Positive Annual Salary Adaptation But Increasing in Pension Contribution
Eurostat has now published the report concerning the Annual Salary Adaptation. Nevertheless, the process is not finalised because the Commission has yet to adopt not only this report, but also, and especially, the related financial impact report. The Council also still needs to endorse both reports. In these times of economic crisis, the yearly adaptation of our salaries remains a sensitive issue. In line with the confidentiality policy agreed with DG HR and to avoid any external interference, Union Syndicale Brussels kindly invites you not to distribute any further the content of this message. This is important to keep the whole process safe.
Summary:
Eurostat published in October 2023 the statistics related to the real GDP growth for the EU as a whole, and the figures were showing an increase of +3.4 %.
But from July 1st 2022 to July 1st 2023, the civil servant in the EU Member-States faced a decrease of -1.8% of their purchase power due to a high level of inflation not compensated by salary increases.
Consequently, following The Method and taking into consideration the intermediate adaptation from January 2023, our salaries in Brussels will be adapted by +1.0%.
Unfortunately from January 2023 the Pension Contribution Rate will be fixed at 11.1% with effect from July 1st 2023, therefore the combination of the adaptation with the increase of the Pension Contribution will result in a zero (0.0%) result.
All details can be found in the main text.
It should be noted that colleagues who receive a retirement pension no longer pay the pension contribution. As a result, they will have a retroactive increase of 1 % to July 2023. Similarly, the various allowances will have to be increased by 1 %, as the pension contribution is calculated on the basis of the basic salary.
In red, the figures for the whole year from 1st July 2022 to 1st July 2023.
In bold, what has already been taken into consideration for the intermediate adaptation of 1st January 2023 and
In italic, the remaining that still has to be taken into consideration.
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Dear colleague,
Each year, the salaries of the EU Officials and other Agents are adapted as requested by the Staff Regulations following the so-called "Method" described in Annex XI of the Staff Regulations.
The price for this automatic process was the addition of two limiting clauses: the Moderation Clause and the Exception Clause.
The Moderation Clause (Article 10 of Annex XI) limits any salary increase or decrease to 2%, with the remaining part being paid the following year. The Moderation Clause applies only when the Exception Clause does not apply.
The Exception Clause (Article 11 of Annex XI) applies when the GDP of the whole EU is negative.
The Method is based on two main principles:
- Parallelism with purchasing power of national officials of central administrations (article 65 of the Staff Regulations).
- Equality of purchasing power for all staff, regardless of their location (article 64 of the Staff Regulations).
The Method consists of several steps.
a. Parallelism
Concerning the parallelism, the evolution of the average purchase power of the officials of 10 Member-States, representing more than 75% of the GDP of the EU, is calculated by Eurostat for a reference period starting from July 1st 2022 to July 1st 2023. This average purchase power evolution, also named the Global Specific Indicator (GSI), takes into account the average evolution (increase or decrease) of the salaries of the officials, as well as the inflation in these 10 Member-States.
From July 1st 2022 to July 1st 2023, the Global Specific Indicator (evolution of the average purchase power of officials in Member-States) decreased by -1.8% (0.982).
As a decrease of -1.9% (0.981) was already taken into account for the intermediate adaptation for the period July 1st 2022 to January 1st 2023, a remaining increase of +0.1% (1.001) has to be taken into account.
The Staff Regulations set Brussels and Luxembourg as reference cities. To ensure the parallelism, the inflation in these reference cities has to be taken into account. Therefore, the Joint Brussels-Luxembourg Index has been established. From July 1st 2022 to July 1st 2023, its value is +4.6% (1.046), corresponding to a weighted value of the inflation in the two cities.
As an inflation of +3.7% (1.037) was already taken into account for the intermediate adaptation for the period July 1st 2022 to January 1st 2023, a remaining of +0.9% (1.009) has to be taken into account.
Hence, to keep the parallelism in purchase power with the officials in the Member-States, our salaries, as mentioned in our salary grid, will have to increase by 0.982 x 1.046 = 1.027 = +2.7% for the period July 1st 2022 to July 1st 2023. This increase corresponds to a loss of purchase power of -1.8%.
As an increase of 0.981 x 1.037 = 1.017 = +1.7% was already taken into account for the intermediate adaptation for the period July 1st 2022 to January 1st 2023, a remaining of 1.001 x 1.009 = 1.010 = +1.0% has to be taken into account.
b. Exemption Clause and Moderation Clause
On the basis of the available information, as GDP evolution for the EU in real terms for 2023 is forecasted to be positive, the Exception Clause does not apply to the current annual exercise.
The Moderation Clause applies when the Global Specific Indicator is higher or lower than 2.0%. the GSI for the 2023 annual exercise (-1.8%) falls within the boundaries set by the Moderation Clause. Consequently, the Moderation Clause does not apply for the adjustment of the nominal net remuneration of EU officials in Brussels and Luxembourg with effect from 1 July 2023.
c. Salary Grid
Therefore, our salary grid, will be adapted by :
+1.0% with effect from July 1st 2023
d. Pension Contribution Rate
The Pension Contribution Rate (PCR), which guarantees the balance of our pension system was calculated by Eurostat to be 11.7 %, i.e. +1.6% more than the current applied rate of 10.1%.
Nevertheless, our Method foresees that, as the difference between the 2023 calculated PCR (11.7%) and the 2022 applied PCR (10.1%) is higher than +1.0%, the increase of the PCR will be capped to +1.0%.
Therefore, the PCR applied for the period 1.7.2023 to 30.6.2024 will be:
11.1% with effect from 1st July 2023
Please realise that the fact that the Pension Contribution Rate is extremely sensitive to the economic situation. It was somehow expected that it could skyrocket but the fact that it remains at a reasonable level under such economic constraints is a real achievement. It shows that, year after year, our Pension Scheme proves to be in balance at a reasonable rate. Next year, with the economic situation coming slowly back to normal with a more moderate inflation, the PCR should also remain in a reasonable range. Our Pension Scheme is an asset that belongs to us all and which we have to protect.
e. Remuneration in Brussels
As a result, our remuneration in Brussels, combining salary grid increase and Pension Contribution Rate, will be adapted by +1.0 -1.0 = + 0.0 %
Union Syndicale Bruxellesis actively involved in each step of the Annual Salary Adaptation process for many years. We set up a strong collaboration with Eurostat over those years.
Union Syndicale Bruxelles reminds you that the Method just reflects the situation of the Civil servants in the Member-States. Its automaticity is following a period of trouble during which our salaries were either frozen or only partially adjusted as in 2012 (0.8% instead of 1.7%) without any legal basis.
Note that this result of +0.0% for Brussels corresponds in fact to a loss of Purchase Power of -1.8%, similar to those of the officials in the Member-States.
Of course, the governments of the Member-States are not pleased with our adaptations that they incorrectly read as salary increases and have already criticized the Method in the past. In these very troubled times where the EU is recovering from its worst economic crisis in its history, there is no doubt that the Method will be again under scrutiny and will need to be defended.
You can count on Union Syndicale Bruxelles to defend your interests where and whenever necessary.
We also want to thank you for your trust,
Kind regards,
The Executive Committee
Union Syndicale Bruxelles
