DG TRANSLATION: Kids of a lesser god or just the preview of the EC of the future?

Contract Agents, Newsletter #22 – May 2017, z Newsletter article Print This Post

Since 2004 the European Union has massively increased in population, number of Member States and languages, and has further expanded its activities in various domains too. In order to cope with this new challenge, the Commission’s administration has increased its staff albeit not in direct proportion to the population increase, thus striking a wise balance between new duties and the budgetary possibilities.

The budgetary effort, though, took a very heavy toll on all newcomers, those who now must sadly bear the labels Generation 2004 and Generation 2014 staff. Our salary conditions, pension perspectives, career structure, precariousness of working status and very reasonable fringe pre-2004 benefits were affected adversely by two subsequent reforms of the staff regulations in 2004 and 2014. Continue reading DG TRANSLATION: Kids of a lesser god or just the preview of the EC of the future? →

CA Dossier: Is the current situation sustainable?

Contract Agents, Newsletter #22 – May 2017, z Newsletter article Print This Post

As mentioned in our communication sent at the beginning of April, Generation 2004 is disappointed by the outcome of the Conciliation meeting that took place on 6 April to discuss the General Implementing Rules of the staff regulations for Contract Agents. You might wonder why we give so much importance to these negotiations. After all, one could argue that they are only about implementing rules, not about the future of the EU civil service. However, we do see a direct link here, because we sense this is part of a silent revolution that replaces more and more permanent officials with Contract Agents so that according to our estimates by 2030 non-permanent staff with precarious contracts will represent more than half of all the staff of the institutions. The most striking data about this creeping change come from the annual reports of our sickness scheme (the latest one covering the year 2015 – available on demand). Continue reading CA Dossier: Is the current situation sustainable? →

Outcome of the Conciliation meeting on the implementing rules for CAs

Contract Agents, Features Print This Post

Yesterday trade unions and staff associations met in a “Conciliation” meeting with Commissioner Oettinger to discuss the General Implementing Rules that will govern how the staff regulations will be implemented in the Commission with respect to Contract Agents (both 3a – Contract Agents with an indefinite duration contract – and 3b – Contract Agents with a limited duration contract of no more than 6 years). The Conciliation phase is the highest level in the negotiations between the staff representation and the Commission. Indeed, Commissioner Oettinger was representing the entire College of Commissioners in these negotiations, not just his position or that of DG HR. Continue reading Outcome of the Conciliation meeting on the implementing rules for CAs →

Art 90 Template – Promotion exercise 2016

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Dear G2004 members,

First of all, we would like once again to congratulate those (numerous) of you who received their well-deserved promotion during the 2016 promotion exercise.

You were lucky this time not to be penalised by a leaving Head of unit or restructuring of your DG or many other factors which have nothing to do with merit and performance but do influence the outcome of the procedure. Continue reading Art 90 Template – Promotion exercise 2016 →

Outrage over EC approaching 1000 senior experts/senior assistants’ nominations – widening career gap and waste of precious administration budget

Newsletter #21 – Feb 2017, Promotions, Staff Categories, z Newsletter article Print This Post

The 2014 staff regulations introduced the so-called “career cap” (blocage des carrières in French). Regular ASTs and ADs who have no management responsibilities cannot reach grades above AST9 and AD12. At least in principle, see the next article on career inequalities which shows that the career cap does not apply to several thousand pre-2004 officials …

The 2014 Staff Regulations also introduced a special career path for those who are supposedly experts in their field, the so-called “senior assistant” and “senior expert” posts. Most of us know that these titles are nothing but a reward for those who have been in place for a long time, nothing to do with actual qualifications!

We have just received an update from DG HR on the number of nominations to these posts and on the resulting promotions since 1 Jan 2014.

A staggering 820 permanent officials have benefited from nominations to these high-ranking positions during the past 3 years. With the current trend, we should reach over 1000 officials in these positions before the end of this year.

Because these nominations open the way to promotions to grades beyond the AST9 and AD12 cap, we can expect that most of these lucky colleagues will reach the AST11 and the AD14 grades in a few years’ time. More than 500 of them have already benefited from promotions to AST10, AST11, AD13 or AD14 during the past 3 years.

The budgetary impact of these generosity is not public yet but a back-of-the envelope calculation suggests that it will be on the order of several million euros/year (a promotion implies a pay rise of about 13% if one neglects the steps; 13% of €10,000/month for 1000 people gives about €16 million/year; we don’t have yet access to the financial fiche of the draft General Implementation Provisions for Contract Agents, but we reckon that DG BUDG is trying to save a similar amount on the back of the Contract Agents, through for instance their downgrading at the occasion of a change of contract).

While it is encouraging to see that DG HR is becoming more transparent with this “senior something” scheme, it raises a difficult issue: how can the Commission afford to spend so much money to boost the careers of officials who are already ultra-privileged while cutting on every other possible expenses?

Don’t forget that the lucky “senior something” will not only enjoy higher salaries but they will also benefit from higher pensions since pensions are directly proportional to the last year of salary. When you consider that the pension liability had reached €57 billion at the end of 2014 (footnote 15, page 6) you start worrying, don’t you? You won’t be the only ones to be worried about the sustainability of our pension scheme, the Council is getting worried too and this is not good news for us! In particular, the Council conclusion #8 “requests that the Commission … reports … on the long-term sustainability of the EU pension scheme, taking into consideration … an evaluation of the pension accumulation rate, the staff contribution rate of 1/3 to the pension system, including for existing staff,…… and to propose appropriate policy measures … to ensure the sustainability of the scheme.“.

Read the Council’s lips: more cuts to the pension rights of “existing staff“. Most of those nominated to “senior something” posts during the past 3 years will have escaped from active service before the situation becomes unbearable (they will no longer be “existing staff“…) but those of you who have been recruited after the 2004 reform, or worse after the 2014 reform, will be targeted once again! In this context, one would expect DG HR to be more cautious with the “senior something” scheme.

Growing inequalities in the Institutions

Administrators, Assistants, Contract Agents, Newsletter #21 – Feb 2017, Staff Categories, Staff Regulations Reform, z Newsletter article Print This Post

Oxfam, the well-known international confederation of charitable organizations has recently published its annual report on social inequalities. What about inequalities in the EU institutions? Since the infamous Kinnock reform of 2004, inequalities have greatly increased in the EU civil service. Before the Kinnock reform, careers of non-management staff were limited to the equivalent of AD12.

For a decade, between 2004 and 2013, this upper limit became AD14. The 2014 staff regulations re-introduced the AD12 cap, but in the meantime, more than 2000 ADs had managed to sneak in to the AD13 grade and another 500 to the AD14 grade, most of them without taking managerial responsibilities. Moreover, the 2014 Staff Regulations did not put an end to what could be perceived as an overly generous scheme: Continue reading Growing inequalities in the Institutions →

How the promotion system works, and why you might be disappointed with this year’s promotion exercise

Promotions, z Newsletter article Print This Post

As every year, the decision of who to promote or not will be largely driven by a set of crude quotas supplied to DGs by DG HR. Because of the clumsy way quotas are calculated many hard working colleagues who have performed well will be left scratching their heads, disappointed at their lack of promotion.

To explain the problem, let us visualise two different DGS with 6 colleagues at each DG of the same grade, where the grade in question has a promotion rate set by the staff regulations of 33% (e.g. AST3->AST4, AD8->AD9, etc.) implying an average promotion rate of 3 years: Continue reading How the promotion system works, and why you might be disappointed with this year’s promotion exercise →

SOS your pension! – G2004 is exploring SOLUTIONS

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Other institutions, in particular the European Investment Bank (EIB), have already taken precautionary measures. Indeed, the EIB recently switched from a notional pension scheme similar to the pension scheme of EU officials to a fully-funded pension scheme (see here).

Some more clairvoyant managers (as well as younger managers) are trying to move the lines on pensions. The Commission reviewed in February 2012 four scenarios to create a real pension fund (see here).

The basic idea behind these scenarios is to move beyond the current “notional” fund, for instance by allocating all new pension contributions to a real pension scheme. However, the inertia of the pension scheme is such that MS and the decision makers in general, failed to take any action during the reform. In practice, setting up a real pension fund would mean that MS would have to pay real money to this fund, which is difficult to do while they are paying the huge cost of pensions of those who are already retired. However, some measures (see below) could help to kick-start a real pension fund.

In this context and in order to avert a potential disaster for our EU service pensions, Generation 2004 requests that without further delay, the Commission explore the following options:

  1. Introduce some form of special levy on current pensions. As this would formally entail a new reform of the staff regulations, which the current senior management of the institutions (in liaison with the old unions) will oppose at all cost, one possibility would be for the Council and the EP to introduce changes to the EU protocol on privileges and immunities. Indeed, the protocol specifies the rates of community tax. The protocol could be modified so that high pensions would be taxed at higher rates than salaries. A reform of the protocol, which is totally outdated anyway, could be carried out without opening again the Pandora’s box of the staff regulations.
  2. Introduce a separate calculation of the actuarial balance [1] of the pension scheme according to the pension benefits that one can anticipate: those with a high accrual rate [2] of pension rights (2%/year), a low retirement age (60) [3], and who benefitted from favourable conditions for “transfers-in” (before 2009) should contribute a higher fraction of their salaries to sustain the actuarial balance of the pension scheme than those who ended being lumped with the worst conditions. As long as the staff as a whole, 1/3 contributes overall to the actuarial balance of the pension scheme, changing contributions of different categories of staff to the scheme could be “internal cuisine” that could be implemented without touching the staff regulations (in particular without touching  Article 83). Differentiated calculation of actuarial balances would be a way to ensure that those who have already paid the price of the 2004 and 2014 reforms do not pay again to sustain the pension rights of those who are more privileged in the likely event that MS embark on a new wide-ranging reform.
  3. A review of the retirement age is foreseen for January 2019. The retirement age could be differentiated according to the pension benefits that one is entitled to (those who receive the highest benefits would be asked to work longer).
  4. Introduce a fully-funded pension scheme. Such a scheme could either replace the current notional fund – like in the EIB (requiring a new reform of the staff regulations) or could supplement the current notional fund. In the latter scenario, the notional fund could become a first pillar and the fully-funded one a second pillar, as is in place in many MS. The second pillar could be designed so as to allow transfers-in/transfers-out in a more flexible and fairer manner than what is currently possible with the notional fund. This would allow newcomers (actually anyone who has not yet transferred-in pension rights) to transfer-in their rights under decent conditions and those who leave (either voluntarily or because their contract comes to an end) not to be penalised.
  5. Notwithstanding the proposal above, the Commission should propose a financial product to which employees who in total have worked less than 10 years in the Institutions could subscribe to when “transferring-out”. Such a fund would obviously be of use to the many precarious colleagues under contract and temporary agent conditions. It would also be of use to the ever-growing number of officials who are actively considering leaving the institutions and looking for better opportunities elsewhere. Directorate-General for Economic and Financial Affairs (ECFIN) already manages funds for the Commission and could propose a fund that would be much more favourable than the few funds that are currently available from the private sector (which are in most cases run by small financial institutions that might no longer be around when comes the time to pay the pension). Moreover, the possibility to transfer-out to several funds should be offered, so that no one would be forced to put more than €100000 into any individual fund (€100000 being the guarantee provided by MS on deposits in the EU in case of bankruptcy of a financial service provider).
  6. We particularly invite the new Commissioner for Human Resources – Vice-President Georgieva – as well as all responsible policymakers in the European Parliament (EP) and the Council to explore these proposals with us. In order to fuel the debate, Generation 2004 welcomes additional suggestions from its members and will study them in depth. In particular, those who have a good knowledge of their national pension schemes are invited to contact us as it is becoming more and more obvious that the senior management of DG HR has no clue as to how the national pension schemes function. In order to negotiate a solution with MS, it is important to understand how their schemes function and to understand how their reform could lead to a reform of our own pension scheme. Let’s not wait until our pension scheme hits the iceberg to think about whether there is a life-boat!!

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[1] The annual pension contribution of the staff as a whole is designed to finance one third of the service cost under the pension scheme, i.e. a series of payments that will arise in the future. For that purpose, the series of payments for European civil servants has to be evaluated at its present value (using an interest rate “discount rate”). The computation is thus an actuarial valuation.

[2] ‘Annual accrual rate of pension rights: The rate at which an employee build up pension benefits whilst working (2 %, 1.9 % or 1.8 % per year). For example, an annual accrual rate of 2 % means that, for each year of service, the employee accumulates 2 % of pension benefits.’ ECA, 2019, Special report no 15/2019: Implementation of the 2014 staff reform package at the Commission – Big savings but not without consequences for staff

[3] Pensions rights amount to 2% of the last salary accumulated per year of service for the pre-2004 staff, 1.8% for the post-2014 staff, 1.9% for the rest of the staff who presently represent the majority of staff members.

Annual pension accrual rates and retirement age were made worse with each staff reform (see Slide 13).

SOS your pension! – The EU pension scheme is a barrier to mobility

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  • For those who choose to leave the institutions before reaching 10 years of service, “transfer-out” of pension rights to a private scheme is possible but under very strict conditions that limit the range of financial products available for the transfer (see here). In particular, the available private schemes charge a high entry fee because they are fully aware that their customers have no viable alternative.
  • For those who remain for more than 10 years in service, the “transfer-out” of pension rights can only be back to national systems where the applicable conditions are left to the discretion of national authorities. In particular, there is no transparency on the amount of pension rights that the “transfer-out” will generate in countries where pensions are based on an annuity principle (countries where in order to get a pension, you need to have contributed for a number of years).

Continue reading SOS your pension! – The EU pension scheme is a barrier to mobility →