CM(2007)106 rev 2 18 June 20071
1001 Meeting, 5 July 2007
11 Administration and Logistics
11.2 The Council of Europe's annual "salary ceiling", guidelines
Item prepared by the GT-SA for consideration by the GR-AB at its meeting on 21 June 2007
1. The Deputies decided at their 971st meeting (12 July 2006, item 11.6 (cf. Appendix 1)) to establish a ceiling on total appropriations for staff-related expenditure (in the following referred to as the "salary ceiling"). The salary ceiling decision provided, inter alia, that:
- the Secretary General include, in future draft ordinary budgets, information on the total of staff-related expenditure to be charged to the ordinary budget for all staff members irrespective of the duration of their contract, with a view to the approval of the total appropriations for staff-related expenditure as part of the budget decisions; and
- any increase in total budget appropriations for salaries/staff-related expenditure above the fixed ceiling would require approval of the Committee of Ministers.
2. This decision was implemented for the first time in the 2007 Ordinary budget and aims at providing the organisation with a further tool at a macro level when taking decisions on budgetary and related management matters, thus avoiding a
. This would avoid the Deputies having to become involved in a time-consuming micro approach. It is intended to play a role in the process of reforming the Council of Europe notably through focussing on cost-efficiency and rationalisation, which should be given due consideration in relation to decisions on the salary ceiling.
3. The following constitutes guidelines for the Secretariat when presenting its proposal concerning the annual salary ceiling, which remains subject to possible subsequent amendment in the light of discussions within the GR-AB and its subsidiary working parties.
Such general instructions to the Secretariat on the drafting of the proposed salary ceiling and their resulting amounts will not prejudice in any way the final decision on either the total of the budget ceiling or the annual salary ceiling. It reflects elements, which need to be addressed and explained when presenting the budget proposal and indicates the “starting point” on which to build the proposal.
The salary ceiling is in principle independent of the outcome of adjustments of individual salaries. However, these individual adjustments will be an element to be taken into consideration when deciding the salary ceiling, but there is no need for an automatic linkage between these two items. On the contrary, a de-linking will enhance the autonomy on behalf of the Committee of Ministers regarding the Council of Europe budgets vis-à-vis the effects of salary adjustments. Individual salaries are adjusted according to the methodology adopted by the Committee of Ministers, subject to the affordability clause (CM/DelDec(2006)983/11.2 Part 1).
Elements to be taken into consideration for the salary ceiling are set out in Appendix 2.
Guidelines for the Secretariat when drawing-up
presenting the proposed salary ceiling
4. The starting point (the base-line) for consideration in the drawing-up of the next year’s proposed salary ceiling will be the current year’s salary ceiling.
5. The base-line shall be adjusted by the same percentage as for the Ordinary budget, or, if lower, by the rate of adjustment resulting from the application of the rules on the remuneration adjustment procedure adopted by the Deputies at their 983rd meeting (13 December 2006, item 11.2 Part1).
However, if the rate of adjustment resulting from the application of the rules on the remuneration adjustment procedure is greater than the rate of adjustment of the total of the ordinary budget, the proposed adjustment to the base-line could be based on the higher rate.
6. The base-line could then be adjusted for the following elements (non exhaustive list), if duly justified:
6.1 If the current year’s salary ceiling were increased compared to the prior year due to non-recurrent staff related expenditure, then the base line should be reduced accordingly. The same will be the case if the total of salaries/staff related expenditure is significantly reduced during the current year, for example due to outsourcing.
6.2. Where reinforcement of certain parts of the budget cannot be carried out without an extraordinary increase of the salary ceiling.
6.3. Where the estimated salary/staff-related expenditure of the current year indicates that the starting point for the decision on the total appropriations for salaries/staff related expenditure for the following year should be different than the current year’s budget.
6.4. Where the full year effect of the prior year budgetary decisions cannot be carried out without an increase of the total appropriations for salary/staff related expenditure.
6.5. Where the results of studies on working methods or of efficiency and/or restructuring exercises reveal that there is a margin for an overall change to salary/staff-related expenditure.
7. The budget proposal should be accompanied with information on the above-mentioned items when relevant, including on the staff related aspects of results of efficiency gains and how these are proposed to be dealt with, together with information on staff related aspects of activities ending or reduced on the one hand and of new or increased activities on the other, as well as, as far as possible, information on forecasted salary/staff-related expenditure for the current year.
8. The guidelines will be kept up to date on a regular basis preferably through an annual review carried out before the summer-break by the GR-AB taking into account past experience.
971st meeting – 12 July 2006, item 11.6
1. invited the Secretary General to take the necessary measures to ensure that information on total
staff-related expenditure is provided according to the following breakdown: salaries, allowances and social costs – which in this context are considered staff-related expenditure – as soon as possible;
2. invited the Secretary General to include, in future draft ordinary budgets, information on the total of
staff-related expenditure to be charged to the ordinary budget for all staff members irrespective of the duration of their contract, with a view to the approval of the total appropriations for staff-related expenditure as part of the budget decisions;
3. decided in this context that any increase in total budget appropriations for staff-related expenditure would require approval of the Committee of Ministers;
4. invited the Secretary General to include, in future draft ordinary budgets, information for each vote on the total of staff-related expenditure to be charged to the ordinary budget for all staff members irrespective of the duration of their contract;
5. noted that, once the information requested in decision number 1 above is available, information on the total of these elements should be included in future draft ordinary budgets on the understanding that the measures in decision number 3 above would only apply to total appropriations for salaries instead of total appropriations for
Explanatory remarks on elements to be taken into consideration as to the salary ceiling including its base-line
1. It would seem clear that either the adopted budget or the expenditure of the current year should constitute the point of reference for the following year’s ceiling on salaries/staff related expenditures.
The draft budget, including the draft salary ceiling is presented towards the end of August. Due to the fact that the actual expenditure of the current year is not known before the adoption of the budget, the uncertainties related to expenditure forecasts in August and the consideration that it would not be helpful to introduce a budgetary practice which could de-motivate savings (in theory this could be the case if savings automatically were lost for ever), it is proposed to use the previous budget and not the estimated actual expenditure as the starting point. It should be noted that savings in principle are paid back to member countries in the form of a reduction in contributions the next-following year, unless the Deputies decide otherwise.
2. The effects of efficiency efforts should duly be taken into consideration when drafting the budget and presenting the proposed ceiling on salaries/staff related expenditure. The question is whether efficiency requirements should be deducted from the base-budget or not. The answer will depend on whether Member Countries would prefer to use the effects of efficiency efforts to increase the level of activities either in the form of man-power, non-staff related expenditures, a combination of both or would prefer to keep the existing level of activities.
It has hitherto most years been considered necessary to expand the total level of Council of Europe activities. The issue of the budget of the Court illustrates this. Building on this practice – and noting that mid-2007 there still seems to be a need for an increase in for example the budget of the Court but also other activities which realistically cannot be met simply through re-allocation of resources – it is proposed that the secretariat build its budget proposal on the assumption, that efficiency gains should be used to cover either an expansion of activities or new activities.
Efficiency is an element to be taken into consideration under paragraph 6.5 of the guidelines and the relevant information should be provided under paragraph 7 of the guidelines.
Explanatory remarks on what is included in the salary ceiling and other issues already dealt with by the 2006 ceiling decision (Appendix 1)
3. What kind of expenditures? The expenditures covered by the first salary ceiling” in 2007 included all kind of salaries, allowances and social costs paid in respect of personnel employed by the Council of Europe irrespective of the duration of their contract and to be charged to the ordinary budget. However, point 5 of the ceiling decision implies that when it will be possible to separate the total of allowances in the ordinary budget, the salary ceiling rule shall be restricted to “salaries” as such. This means that any fluctuation on allowances will be dealt with within the total of the ceiling of the ordinary budget - as has hitherto been the case.
4. The reason for the decision to limit the ceiling rule to “salaries” was that it would cause a number of problems to deal with salaries and allowances under the same budgetary rule (in the same box). It would for example not be correct to make it possible to use savings on certain allowances (for example if a retired expatriate is replaced by a non expatriate) on salaries (which would be possible if they were dealt with under the same box). Further it would not seem possible (or correct to try), for example, to pre-determine the totals of expatriate and family allowances
but to leave where some margin of flexibility on the total amount of these types of expenditure is necessary in accordance with the relevant regulations and the recruitment of staff.
5. Due to the fact that also the total of allowances in the future will be specified in the budget it will henceforward be possible to follow these expenditures better than in the past and take relevant strategic decisions. The “in case of need rule” in art. 31 of the Financial Regulations will apply for these types of expenditures thus making the limits a bit softer than what is now the case for the salary ceiling, but this difference is well argued, ref. above.
6. The pensions budget is separated from the ordinary budget (and thus already for this reason not covered by the “salary ceiling”). The pension’s costs depend on complex actuarial calculations which take into account demographic developments and the accrual of pension rights by staff members.
When allowances (which are not taken into account for the pensions system) are taken out of the “salary ceiling” the total of salaries would seem to provide for the steering of the pensions costs. A separate “pension ceiling” or the inclusion of the pension’s costs within the salary ceiling would thus not introduce additional benefits. Actions taken to manage the contribution to the pension system will in any case have to be directed towards either the total of salaries or the rules governing pension’s contributions.
7. The ceiling rule supplements the existing Council of Europe rules on limits on the number of employees. The annual ordinary budget includes a table of posts, which are employments “approved by the Committee of Ministers”. In additions there are positions, which are employments established by the Secretariat for a fixed term (provided funds are available). Positions can be created without prior approval by the Committee of Ministers, which “takes note” of the creation of positions. A table of these is in principle presented to the CM for information each 6 months.
A combination of the exiting limits on the number of staff in different grades and the salary ceiling makes it possible to manage the structure of the organisation and to effectively control the total of salaries and the different derivates from salaries.
Note 1 This document has been classified restricted at the date of issue. Unless the Committee of Ministers decides otherwise, it will be declassified according to the rules set out in Resolution Res(2001)6 on access to Council of Europe documents.
Note 2 Proposed new text in shaded red bold; deletions in strikethrough.