 The current Exception Clause is ineffectual.
In spite of the financial crisis, and the difficult economic situation
across the EU, the Commission has not seen fit to activate the
Exception Clause and suspend the annual salary adjustment process.
The Exception Clause endorsed at COREPER would only defer the
'specific indicator' of the Salary Adjustment Method to the following
year if EU GDP growth was negative, and cancel the 'specific indicator'
if GDP growth came in below -3%.
4.11 Whilst an Exception Clause which contains a
clear activation trigger is to be welcomed, given the Commission's
past refusal to apply the Clause, the proposal is too weak to
be effective, and, in the Government's view, will not contribute
towards pay restraint.
Special Levy
4.12 The Special Levy — the additional tax
paid by EU officials — is reintroduced at 6% for all staff,
and at 7% for the most senior officials and Commissioners. Whilst
this small tax increase is welcome, the Council's proposal to
limit deductions and include all remuneration (e.g. allowances)
in order to maximise receipts was not accepted. Moreover, whilst
the Government welcomes the progressivity of the new 7% rate,
as it is currently constructed it would only impact on the pay
received by around 200 staff and bring in very little revenue.
Pensions
4.13 The 28 June compromise increases the retirement
age for new staff from 63 to 66, and for existing staff to 65
(with generous transitional measures). The accrual rate would
also be decreased for new staff, and early retirement without
penalty would be abolished. Whilst these limited changes are useful,
they do not go far enough in aggressively tackling pension costs,
which are on course to make up over 20% of Heading 5 spending
before the end of the next MFF in 2020.
Career Structure
4.14 On career advancement, the Council had been
looking to slow progression (both merit-based and automatic) for
all but the most talented staff whilst simultaneously limiting
the most senior posts to those EU staff with significant responsibility
and management of staff. The 28 June compromise does limit the
number of those who can be placed at the highest grades, but does
not slow down the career path enough. This is important, not just
because of the need to promote meritocracy, but also because career
progression has a clear impact on salary and pension costs.
Allowances
4.15 This is one of the areas of the Staff Regulations
most clearly in need of significant reform, and the Minister is
disappointed that reform in this area "has been marginal,
at best". The Government had argued strongly for a rationalisation
of the present complex allowances system and a significant reduction
in the overall monetary value of the package. The limited reforms
focus on travel allowance, but these will not bring significant
savings.
Geographic balance
4.16 Some helpful language has been endorsed, stating
that the EU Institutions ought to take "appropriate measures
following the observation of a significant imbalance between nationalities
among officials". The Commission will produce a report in
January 2017 outlining its work to date to ameliorate geographic
imbalances. This is, however, only a small step, and the Government
does not expect it to result in any significant changes to EU
recruitment practices that would benefit the UK.
Next steps
4.17 The Commission will likely need to propose further
amendments to the Staff Regulations before the next MFF in 2020.
In the meantime, this Government will continue to fight against
unnecessary administrative spending at every opportunity; most
frequently through the annual budget negotiations. There is, however,
a limit to how much this can be expected to achieve given that
annual budgets cannot alter the provisions of the Staff Regulations
and that those regulations determine spending on pay, pensions
and allowances which together comprise 70% of EU administrative
spending. Nevertheless, the annual budgets will be an essential
tool for ensuring that reforms such as the 5% headcount reduction
are being met, and for making certain that the Institutions are
not falling behind their own targets for reform.
Conclusion
4.18 The outcome of the negotiations is disappointing.
We had expected a far greater reduction in costs to the EU budget
to come of them, and, given the levels involved, for them not
to be concluded in a hurry. As we said when we previously reported:
"these are, manifestly, important reforms,
not least because of the level of expenditure — 70% of €61.6
billion to be spent on implementing the EU Staff Regulations over
the next five years amounts to €43.1 billion. The adoption
of the proposal should not, therefore, be rushed; certainly not
for reasons about which the Minister is unconvinced; nor as a
feather in the cap of the Presidency before its term ends".
4.19 In the event the negotiations were indeed
rushed, as is so often the case in Brussels.
4.20 We would like to explore with the Minister
in far greater detail the reasons for the haste in concluding
the negotiations; the contents of the compromise text agreed by
COREPER on 28 June; the estimated future annual costs of the revised
Staff Regulations to the EU budget; and why the Government was
so unsuccessful in the negotiations. We would like to do so in
the form of a debate in European Committee, which we recommend
to take place once we have received and reported on the further
information requested below.
4.21 We ask the Minister to deposit, in accordance
with the Cabinet Office Guidance, the compromise text with a Supplementary
Explanatory Memorandum explaining the changes from the original
text which was deposited in Parliament in December 2011. This
Explanatory Memorandum should quantify the costs of each of the
main heads of expenditure foreseen by the revised Staff Regulations.
In an accompanying letter we ask the Minister to explain why the
negotiations were hurried and so unsuccessful for the Government.
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