PERFORMANCE-BASED PAY SYSTEM, HAZARD PAY INCREASE FOR LOCAL STAFF AMONG ISSUES RAISED, AS FIFTH COMMITTEE DEBATE CONTINUES

Fifty-eighth General Assembly

Fifth Committee

15^th Meeting (AM)

PERFORMANCE-BASED PAY SYSTEM, HAZARD PAY INCREASE FOR LOCAL STAFF

AMONG ISSUES RAISED, AS FIFTH COMMITTEE DEBATE CONTINUES

As the Fifth Committee (Administrative and Budgetary) continued its consideration of the United Nations Common System this morning, speakers addressed the proposals to introduce a pay system that would reward performance, the recommendations to increase hazard pay for locally recruited staff and the possible introduction of a broadbanding system.

Canada’s representative stressed that linking pay and performance should be a very high priority for human resource management reform, because under present arrangements length of service mattered more than performance.  He also saw merit in the suggestion that a pay-for-performance system should be tested.  Such a test could start with managers, he said.

China’s representative felt the reform should eventually lead to establishing pay for performance, a practice that had already been adopted by some governments.  The proposals put forward by the International Civil Service Commission (ICSC) were not something revolutionary, he said.  Rather, they represented an effort to help the common system organizations to improve their efficiency.  That was why his delegation welcomed a limited pilot project to link pay and performance.

The representative of the Russian Federation agreed with China that the focus should be on increasing efficiency and cautioned against creating illusions that the new pay system was paramount to increasing pay.  Better rewards for above-the-average performance should be achieved through redistribution of the funds and not through introducing new resources.

Turning to the issue of hazard pay for locally recruited staff, the United States’ representative questioned the rationale behind the Commission’s recommendation to increase hazard pay for local staff to 30 per cent of the midpoint of the local salary scale, which reflected a 50 per cent increase in the benefit.  [Following last year’s recommendation by the ICSC to increase the hazard pay for locally recruited staff, the Assembly, in its resolution on the matter, requested the ICSC to reconsider the question.]  Instead of increasing hazard pay, the United Nations should focus its resources on improving the overall security of United Nations personnel, she said.

While supporting an increase, China’s representative believed that to set such pay at 30 per cent of the midpoint of the local salary scale seemed to be somewhat simplistic and a bit arbitrary.  Thus, he would appreciate some explanation about the thinking behind such a decision.

While agreeing with some of the cautionary remarks made by other speakers, Sierra Leone’s representative strongly supported the ICSC’s recommendation, stressing that staff working in dangerous conditions deserved recognition from the United Nations.

Several speakers also noted the progress made by the Commission in exploring the possible introduction of a broadbanding system, which would put grades into broad salary groups with no steps between the minimum and maximum pay for the band.  It would permit managers to shift the duties of their staff to meet new requirements and priorities.  Nevertheless, some delegates doubted that broadbanding could succeed at the United Nations and wondered if the models chosen to test such a system were the most appropriate.

Also this morning, Conrad S.M. Mselle, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced the Committee’s report on the salary and retirement allowance of the Secretary-General and Administrator of the United Nations Development Programme (UNDP).

The Committee will meet again at 9:30 a.m. Wednesday, 5 November, to continue its work.

Background

This morning the Fifth Committee was expected to continue its consideration of United Nations Common System and begin its consideration of various aspects of the 2002-2003 budget.

Programme Budget for Biennium 2002-2003

The Committee had before it a report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the salary and retirement allowance of the Secretary-General and salary and pensionable remuneration of the Administrator of the United Nations Development Programme (A/58/7/Add.3).

The report is submitted by the Advisory Committee in accordance with General Assembly resolution 57/310 of June 2003, in which the Assembly concurred with the recommendation of the Committee concerning the salary and retirement allowance of the Secretary-General and the salary and pensionable remuneration of the Administrator of the United Nations Development Programme (UNDP) contained in document A/57/7/Add.25.

[A/57/7/Add.25 states that, in December 2002, the General Assembly approved differentiated salary increases in the salary scale for staff in the professional and higher categories, including a 6.3 per cent increase for D-2 staff and above.  As a result of the increase, the pensionable remuneration of the UNDP Administrator would increase from $251,827 to $267,692.  The Secretary-General’s retirement benefit would increase from $129,548 to $137,710.  The Advisory Committee recommends that those changes be made effective from 1 January 2003.

The change in the Secretary-General’s gross salary would result in an increase of expenditure of staff assessment under section 32 of the 2002-2003 programme budget of some $18,000, offset by an equivalent amount under Income section 1, Income from staff assessment.  Should the Secretary-General’s net salary be increased, there would be an increase in expenditure under section 1 of 2002-2003 budget of some $16,400.  The consequential increases in the maximum retirement allowance for the three former Secretaries-General would result in a total additional cost under section 30, Special expenses, of the 2002-2003 programme budget of some $24,900 at a rate of $8,300 per former Secretary-General for 2003.]

The Assembly requested that the Committee submit proposals to it at its fifty-eighth session with a view to formalizing conditions and procedures related to the salary and retirement allowance of the Secretary-General and the salary and pensionable remuneration of the Administrator of the UNDP.

The Advisory Committee does not see a need, at this time, to change the current practice.

Statements

JERRY KRAMER (Canada), also speaking on behalf of Australia and New Zealand, said that improvement of human resources management was an important part of the reform of the Organization.  Changes to the pay and benefits system should lead to a more streamlined and dynamic system, which enhanced management and leadership, rewarded competence and performance and was responsive to the changing nature of work across organizations in the common system.  He was pleased with the progress made in revising the job classification system.  That was an important first step in reform that created a simpler and more flexible classification system for Professional posts.

Linking pay and performance should be a very high priority for human resource management reform, he continued.  All common system organizations should now be working towards implementing and refining fair and transparent systems for performance assessment.  The link between pay and performance was needed, because under present arrangements, length of service mattered more than performance.  He saw merit in the suggestion that a pay-for-performance system should be tested.  Such a test could start with managers.  An excessive number of steps in the Professional salary scale was a related problem that also needed to be addressed.

Before a system of broadbanding could be implemented, progress was needed on performance measurement and on linking pay and performance, he said.  Last year, the delegations he represented had already expressed interest in the potential utility of broadbanding, because of the flexibility it could offer to deploy staff in a less hierarchical structure and as a further means of strengthening the link between compensation and performance.  But, it was clear from the report that much work needed to be done.  He, therefore, encouraged the Commission to continue working towards a strong framework for the pilot study on broadbanding.

Continuing, he expressed surprise that the International Civil Service Commission appeared to have ceased its work on the Senior Management Service as part of the overall pay and benefits system.  He was, therefore, doubly pleased that that important initiative was being further developed by the Chief Executive Board.  While some delegations had posed questions on the matter, the Assembly had not rejected the idea of such a service.  The Commission last year had argued that building managerial capacity through the Senior Management Service was essential to support broader reform processes.  He shared that view and hoped the Commission would continue to do so, as well.

Mobility was a key element in human resources reform, he said.  He was pleased that the Commission intended to contribute ideas on enhancing mobility, it being understood that mobility embraced movement within duty stations, as well as between them.  He also supported that Commission’s recommendation to use the nationwide General Schedule (excluding locality pay) of the United States federal civil service as a reference point for the United Nations base/floor salary scale.  That seemed a prudent approach consistent with initially established practice.  He hoped that intended reviews of current mobility and hardship allowances would be conducted in the context of a comprehensive review of all allowances.

LIZ NAKIAN (United States) noted the progress made by the Civil Service Commission in reviewing the pay and benefits system and in exploring the possible introduction of a broadbanding system.  Nevertheless, she remained concerned whether broadbanding could succeed at the United Nations and whether the models chosen to test such a system were the most appropriate.  Broadbanding did not distinguish between degrees of difficulty and responsibility of work within a band.  Therefore, she questioned how applicants would know if an advertised job had less or greater responsibility than their current position.  For that reason, she believed that the current seven-grade classification structure should be maintained, in order to retain the ability to compare job levels both within and outside the system and track career progression.

Before a broadbanding system could be seriously contemplated, the organizations needed to have effective pay for performance systems in place.  That required credible, reliable and acceptable performance appraisal systems with well-trained managers.  That was far from the case at present.  Furthermore, she was concerned about the concept of weighting several elements, particularly competencies, and urged the implementation of controls in that area.  For example, if gains in competency were “technically” good, yet performance was unsatisfactory, performance pay should not be granted.

Finally, she raised the issue of hazard pay for locally recruited staff.  Her delegation continued to question the rationale behind the Commission’s recommendation to increase hazard pay for local staff to 30 per cent of the midpoint of the local salary scale, which reflected a 50 per cent increase in the benefit.  Increasing hazard pay for locally recruited staff was not the most appropriate approach to dealing with the issue of hazardous working conditions.  Instead, the United Nations should focus its resources on improving the overall security of United Nations personnel.  Her delegation was also concerned that the proposed increase in hazard pay would destroy the equitable relationship between the benefit provided to professional and local staff.

VLADIMIR A. IOSIFOV (Russian Federation) said that his country attached great importance to the work of the International Civil Service Commission, particularly concerning the extensive reform of the pay and benefits system and the conditions of service.  He also attached importance to the pilot project to test new models of pay.  As a result of that, Member States would be able to determine the feasibility of introducing a rewards system at the United Nations, which would be radically different from the one in place now.  It was important to avoid creating illusions that the new pay system was paramount to increasing pay.  The focus of attention should be on increasing efficiency within the system.  Better rewards for above-the-average performance should be achieved through redistribution of the funds and not through introducing new resources.

Within the framework of testing “pilot projects”, he said that it was necessary to test all three models, and not only the first one, providing for a broad range of pay combined with personnel evaluation.  It was extremely important to test all three, including the third model, which preserved the current salary scale, but without steps.  In principle, such a system could provide the basis for a gradual transition to pay based on results.

The ultimate purpose of the review was creation of a less cumbersome and more economical system of pay and allowances for the common system, he continued.  He supported the Commission’s recommendation on the use of the national scale of the United States federal civil service (excluding locality pay) as a reference point for the United Nations base/floor salary scale.  That could smooth out, at least temporarily, the problem of post adjustment correctives, which was called upon to level out the purchasing power of United Nations staff around the world.

HAO BIN (China) said that, as an independent expert body, the International Civil Service Commission made recommendations that bore upon the critical interests of international civil servants.  Those recommendations deserved to be seriously addressed.  He noted that, after more than a year’s work, the new job evaluation system for Professional and higher categories had now evolved from a conceptual framework to something more concrete, and its initial testing had shown some positive results.  He encouraged the Commission to consult with all interested parties, especially the common system organizations, to ensure introduction of the system of job evaluation on schedule.

China supported the reform of the present pay system, he said, which should eventually lead to establishing a performance pay system.  Performance pay had already been adopted by some governments.  The proposals put forward by the Commission were not something revolutionary.  Rather, they represented an effort to help the common system organizations to improve their efficiency.  That was why his delegation welcomed a limited pilot project to link pay and performance.

Regarding broadbanding, he said that his delegation was very interested in seeing satisfactory results from those organizations, which had volunteered to participate in the pilot study of the three models, which had been selected to be tested.  It must be stressed, however, that the total budgetary amount should be kept at the current level.  Focus should be on how the existing financial resources could be best utilized.  The primary concern was preventing an increase in administrative costs.  In that context, he would like to know how the Commission planned to meet the resource requirement of a full-time project manager to oversee the pilot study, as well as the grade level and the expected duration of his assignment.

China supported a hazard pay system that was equitable and appropriate, he said.  At some duty stations, living conditions were harsh and security was inadequate.  Granting some compensation to staff members who worked there, in addition to salary, would provide recognition of the sacrifice they made in their service to the United Nations.  The local staff working in dangerous locations should be entitled to reasonable hazard pay.  However, to set such pay at 30 per cent of the midpoint of the local salary scale seemed to be somewhat simplistic and a bit arbitrary.  In that connection, his delegation would appreciate if the Commission could enlighten it about the thinking behind such a decision.

Supporting mobility, where appropriate, he said that it should be a factor to be considered for promotion.  The Commission and common system organizations should actively encourage all participating organizations to further promote mobility, and China supported the recommendations of the Commission to change the organizational culture with regard to mobility; to clearly define various types of mobility; and to include mobility in the terms of contract.

In conclusion, he stressed the importance of meeting staff members’ work/life needs.  All participating organizations should try to resolve, to the extent possible, problems attendant to staff mobility, spouse employment and so on.  However, the issue of spouse employment involved many practical problems, the solution of which had so far eluded the international community.  To treat that “mission almost impossible” as a priority could only legitimize it as an excuse against mobility and, for that reason, China could not agree to treating spouse employment as a priority area in the context of mobility.

JAMES JONAH (Sierra Leone) said that, while he agreed with some of the cautionary remarks made by the United States with regard to hazard pay of locally recruited staff, he supported the Commission’s recommendation to increase hazard pay from 20 to 30 per cent of the midpoint of the local salary scale.  Today, the Organization found itself in a very difficult and critical security situation.  Owing to the security policy of the Organization, it was often the case that international staff had to be removed.  The only face of the Organization in such a situation was the local staff.  In support for what they were doing on behalf of the Organization, he felt that strong support should be given to the Commission’s recommendations.

Introductions

CONRAD S.M. MSELLE, Chairman of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced the report of the Advisory Committee on the salary and retirement allowance of the Secretary-General and salary and pensionable remuneration of the Administrator of the UNDP (document A/58/7/Add.3).

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