SYSTEM-WIDE 4.1 PER CENT PAY INCREASE FOR PROFESSIONAL AND HIGHER LEVEL STAFF PROPOSED BY ICSC IN FIFTH COMMITTEE
Press Release
GA/AB/3118
SYSTEM-WIDE 4.1 PER CENT PAY INCREASE FOR PROFESSIONAL AND HIGHER LEVEL STAFF PROPOSED BY ICSC IN FIFTH COMMITTEE
19961125 Committee Defers Action On Economic and Social Council Revised EstimatesThe International Civil Service Commission (ICSC) is recommending that the General Assembly increase the base/floor salary scale for the Professional and higher level staff by 4.1 per cent, effective 1 March 1997, the Fifth Committee (Administrative and Budgetary) was told this afternoon, as it began considering the United Nations common system.
Introducing the Commission's annual report, that body's Chairman, Mohsen Bel Hadj Amor (Tunisia), said the system-wide increase of 4.1 per cent was significantly lower than the 1995 recommendation of 9.2 per cent. The lower proposal was largely the result of the November 1995 increase in post adjustment at the base city (New York), he added.
The base/floor salary scale is a universally applicable salary scale for staff in the Professional and higher categories. The 15-member intergovernmental Commission advises the Assembly on salary and compensation issues, including post adjustment and pension, for Professional and higher level staff, as well as on General Service remuneration and conditions of service.
Mr. Bel Hadj Amor stressed the continued applicability of the Noblemaire principle to ensure the competitiveness of the common system. The Commission was well aware that "the times are lean and difficult for Member States and there has been no upturn in the past year". However, even when beset by budget cuts and cash flow problems, the system must be capable of attracting, motivating and retaining staff of the highest calibre.
The Noblemaire principle states that salaries for the Professional and higher categories of staff in the United Nations system shall be established by reference to the highest paid national civil service. The United States federal civil service has been used as the comparator in that regard.
Representing the Secretary-General as Chairman of the Administrative Committee on Coordination (ACC), Under-Secretary-General and his Special
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Adviser Ismat Kittani said the financial implications of the Commission's recommendations on the United Nations regular budget would be about $15 million for 1997. The ACC members would try to absorb those costs to "the maximum extent possible".
Also this afternoon, the Committee began considering the United Nations pension system and aspects of the 1996-1997 programme budget, specifically revised estimates resulting from decisions of the Economic and Social Council.
Introducing the Secretary-General report on the pension fund's investments, Under-Secretary-General for Administration and Management Joseph E. Connor said that as of 20 November the market value of the Fund had reached $17 billion.
The Chairman of the United Nations Joint Staff Pension Fund, Yvon Chotard, introducing the Fund's report, said it paid more than $75 million monthly in benefits in 27 currencies to beneficiaries in 184 nations.
The Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), C.S.M. Mselle, introduced the Committee's report on the pension system.
The representative of Ukraine spoke on the pension system.
When the Committee took up the 1996-1997 budget, the ACABQ Chairman, Mr. Mselle, presented orally revised estimates resulting from the decisions of the Economic and Social Council.
The Committee deferred action on the revised estimates at the request of the United States which asked for more time and "to avoid unforeseen circumstances". As to what they might be, he said: "You know what I am talking about". Earlier the representative of Cuba said the Committee was in a position to take a decision on the revised estimates.
Statements on how to proceed on the revised estimates and programme budget implications were also made by the representatives of Ireland (on behalf of the European Union), Japan and Costa Rica, on behalf of the "Group of 77" developing countries and China. Mexico's representatives asked when the International Seabed Authority 1997 budget would be taken up.
The Committee will meet again at 10 a.m. on Wednesday, 27 November, to take up the budget for the International Seabed Authority and to continue discussing the administrative and budgetary aspects of peace-keeping operations, the United Nations common system, the Organization's pension system and the revised estimates related to the Economic and Social Council.
Committee Work Programme
The Fifth Committee (Administrative and Budgetary) met this afternoon to take up aspects of the 1996-1997 regular budget relating to revised estimates resulting from the decisions of the Economic and Social Council and to the budget of the International Seabed Authority. It was also scheduled to begin consideration of the United Nations common and pension systems.
Aspects of 1996-1997 Regular Budget
In a report on revised estimates resulting from resolutions and decisions adopted by the Economic and Social Council in 1996 (document A/C.5/51/20), the Secretary-General says that legislation on crime and international drug control would give rise to requirements of about $1.1 million in 1996-1997.
The Secretary-General recalls that a contingency fund is established each biennium to pay for extra expenditures derived from legislative mandates not covered in an original budget. Further, each proposal for revised estimates should contain alternatives to the financing from the contingency fund for the proposed new activities. However, regarding the $1.1 million required, the Secretary-General says he was not able to identify the work that could be terminated, deferred, curtailed or modified to finance the work sought by the Council's resolutions. The requirements should, therefore, be considered by the General Assembly in the context of the revised budget for 1996-1997, after it reviews the first performance report on the budget for the biennium.
The Council's resolutions that gave rise to the extra costs include those on measures to prevent and punish the illicit international trafficking in children; the implementation of the Naples Political Declaration and Global Action Plan against Organized Transnational Crime; follow-up on firearms regulation for crime prevention and public safety; and action to strengthen cooperation to control the materials used in the illicit manufacture of controlled substances.
The work ordered by those texts would be carried out by temporary assistants, costing $656,000, and consultants, worth $427,000. External printing would take another $10,200 to pay, among other things, for training manuals for specialized law enforcement and investigative personnel for action against organized transnational crime.
A note by the Secretary-General (document A/C.5/51/21) transmits the International Seabed Authority's 1997 budget of about $4.2 million. The administrative expenses of the secretariat of the Authority would require some $2.8 million while conference-servicing would need about $1.4 million. The
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provisions for conference services could be met from within the United Nations regular budget resources for such services. The $2.8 million for administrative expenses, the Secretary-General suggests, should be considered in the context of a revised appropriation by the Assembly after it reviews all relevant documents, including the first performance report on the 1996-1997 regular budget.
The Secretary-General explains that the United Nation will finance the budget of the International Seabed Authority through 1997 because of the Assembly's commitment to do so, by adopting resolution 48/263 of 28 July 1994.
Annexed to the note is the Authority's 1997 budget, as adopted by the Assembly of the Authority, which proposed 15 Professional and 15 General Service posts for 1997. The posts account for the largest share of the Authority's overall budget, with about $1.1 million; common staff costs would take up some $454,400; while general temporary assistance would account for about $163,600.
Provisions for renting and maintaining premises, according to the report, would require about $425,000. Of that, $275,000 is for the rental and minor alteration of office space, $90,000 for renting the Kingston Conference Centre and $60,000 is for the residence of the Authority's secretary-general.
Overall, the report states, the Seabed Authority would require $25.4 million for the period 1994-1999.
In its related report on the Authority's budget (document A/51/7/Add.2), the Advisory Committee on Administrative and Budgetary Questions (ACABQ) recommends the approval of $2.8 million for the Authority's administrative expenses and suggests that the General Assembly may consider whether to pay for the Authority's expenses from the contingency fund.
Commenting on the staffing levels, the ACABQ says that 1997's 30 posts, an increase of 10 positions over 1996, would rise to 44 in 1999, the first year in which the Authority would be working at full capacity.
In relation to the $60,000 meant for housing the Authority's secretary- general, the ACABQ says it was informed of consultations between the secretary-general and the host country to see whether that allocation could be dropped from future budgets and to seek the best terms for office accommodation. The ACABQ says it expects the secretary-general to report to the Authority's Finance Committee on those consultations.
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United Nations Common System
For its consideration of the United Nations common system, the Committee had before it the 1995 and 1996 reports of the International Civil Service Commission (ICSC), including an addenda to the 1995 report; a statement by the Secretary-General on administrative and financial implications of the ICSC's decisions and recommendations as stated in the 1996 report; a note by the Secretary-General transmitting a statement adopted by the Administrative and Coordination Committee (ACC) on the United Nations common system; and comments by the Federation of International Civil Servants Associations (FICSA).
The Committee will also consider two notes by the Secretary-General: the first, dated June 1993, transmits to the Economic and Social Council a Joint Inspection Unit (JIU) report on relationship agreements between the United Nations and specialized agencies pertaining to salaries, allowances and conditions of service; and the other, dated November 1993, transmits to the Council the comments of the ACC on the JIU report.
Fourteen organizations, together with the United Nations itself, participate in the United Nations common system of salaries and allowances. The 15-member ICSC advises the Assembly on salary and compensation issues, including post adjustment and pension, for Professional and higher level staff as well as on General Service remuneration and conditions of service. In 1996, the Commission held two three-week sessions -- in April/May in Vienna, and in July/August at Headquarters. The Commission has an Advisory Committee on Post Adjustment Questions (ACPAQ). The ACC -- composed of the Secretary- General and executive heads of specialized agencies and the International Atomic Energy Agency (IAEA) -- ensures that activities of the various bodies are fully coordinated.
On the issue of remuneration of Professional and higher categories of staff, the 1995 ICSC report (document A/50/30) asks the Assembly to consider reaffirming the continued applicability of the Noblemaire principle.
That principle states that salaries for staff in the Professional and higher categories in the United Nations system shall be established by reference to the highest paid national civil service. For that purpose, the United States federal civil service has been used as the comparator. In addition, the Commission also reports that the superior conditions of the German civil service in relation to those of the United States federal civil service could be considered as a reference point for managing the remuneration margin. [Note: The "margin" is the average percentage difference between the remuneration of United Nations staff in New York and that of the United States federal civil service.]
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The Commission recommends that the Assembly review the results of its study to identify the best paid national civil service and the reference studies regarding remuneration in other international organizations. The review would determine which of the diverse views expressed in the Commission regarding competitiveness of the United Nations remuneration systems might be reasonably supported. Regarding the German civil service, the Commission decided that the conditions for changing the comparator were not, under the current circumstances, in place. It also decided that in the comparisons of total remuneration between the Swiss and United States federal civil services, the Swiss federal civil service could not be considered as an alternative to the current comparator.
The Commission recommends that the 115 desirable mid-point of the United Nations/United States net remuneration margin should be restored in 1996. To restore that margin of 15 per cent above the United States federal civil service remuneration, the Commission recommends an increase in the base/floor salary scale, equivalent to 3.1 per cent, with effect from 1 March, and an increase in post adjustment indices by 5.1 per cent, as of 1 July.
[Note: The base/floor salary scale is a universally applicable salary scale for staff in the Professional and higher categories and reflects the minimum net amounts received by United Nations staff members around the world. The post adjustment index is the measurement of living conditions of those categories of staff in a given location compared with costs in New York at a specific date. Post adjustment is a supplement to base pay and is calculated as a percentage of net base pay.]
The Commission also seeks the Assembly's guidance on alternative approaches regarding the setting of a single post adjustment index or two post adjustment indices for persons working in Geneva. The Commission's conclusions on that matter refer to the difference in cost of living for staff who work and live in Geneva as opposed to those who work in Geneva but reside in the contiguous area of France (some 40 per cent of Professional staff) where the cost of living is lower.
In an addendum to its 1995 report (document A/50/30/Addendum), the Commission re-examines two issues on conditions of service of the Professional and higher categories on which it had already made recommendations in its earlier report to the Assembly. Those issues are: the manner in which net remuneration comparisons are made with the current comparator (the United States federal civil service); and clarification of outstanding difficulties in making comparisons with the German federal civil service. The issues were re-examined pursuant to Assembly resolution 50/208, of December 1995, which concerns the United Nations common system.
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On the first issue, the ICSC decided to reaffirm the decision already made in its 1995 report that ways needed to be found to reflect the comparator's special pay systems more fully in the remuneration comparisons. The Commission's conclusions take account of the legislative changes in the comparator's pay systems. The report also takes account of the views of the ACC -- which states that the decisions made by the ICSC in 1995 must be upheld -- and of the Consultative Committee on Administrative Questions (CCAQ). That body saw no technical evidence which would support any change in the positions taken by the ICSC and called on the Commission to offer some straightforward, unequivocal recommendations for the resumed fiftieth session of the General Assembly; otherwise, others might try to provide guidance.
On the second issue, the Commission re-examined the question of comparison with the German civil service, the report states. The ICSC maintained its position that the total compensation levels of the German federal civil service were superior to those of the current comparator. Following further discussion with the German officials, the Commission did not consider that it was opportune to recommend a change of comparator for the following reasons: the actual process of changing comparators was a complex one, with implications for pensions, the currency of record, the location of the base of the United Nations remuneration system and related issues; and the superiority of the total compensation levels of the German civil service might not be maintained over time. Consequently, the Commission again recommended that the situation should be monitored.
The ICSC's 1996 report (document A/51/30) contains the Commission's recommendations on conditions of service of the Professional and higher categories, including the base/floor salary scale, and the level of dependency allowances; and conditions of service applicable to both categories of staff and staff in the field. Other recommendations focus on aspects of the pensionable remuneration (the amount used as the basis for effecting contributions from the staff member and the Organization to the United Nations Joint Staff Pension Fund) and pension entitlements of all categories of staff during 1996. Those aspects include the methodology for the determination of pensionable remuneration; a common staff assessment scale; and a special index for pensioners.
Regarding conditions of service of the Professional and higher categories, the ICSC recommends that a revised base/floor salary scale be effective from 1 March 1997 to determine gross salaries of the Professional and higher categories; the desirable mid-point of 115 for the United Nations/United States net remuneration margin should be restored in 1997; and the new base/floor salary scale should be implemented effective 1 March 1997 with a view to achieving the desirable mid-range.
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The 1996 recommendations provide for an across-the-board increase of 3.1 per cent in the current base/floor salary scale, a further differential increase of 1 per cent (on average) at various grades/steps of the base/floor salary scale and a consolidation of 2.51 per cent of post adjustment on a no-loss/no-gain basis into the base/floor salary scale to reflect a corresponding increase in net salaries of the comparator effective 1 January.
Among other recommendations on other conditions of service, the ICSC proposes that the current level of children's allowance (including that for disabled children) and secondary dependant's allowance should be increased, effective 1 January 1997. The increase would reflect the 7.98 per cent increase in the value of tax breaks and payments under social legislation made at the seven headquarters duty stations between 1993 and the current review.
The ICSC proposes increased maximum admissible levels for expenses covered under the education grant system in areas where education-related expenses are incurred by staff in seven currencies -- the Swiss franc, the Italian lira, the Norwegian and Swedish kronas, pound sterling and the United States dollar. The expenses relate to the maximum education grant and the ceiling for boarding in the seven currencies. In other currency areas, those expenses remained unchanged. Other recommendations are made regarding boarding costs for designated duty stations in three currency areas of the pound sterling, and the special education grant for disabled children. The recommendations on the education grant would be applicable for the school year in progress on 1 January 1997.
For General Service and related categories of staff in London, based on surveys of the best prevailing conditions of employment, the Commission recommended a salary scale that was 5.3 per cent lower than the existing scale. For the same category of staff in Vienna, the Commission recommended a revised salary scale which is 3.2 per cent lower than the current scale. That new scale will be phased in over the next few years.
On pensionable remuneration and pension entitlements for Professional and higher categories of staff, the ICSC recommends that income replacement in New York should continue to be used as the basis for the methodology; the methodology used to establish the current scale of pensionable remuneration should continue to be used in the future; the current interim adjustment procedure for adjusting pensionable remuneration between comprehensive reviews should be continued; and the monitoring of pensionable remuneration and the United Nations/United States income replacement ratios should be carried out on the occasion of periodic comprehensive reviews of the pensionable remuneration and consequent pensions of the Professional staff.
[Note: Under income replacement methodology, pensionable remuneration for Professional staff is set at levels that would yield net pensions equal to
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46.25 per cent of net remuneration corresponding to 25 years of contributable service.]
For General Service and other locally recruited categories, the ICSC recommends that the income replacement approach and the methodology related to it should continue to be used for the determination of pensionable remuneration of the General Service and related categories of staff, including the use of 66.25 per cent of the net pensionable salary for grossing-up purposes; and the current interim adjustment procedure should be continued. [Note: Grossing-up procedure is the method used to determine gross salaries from net salaries.]
The ICSC also recommends that a common staff assessment scale should be used for determining the pensionable remuneration of staff in the Professional and higher categories and General Service and related categories. For the Professional and higher categories, the scale should be implemented with effect from 1 March 1997. For the General Service and other locally recruited categories, the common scale would be applied after a number of actions were taken to revise or adjust General Service salary scales. [Note: Staff assessment, an internal form of United Nations taxation, is the difference between the gross and net salary.]
The administrative and financial implications of the ICSC's decisions and recommendations (document A/C.5/51/24) are submitted by the Secretary- General. The recommendations on increases in the salary scale and post adjustment consolidation for the United Nations common system as a whole were estimated by ICSC at $72 million in 1997 (increased costs related to pension contributions are included in that figure). The financial implications for the United Nations regular budget have been estimated at $15.1 million for 1997. The consequences of the structural changes and the overall base/floor adjustment would be to move the estimated margin for 1997 to 114.4, and that of 1998 to 115.3, thereby bringing both close to the desirable mid-point range.
The financial implications for the regular budget of the United Nations of the revisions in the education grant are estimated at $200,000 for 1997. The Commission estimates that the system-wide financial implications of the recommended increases are approximately $590,000 per year in respect of the increase in the maximum admissible expense level, and $233,000 per year in respect of the increase in boarding costs.
The Secretary-General's statement noted that as a result of the changes in the post adjustment indices in the headquarters duty stations, the Commission has calculated that, with effect from 1 March 1997, there will be net savings of approximately $11 million per annum on a system-wide basis. The savings that would accrue to the regular budget of the United Nations were
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estimated at approximately $2 million for 1997. The post adjustment indices of Washington, D.C., and Montreal would experience very slight increases, the post adjustment index for Rome would not be affected and those for Geneva, London, Paris and Vienna would experience reductions.
The financial implications of the Commission's recommendations in respect of the level of children's and secondary dependant's allowances were estimated at $1.2 million and $13,500 per year, respectively, system-wide, the report states. The implications for the regular budget of the United Nations would be $400,000 in 1997. The increase in the annual amounts of the existing children's allowance would be $1,510 and for disabled children $3,020. The recommended increase in the current level of the secondary dependant's allowance would be a $40 increase -- from $500 to $540 per year.
The Secretary-General also notes that the savings that would accrue to the regular budget of the United Nations as a result of the revised General Service salary scale in Vienna would be $900,000 in 1997. The savings to be realized in view of the phasing in of the new scale over the next few years would have no immediate impact. Associated savings for the United Nations common system were envisaged to be $2.5 million for 1996, and a further savings amounting to $6.4 million would be realized incrementally from 1996 to 1999, at which time the ICSC recommendation would have been fully implemented. A savings of $1.4 million was also envisaged for the United Nations common system relating to the organizations' contributions to the United Nations Joint Staff Pension Fund as a result of reduced pensionable remuneration levels during the 1996 to 1999 phased implementation.
Should the General Assembly decide to adopt the recommendations in the Commission's report, there would be increased requirements under the regular budget in the order of $15.7 million under the sections of expenditure. The decisions on the post adjustment system and the Vienna salary survey would result in reduced requirements of $2.9 million.
A note by the Secretary-General (document A/C.5/51/25 and Corr.1) transmits a statement adopted by the ACC on the United Nations common system at its second regular session in 1996. In the annex to the note, the ACC strongly supports the Commission's decision to recommend the restoration of the margin of United Nations to United States net remuneration to its desirable mid-point in 1996. The Committee stresses that "this is the second year in succession that net remuneration remains below the lower limit of the range of 110 to 120 established by the General Assembly in its resolution 40/244 of 18 December 1985".
In the context of increasing demands of the international community on the United Nations system and the current financial constraints, major reforms and restructuring, the ACC stresses the critical need to restore competitive
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conditions of service that would enable the organizations of the system to attract and retain high calibre staff. In the future, the ACC states, both the active pursuit of efficiency and enhanced performance and structural and management reform and the equally active pursuit by the ICSC of measures to restore competitive conditions of service through the rebuilding of the Noblemaire principle must be pursued vigorously and in a mutually reinforcing way.
In urging the Assembly to take action on the ICSC recommendations at the current session, members of the ACC reiterate their responsibility for the management of the cost structure of their organizations. Modalities and arrangements for implementation may need to vary from organization to organization, in consultation, as necessary, with the respective governing bodies, taking into account resource constraints while fully safeguarding programme resources.
Stressing the need for full participation of all partners in the ICSC consultative process, the ACC states that it is particularly important that the concerns of staff be articulated at all levels, including that of the ICSC. The absence of a dialogue between the Commission and the two staff bodies -- Coordinating Committee for Independent Staff Unions and Associations (CCISUA) and the FICSA -- constitutes an important gap in that regard and a serious obstacle to improving governance and management of change in the common system.
A note by the Secretary-General (document A/C.5/50/23) transmits a document submitted by the Federation of International Civil Servants Associations (FICSA) on negotiation and consultation in the United Nations common system. The Federation proposes the abolition of the current consultative process in the Commission and its replacement by a more responsive and representative body where the three parties involved, that is, the Member States, the organizations and the staff, would jointly meet the challenges of the common system.
The Federation summarized the issue to be addressed in the following question: "Why is the United Nations system not consistent in extending to its own staff members the fundamental rights, workers' rights and the right of association that it promulgates in Member States?" The Commission's crucial weakness lies in a total absence of any pragmatic system of direct staff/management negotiations or even a semblance of consultation. Stressing that the Commission's consultative process is flawed in several other ways, the Federation highlights a number of deficiencies.
In the FICSA's view, the Commission has been deficient by being, among other things, unresponsive to the particular needs of specialized agencies and programmes of the common system, overcentralized and catering solely to the
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needs of the system's political branch -- the United Nations in New York, and particularly the Assembly's Fifth Committee. The Commission's decision-making process follows perceived political priorities of the Assembly. Other deficiencies include the lack of a mechanism to ensure that the Commissioners (as ICSC members are called) have the required competencies, and a lack of accountability for the Commission's decisions and recommendations. In addition, the FICSA states that the Commission is too expensive and too bureaucratic and has evolved into a regulatory body whose functioning has been blurred by procedural rigidities.
The Federation further states that staff representatives are convinced that there should be a process of direct negotiation between employers and employees in international organizations. "Collective bargaining is and remains our goal", FICSA states, and recommends a tripartite mechanism, with the participation of Member States, the organizations and the staff, as the best guarantee for a fair and equitable system of setting conditions of service. The mechanism could be similar to the United Nations Joint Staff Pension Board and the International Labour Organization's (ILO) Governing Body or the tripartite committee of the European Communities. The Federation proposes a body of 21 members, elected or appointed, on a rotating basis by the Assembly, the other governing bodies of the specialized agencies, the administrations reporting to the Assembly, the specialized agency representatives and by the staff federations. Decision-making would be by majority vote.
A report of the JIU on "relationship agreements between the United Nations and the specialized agencies: review and strengthening of sections pertaining to the common system of salaries, allowances and conditions of service" (document E/1993/119) focuses on those sections of said agreements relating to personnel matters or to a unified international civil service. The United Nations has concluded 17 relationship agreements with the specialized agencies and the IAEA, which appear more like political statements of intent rather than binding legal instruments containing specific rights and obligations with respect to coordination matters.
However, the report states, the agreements have provided a useful and flexible framework for the development of inter-organizational relationships. The general formulation of the agreements has thus provided broad scope for evolving coordination practices within the common system. None of the 17 agreements have ever been revised, although the possibility of such a revision has been raised by the Economic and Social Council. However, it would seem reasonable to conclude that articles of the agreements have been applied relatively well over the years, despite some difficulties. The JIU believes that the progress accomplished in evolving the common system of salaries and conditions of service should be further consolidated.
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The Unit proposes a number of options in five of the eight recommendations they make on the issue. Those recommendations state that the Economic and Social Council should have a complete and up-to date evaluation of the implementation of all the agreements before determining its position on their future; the strengthening of the common system should be sought through a fuller, more active and specific application of existing coordination measures contained in the agreements, and not by revision; the ICSC should play an extended role in the regulation and coordination of conditions of service, through greater exposure to the organizations, participation in their meetings and extensive consultations with the administration and their staff.
Other recommendations refer to the possibility of supplementary arrangements being concluded by executive heads to regularize modalities of practical cooperation.
Another note by the Secretary-General (document E/1993/119 and Add.1) transmits to the Economic and Social Council the comments of the ACC on the JIU report. Among other issues taken up by the ACC is a response on proposals on the conditions of service.
In commenting on the JIU's recommendations, the ACC agreed that the articles of the relationship agreements relating to the common system of salaries, allowances and conditions of service have been applied relatively well over the years. There were no problems at the working level that would justify a review of the agreements. It remains the conviction of the organizations that the common system will best be strengthened through overall improvements in the conditions of service. Although the ICSC's role in improving those conditions is clearly defined, there is always room for improving the day-to-day working relations between the Commission, its secretariat and the relevant organs and secretariats of the specialized agencies.
Care must be taken, however, to ensure that such improvements in communications are practical and relevant, the ACC states. It adds that it would not be beneficial to impose the participation of the Commission at meetings of governing bodies. However, as the Unit suggest, benefits are likely to result from increasing the Commission's exposure to the organizations, particularly to the specialized technical roles of many of the agencies; and enhancing the consultation process between the Commission and the administrations and staff of the specialized agencies to the extent that the current financial restrictions allow.
United Nations Pension System
The report of the United Nations Joint Staff Pension Board (document A/51/9 and Corr.1) transmits to the General Assembly the Board's comments on
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the reviews of the pensionable remuneration of Professional and General Service staff; the development of a common scale for staff assessment; the proposed agreement between the United Nations Joint Staff Pension Fund and the Government of the Russian Federation on the pension-related claims of former Fund participants living in the former Soviet Union; and provisions for suspending Fund benefits paid to retirees re-employed in member organizations.
The Fund was created in 1949 by the Assembly to provide retirement, death, disability and other benefits for staff who stopped working for the United Nations. It is administered through a 33-member Board, representing 18 member organizations. The Board reports to the Assembly and its expenses for administering the Fund are met by the Fund itself. Those expenses include the cost of its secretariat at Headquarters and of managing the Fund's investments.
Regarding Professional and General Service staff, the Board recommends that the income replacement approach should continue to be used for determining their pensionable remuneration.
Turning to the development of a common scale for staff assessment to correct the existence of different assessment rates in the United Nations system, the Board agrees that, in these tight budget times, efforts should be made to limit potential additional costs which might result from the proposals that are submitted.
In its related report on the pension system (document A/51/644), the ACABQ shares those views.
On the proposed agreement between the Fund and the Russian Government on the claims of former Fund participants, the Board says it approved a proposed agreement, which, according to the ACABQ report, would cover 349 former participants, as Russian citizens, from an initial list of 433 former Fund participants. Under the proposed agreement, retirement benefits similar to those provided under the Fund's Regulations would be paid prospectively to the former participants covered, as from 1 January 1997 or age 60, whichever is later. While there would be cost-of-living adjustments, there would be no retroactive payments of any kind.
The Board says it has received a letter from the Permanent Representative of Ukraine, requesting a postponement of the proposed agreement since it did not cover former participants from the former Ukrainian Soviet Socialist Republic. The Board asked its Secretary to continue his efforts to achieve a comprehensive solution relating to the claims of former participants from the Soviet countries who were not covered by the proposed agreement.
The ACABQ agrees with that request in its report.
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On the suspension of benefits to retirees re-employed by any United Nations organization, the Board states that the control of "double-dipping" -- simultaneous receipt of a United Nations pension and a salary -- had been provided for in the Fund's Regulations, which would suspend the payment of benefits to a re-employed retiree until he dies or again leaves service.
Regarding administrative expenses, the Board recommends that the Assembly establish two new P-5 posts and convert four temporary positions (one P-4, three General Service) to established posts. It also submits revised estimates of $41.4 million for 1996-1997, consisting mostly of administrative costs of almost $14 million and investment costs of about $27 million. The revision represents an increase of some $1.2 million over what was approved last year.
The ACABQ concurs with the recommendations on the posts and does not object to the revised estimates.
Annexed to the Board's report are facts, figures, member organizations and a proposed draft resolution that would have the Assembly enact the proposals in the report. As of 31 December 1995, the Fund had 68,708 participants. In 1995, it paid out about $391.7 million in retirement benefits, some $255.2 million for early and deferred retirements, $69.3 million as death benefits (other than to children) and $10.6 million as children's benefits.
The Secretary-General's report on the investments of the Pension Fund (document A/C.5/51/4) says that the Fund's return of 14.6 per cent for the year ended 31 March was the highest in the last eight years. The Fund also continued to benefit from its policy of diversification of assets, currencies and countries of investments. The report covers the period 1 April 1994 to 31 March 1996 in response to a decision by the General Assembly to take up pensions biennially. Some data have been updated to 30 June, though.
The Secretary-General says that the investment of the Fund's assets is his responsibility. He acts in consultation with the Investments Committee, taking into account the observations on broad policy of the United Nations Joint Staff Pension Board and the Assembly. That Committee advises him on investment strategy and reviews the investment portfolio in detail.
According to the Secretary-General, the Fund's market value rose to $15.54 billion on 31 March 1996 from $12.53 billion on 31 March 1994, a rise of $3 billion or 24 per cent. The investment return for the year ended 31 March 1995 was 8.7 per cent and for the year ended 31 March 1996 was 14.6 per cent, which, after adjusting for inflation, represent real rates of return of 5.6 per cent and 11.5 per cent, respectively.
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The policy of broad diversification of investments by currency, types of assets and geographical areas continued as the most reliable way of reducing risk and improving returns, according to the Secretary-General. Geographically, the proportion of the Fund invested in North America rose to 38 per cent from 37 per cent. Assets in the United States were worth $5.38 billion. Investments in Europe stayed at the same level as in 1994 in percentage terms. In the Far East, the proportion of investments grew to 24 per cent from 22 per cent; there were development-related investments worth $821.3 million in Asia in 1996. The development-related portfolio in Africa was worth $303.9 million, with more than one half in development institutions and one third in South Africa. Similar investments in Latin America total $425.9 million.
By country, the Secretary-General reports that, after the United States, those with the largest Fund investments include Japan, with $1.89 billion; United Kingdom, with $1.11 billion; Germany, with $1.05 billion; Netherlands, with $727.6 million; Canada, with $529.3 million; and France, with $515.2 million.
Complying with the Assembly's request that it invest in developing countries in accordance with established criteria, the Fund tried to identify appropriate opportunities, says the Secretary-General. Direct and indirect investments in those nations totalled $1.88 billion on 30 June 1996, up 8 per cent since 30 June 1994. The increases were a result of additional investments in Latin America, which increased by 4 per cent; investments in Asia grew by 24 per cent and investments in Africa rose by 13 per cent. Development-related investments accounted for 14.8 per cent of the Fund's assets at book value.
The Secretary-General expects to propose by January 1997 a benchmark against which the Fund's performance will be compared.
In its report on the pension system (document A/51/644) cited above, the ACABQ recommends that the establishment of the benchmark should be handled cautiously.
Statements on United Nations Common System
MOHSEN BEL HADJ AMOR, Chairman of the ICSC, introduced the Commission's 1995 and 1996 reports. He drew attention to the Noblemaire principle, which he said remained applicable today, having been introduced since the days of the League of Nations in the 1920s. Reviewing the 1995 and 1996 recommendations made by the Commission on the matter, he said the Noblemaire review aimed at restoring the competitiveness of the common system. The bottom line of the 1996 recommendations would be an overall average adjustment of some 4.1 per cent in the salary scale for the Professional and higher-level
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staff, to take effect on 1 March 1997, with actual amounts varying at different points of the scale, in order to meet restructuring requirements.
Explaining the difference between the Commission's 1995 recommendation of an average increase of 9.2 per cent in the salary scale and this year's recommendation (4.1 per cent), he said it was largely the result of the November 1995 increase in post adjustment at the base city (New York). Those adjustments had repercussions on the net remuneration margin. Therefore, the system-wide increase required to restore the margin to the mid-point of the range in 1997 was significantly lower than the 1995 recommendation.
Stressing that the Commission was well aware that "the times are lean and difficult for Member States and there has been no upturn in the past year", he said even when beset by budget cuts and cash flow problems, the system must be capable of attracting, motivating and retaining staff of the highest calibre. Otherwise, the requirements of the United Nations Charter would not be met and the system would lose its raison d'etre.
The structures, operations and needs of the 14 organizations that participate in the common system, as well as the five United Nations affiliated bodies, funds and programmes were quite varied, he continued. Some of those bodies were growing while others were retrenching. Their rich diversity made the concept of a common system a challenging, if interesting, one. Their different needs required a nuanced approach. At the same time, the principle of equity in conditions of service at the basis of the common system could not simply be abandoned. The art was to strike the right balance between regulation and responsiveness, between coordination and flexibility, which was no easy task. Although some common system members were pulling in one direction or another, he was convinced the system would hold. It was necessary to have the positive collaboration of all the partners in the common system.
The Commission was strongly committed to the concept of an international workforce that was equipped to meet the challenges of the twenty-first century, he said. It intended to take a leadership role in that regard. The consultative process was a highly valued feature of the Commission's working methods. To those who considered the Commission's process slow and cumbersome, he appealed for help to speed up the consideration of items on the Commission's work programme, since not all delays were attributable to the Commission.
Regarding "alleged politicization", he said the Commission was "independent to a fault". It listened to all views and arrived at reasonable and balanced conclusions, taking all the facts and the realities of the situation into account. "It was precisely the Commission's strength that it has no vested interest." The Commission would welcome the return of staff
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representatives to consult with it. It would continue to open all channels of communication with the staff.
ISMAT KITTANI, Special Adviser to the Secretary-General, speaking for the Secretary-General in his capacity as Chairman of the ACC, endorsed the recommendations of the ICSC. The Secretary-General and his ACC colleagues supported the ICSC's decision to go ahead with the recommendation to restore the margin of United Nations to United States net remuneration to its desirable range of 110-120. [Note: That means that the United Nations net pay should be 10 to 20 per cent above that of the United States federal civil service.] As indicated by the ICSC, the restoration of the margin would be achieved by introducing, as of 1 March 1997, a restructured salary scale for Professional and higher-category staff.
He said the financial implications of the ICSC recommendations on the United Nations regular budget would be about $15 million for 1997. The ACC members would try to absorb those costs to "the maximum extent possible".
Statements on Pension System
YVON CHOTARD, the Chairman of the United Nations Joint Staff Pension Board, introduced the report of the Board, reviewing some of its contents. The Fund paid more than $75 million monthly in benefits in 27 currencies to beneficiaries in 184 nations, he said.
Referring to the Transfer Agreements with the Governments of the former Soviet Union, Ukrainian SSR and Byelorussian SSR, which had gone into effect in 1981, he said their application had been suspended since 1992 pending a clarification of the status of the Agreements after the dissolution of the Soviet Union. Over the last five years, the Fund had received complaints from former participants covered by the three Transfer Agreements that, contrary to their terms, transferred pension rights in the Fund had not led to increases in their pension benefits under the applicable national pension or social security schemes. The Board had on several occasions told the Assembly of its sympathy for the position in which those former participants had found themselves, even though no outstanding legal obligations existed on its part. The Board had also stated its readiness to consider favourably proposals for the reinstatement of their pension rights, on a group basis, if the amounts transferred were repaid to the Fund, with appropriate interest.
At the request of the Board, he continued, its Secretary had initiated contacts with the concerned governments to determine the extent to which the problems that had arisen could be resolved. However, only the Mission of the Russian Federation had responded to requests to designate a contact person for discussions. The talks ultimately led to an agreement to follow a step-by- step approach in addressing the concerns of all former Fund participants in
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the former Soviet Union, Ukrainian SSR and the Byelorussian SSR, covering not only those who had entered the Fund on or after 1 January 1981 but also those who had entered the Fund before that date. The proposed Agreement between the Fund and the Russian Government would provide periodic pensions to a defined and limited group of former participants in the Fund who were Russian citizens and who met other criteria set out in the document. The cost of the prospective periodic pensions would be met by the Russian Government through the payments to the Fund, in 10 instalments, of the actuarial costs involved. If payments were not made according to the terms of the proposed Agreement, its implementation would be suspended. The Agreement was a first step towards a comprehensive resolution of the matter.
The Chairman said that both the Secretary and the Board understood the position taken by Ukraine, which stressed that monies transferred on behalf of its nationals under the Transfer Agreement with the former Ukrainian SSR had been sent to the Social Security Plan of the former USSR. But the question of responsibility for payments to cover the costs of the benefits set out in the proposed Agreement should be a matter for resolution by the Member States concerned. The Board hoped that the Assembly would address the importance of taking further steps in respect of those former participants not covered by the first proposed Agreement, including those from countries other than the Russian Federation.
JOSEPH CONNOR, Under-Secretary-General for Administration and Management, introduced the report of the Secretary-General on the investments of the Fund, reviewing some of its contents such as the Fund's profits. As of 20 November, the market value of the Fund had reached $17 billion. The investment strategy of the Fund should be examined with a long-term perspective. Short-term results were influenced by the volatility in the financial markets that were hard to predict or control, and any assessment of the Fund's performance should be based on analysis of investments over longer periods such as five to 10 years.
He said that the Secretary-General had tried to ensure investments in the developing countries in accordance with established criteria. Speaking on the management of the Fund, he said that it had been served by a single global institutional adviser, the Fiduciary Trust Company International. In response to a resolution of the Assembly, the Secretary-General had conducted a world- wide competitive bidding to identify one or more advisers to provide the Investment Management Service (IMS) with research, economic, markets and securities analyses. Out of 11 institutions that had sent in their bids, the High-Level Contracting Group, set up by the Secretary-General, had approved three to advise the Fund. As the Fund continued to grow, it would gain from the increased specialization that would be provided by the additional advisers.
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He said that the IMS had 24 staff, nine of whom were at the Professional level, with six being actively involved in making investment decisions. The service, headed by a D-1 level staff, handled millions of dollars daily. The Fifth Committee should review the matter without delay to ensure that the Service was restructured, as proposed by the Office for Human Resources Management, which had audited the service.
C.S.M. MSELLE, the Chairman of the ACABQ, introduced the report of his Advisory Committee and reviewed some of its contents.
YURI BOHAYEVSKY (Ukraine) said that his delegation paid close attention to the progress being made by the Board on activities related to resolving the problems of the implementation of the Transfer Agreements between the Pension Fund and the former USSR, the former Ukrainian SSR and the Byelorussian SSR. The ideal solution to the problem that had arisen from the implementation of the Transfer Agreements between the Fund and the former Republics would entail the return to the Pension Fund of the amounts credited to the USSR State budget and the re-establishment of the erstwhile Pension Fund rights of former participants living in the former Republics. He asked whether the Secretary of the Pension Board had exploited all possibilities to reach that ideal and comprehensive solution for all the former participants -- regardless of their nationality or place of residence -- who had transferred their accrued Pension Fund rights under the three Agreements since all the amounts involved had been transferred to the Social Security Fund of the former Soviet Union.
He said that the proposed Agreement between the Russian Government and the Pension Fund did not re-establish the pension rights of all former participants and was intended to provide periodic pensions to a limited group. He asked for an explanation of the legal grounds on which the Pension Fund got involved in such an arrangement and whether there were contradictions between the proposed Agreement and the Fund's rules and regulations. The termination of the Transfer Agreement between the Fund and the former USSR, as provided for in the proposed Agreement, would eliminate the legal instrument contained in all three Transfer Agreements. Noting that the Secretary of the Board had expressed hope that a new Agreement could be reached with Ukraine, the representative asked whether the letter and the spirit of the proposed Agreement between the Fund and the Russian Government corresponded to article 34 of the Vienna Convention on the Law of Treaties, which reads: "A treaty does not create either obligations or rights for a third State without its consent."
Since the Secretary had referred to the Russian Federation as the successor State to the former USSR, the representative asked whether the Secretary continued to recognize that country was fully responsible for the comprehensive resolution of the problems arising from the implementation of
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the three Transfer Agreements and that it should return appropriate sums of money to the Fund.
Statements on 1996-1997 Programme Budget
Mr. MSELLE, Chairman of the ACABQ, presented an oral report on his Committee's conclusions and recommendations on the revised estimates resulting from the resolutions and decisions of the Economic and Social Council in 1996.
He said the programme budget requirements related to crime and international drug control. There were also additional conference servicing requirements which would be considered in a separate report later this year on all additional conference servicing requirements for the biennium. In addition, the requirements included estimates for consultants at the P-3 and P-4 levels, and for translation and interpretation services.
He recommended that the Fifth Committee took note of the requirements, on the understanding that such additional appropriations would be determined in the context of the procedure for using the contingency fund, and after taking account of the first performance report of the 1996-1997 budget. Referring to a publication addressing the issue of organized transnational crime, he said it was a continuing activity which could be integrated into the relevant programmes of work for the 1998-1999 biennium.
ANA SILVIA RODRIGUEZ ABASCAL (Cuba) said, based on the Secretary-General recommendations on the revised estimates, the Fifth Committee was in a position to take a decision in the context of relevant Assembly resolutions governing budgetary procedures. She regretted that the Secretariat had prejudged Member States decisions and had not followed the established budgetary procedures.
PATRICK KELLY (Ireland), speaking on behalf of the European Union, said, with regard to the issue of programme budget implications and decisions taken by intergovernmental bodies or which would be taken by Main Committees during the current session, the European Union would abide strictly by the budgetary procedures which had served well over the years.
It was the responsibility of the Fifth Committee to take action on proposals with programme budget implications under Assembly resolutions 41/213 (which, among other things, sets out the Organizations's budgetary process) and 42/211 (which provides criteria for use of the contingency fund). Those resolutions provide for the contingency fund to be utilized under specific circumstances. He elaborated on the action that should be taken if programme budget implications exceeded the amounts allowed under the contingency fund.
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The two documents -- related to Economic and Social Council and the International Seabed Authority -- concerned revised estimates and could be dealt with in the context of revised appropriations in the first performance report of the 1996-1997 budget. He proposed that the programme budget implications be dealt with all together and not on a piecemeal basis. There should be a deadline for the submission of all programme budget implications to allow the Committee to act in a more informed manner of all the demands on the budget.
He asked how much of the contingency fund remained to be committed at this stage and if the Secretariat had prepared any preliminary estimates of the total amounts of additional financing requirements likely to arise as a result of the programme budget implications, which the Fifth Committee would be required to deal with at the current session.
DONALD GELBER (United States) said his Government would endorse the European Union's position. Programme budget implications had to be examined together so that the Committee would have a full view of the competing demands for resources, which would allow it to make informed decisions. He would like the issue postponed until all programme budget implications were available.
FUMIAKI TOYA (Japan) said while it was necessary to carefully examine the revised estimates, he attached great importance to crime and international drug control which were the areas covered by the estimates. The budget for those activities should be given high priority in the context of the first performance report for the 1996-1997 biennium.
FREDERICO SAENZ (Costa Rica), speaking on behalf of the "Group of 77" developing countries and China, said the revised estimates and the budget of the International Seabed Authority were in keeping with the budgeting procedures in the relevant Assembly resolutions. The Group, therefore, agreed that those activities should be financed from the contingency fund.
YUKIO TAKASU, United Nations Controller, said that the Secretariat did not intend to change the established budgetary procedures, unless it received specific instructions from the Assembly to do so. Assembly resolutions 41/213, of December 1986, and 42/211, of December 1987, and relevant rules of procedures of the Assembly on the budgetary procedures would be followed by the Secretariat. The revised estimates for the Council fell under the procedures for using the contingency fund of the United Nations. As for that fund, the Assembly had established it at a level of 0.75 per cent of the 1996- 1997 regular budget, or about $20.6 million, which was larger than what had been allocated for preceding bienniums. So far, about $1.2 million had been used from the contingency fund, leaving a balance of $19.4 million.
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He explained that the contingency fund was not a fund per se, but a mechanism that would enable the Assembly and Member States to provide the Secretary-General the resources he needed to carry out mandates that had not been provided for in the initial budgets of the United Nations. In the case of unforeseen circumstances, such as those relating to the maintenance of international peace and security, the Secretary-General would try to absorb them as much as possible. But, should he fail to do so, those requirements would be treated outside the procedures governing the contingency fund. Additional expenditures in the cases of revised estimates that exceeded the balance in the contingency fund could be met through a redeployment of resources from other activities or the postponement of other programmes. In the last 10 years, however, all the additional expenditures had fallen within the resources available in the contingency fund. Therefore, the question of whether to redeploy resources from one programme to another and of which ones to redeploy had not arisen.
The Secretary-General, he said, could provide a consolidated statement of the programme budget implications. If the additional requirements exceeded the balance in the fund, the Secretary-General might then propose the selection of programmes that were to be deferred or curtailed in order to enable the implementation of a new mandate. So far, the balance in the contingency fund had not been exceeded. The issues regarding the Council and the Seabed Authority were both revised estimates.
The programme budget implications, he went on, arose when a Main Committee considered a draft resolution which might lead to some additional expenditures. They were made available for the consideration of other Main Committees, with the Fifth Committee retaining the prerogative on how to provide the additional resources needed. The Assembly required recommendations of the Fifth Committee before adopting draft resolutions that had budgetary implications. Therefore, if the Fifth Committee deferred considering programme budget implications until all of them had been produced, the plenary could not finish its work. Several programme budget implications and revised estimates would be coming from the Third Committee (Social, Humanitarian and Cultural) and the Fourth Committee (Special Political and Decolonization). Statements of programme budget implications could be expected also in relation to the United Nations Human Rights Verification Mission in Guatemala (MINUGUA), International Civilian Mission to Haiti (MICIVIH), the situation in Afghanistan and the situation in Central America.
Mr. GELBER (United States) said that his delegation could not proceed with any action on the revised estimates today. The matter should be deferred until the Committee could consider all actions that could lead to fresh assessments. Member States might be aware of the constraints that the United States delegation faced. He would not like to join any action that the United States delegation might regret later. He wanted to make his position clear so
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that there would be no unforeseen consequences. "You know what I am talking about", he added. Therefore, deliberations on the matter should not proceed until a full picture had emerged.
Mr. MSELLE said that the ACABQ was recommending that the Fifth Committee take note of the Secretary-General's proposals. If the United States proposal was applied to programme budget implications, it would create serious problems. He explained that the current procedure allowed the Fifth Committee to inform the Assembly that it could adopt a draft resolution from the Main Committee without committing itself to their budget implications. However, at a later stage, the Fifth Committee would inform the Assembly on the requirements that would be needed. Such a procedure would allow for an orderly consideration of the reports of the various Main Committees, while the Fifth Committee negotiated the issue of how to allocate resources for the various resolutions. The proposal of the United States was similar to what the ACABQ felt in relation to revised estimates. But, if such a proposal was applied to programme budget implications emanating from the Main Committees, it could lead to complications.
Mr. GELBER (United States) said he wanted the matter postponed for a few days, after which he would return with a positive response, if possible.
MARTA PENA (Mexico) asked when the financial requests of the International Seabed Authority would be taken up.
NGONI FRANCIS SENGWE (Zimbabwe), the Fifth Committee Chairman, said the Authority's estimates would be considered at the next formal meeting, on Wednesday, 27 November.
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