Sixty-eighth General Assembly

Fifth Committee

17^th Meeting (AM)

Growing Staff Costs, Retirement Age Rules Dominate Budget Committee’s

 

Debate on Conditions of Service for United Nations Employees

 

As the Fifth Committee (Administrative and Budgetary) today discussed the conditions of service of United Nations staff worldwide, delegates differed over how to address growing compensation costs and the widening pay gap between the Organization’s employees and their counterparts elsewhere.

Labour costs made up 70 per cent of the United Nations regular budget and their growth, specifically the number of staff and the size of their compensation packages, was the primary driver of the Organization’s budget growth in the past decade, the representative of the United States said.

The impact of that trend was magnified in the United Nations common system’s 23 other organizations, he said, noting that many of those bodies relied on voluntary contributions that had dwindled since the global financial crisis.  Failure to understand the budget impact of increasing staff costs had forced the World Health Organization (WHO) to cut 800 critical HIV/AIDS workers in Africa, and led the governing bodies of three organizations to request immediate action to relieve staff cost pressures.

As the Committee examined the 2013 report of the International Civil Service Commission (ICSC), which presented data on compensation packages of United Nations staff, he and other delegates expressed concern over the expanding gap between United Nations staff salaries and the pay scales of employees of the United States civil service in Washington D.C.  The one-year margin had continued increasing, from 13.3 per cent in 2010 to a projected 22.4 per cent in 2014, withthefive-year average margin creeping above its desired midpoint for the first time in history.  He welcomed the Commission’s decision to freeze the one-year margin, but called for more action to bring it back to the midpoint, stressing that the only option was a downward correction in the post-adjustment, a pay add-on that fluctuated.

While India’s representative acknowledged, along with several other delegations, that the margin level was approaching the threshold of unacceptability, he urged against any changes to post-adjustments.  He pointed to the recent creation of higher-level posts at a greater rate than ever before, stating that it was impossible to get consistent lists of Under-Secretary-Generals and Assistant Secretary-Generals, and that “mandate-creep” had blunted monitoring of posts, functions, levels and finances.

He said he expected the Commission’s ongoing comprehensive review of the compensation package to improve the United Nations workforce’s geographic and gender diversity, a view echoed by the representative of Fiji, who, speaking on behalf of the “Group of 77” developing countries and China, noted a particularly poor gender balance in senior positions, and called for more efforts to recruit women from developing countries.

He also took up the issue of the increase in the mandatory age of staff separation from the United Nations to 65 years, stating that he would listen to the United Nations staff representatives, the common system’s organizations, and the United Nations Joint Staff Pension Fund on the issue.

Two such staff representatives addressed the Committee, expressing support for the increase.  The President of the Federation of International Civil Servants’ Associations noted the need for a system-wide approach to separation, and the President of the Coordinating Committee for International Staff Unions and Associations of the United Nations System cited worldwide trends towards later retirement ages and the potential positive impact such a change could have on the Pension Fund.

The representative of Japan, however, expressed reservations about an increased age of separation.  She called for extremely careful consideration of the plan, noting the great effects that such a change could have on human resource management, including the Organization’s geographical distribution and rejuvenation.  She said she was willing to discuss the deferment of this proposal.

Also today, Kingston P. Rhodes, Chairman of the International Civil Service Commission, submitted that body’s report, which had focused on reviewing the United Nations common system compensation package.  Johannes Huisman, Director of the Programme Planning and Budget Division, introduced the Secretary-General’s statement on the administrative and financial implications stemming from the Commission’s report, and Carlos Ruiz Massieu, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced the Advisory Committee’s related report.

The representatives of the Republic of Korea and the European Union also spoke today.

The Fifth Committee will reconvene at 10 a.m., on Monday, 18 October, to take action on draft resolutions relating to the financial reports and reports of the Board of Auditors and the report on Office of Internal Oversight Services (OIOS) activities, as well as to discuss revised estimates/subvention: CESCR Protocol and the proposed programme budget: biennium 2014-2015, focusing on construction and property management.

Background

The Fifth Committee met today to discuss the United Nations common system agenda item.  It had before it the Report of the International Service Commission for 2013 (document A/68/30), and two documents on the Administrative and financial implications of the decisions and recommendations contained in the report of the International Civil Service Commission for the year 2013.  Those two documents included a statement submitted by the Secretary-General in accordance with rule 153 of the rules of procedure of the General Assembly (document A/C.5/68/3), and the Fifth report of the Advisory Committee on Administrative and Budgetary Questions (ACABQ) on the proposed programme budget for the biennium 2014-2015 (document A/68/7/Add.4).

Introduction of Reports

KINGSTON P. RHODES, Chairman, International Civil Service Commission (ICSC), presented the Commission’s report for 2013 (document A/68/30), saying it had focused on reviewing the United Nations common system compensation package.  The Commission was aware of the serious financial situations faced by Member States, including their national civil services and common system organizations.  The Commission’s review of the common system compensation package covered all elements of remuneration, assessed the history and rationale of elements of the current package and looked beyond the present system to consider alternative approaches and  ensure a holistic and integrated approach.  Three working groups had been established, on remuneration structure; competitiveness and sustainability; and performance incentives and other human resources issues.  The Commission had sought to redistribute resources to cover the review, he said, noting that it had already placed a significant extra burden on the Commission’s administrative and operational capacity.

He said the Commission, accounting for people’s better health and vitality later into life, considered increasing the mandatory retirement age to 65 years.  The United Nations Joint Staff Pension Fund (UNJSPF) Consulting Actuary had estimated that a 70 per cent utilization rate would lead to a 0.13 per cent reduction in the actuarial deficit of pensionable remuneration, positively impacting the Pension Fund’s long-term sustainability, with After-Service Health Insurance Liabilities also reduced by 0.85 per cent.  The Commission therefore recommended extending the mandatory age of separation to 65 years, effective from January 2016.

He pointed to the Commission’s monitoring of the margin between the net remuneration of United Nations Professional and higher level staff in New York and that of their counterparts in the comparator civil service in Washington D.C.  The margin had increased in 2013, primarily due to a pay freeze in the comparator service, and it was expected to approach the upper limit of the established range in 2014.  Certain variable factors important to calculating the margin might not be known by February 2014.  The Commission had concluded that in order to maintain the margin at the established level, no increase in the post adjustment for New York would be possible in 2014.

He noted that the pay freeze in the comparator civil service meant the gross level of the comparator’s General Schedule had remained the same, though slight changes in the federal tax schedule gave a slight boost to the net level of pay.  He requested that the Assembly adjust the United Nations’ base/floor salary scale by the same amount as that net change.  He pointed also to the Commission’s concerns over the methodology to determine allowances for children and secondary dependants and its deferral of a possible 16 per cent increase in such allowances.  A holistic examination was ongoing within the context of the ongoing comprehensive review, he said.  He also outlined the results of two salary surveys of General Staff pay, which found that salaries in Paris and Montreal in 2013 were 2.19 per cent and 1.22 per cent lower than existing salary scales, respectively, and noted that the Commission had not acted on ACABQ recommendations pertaining to place-to-place surveys at headquarters locations because the post adjustment system was being assessed through the comprehensive review of United Nations compensation.

JOHANNES HUISMAN, Director, Programme Planning and Budget Division, Office of Programme Planning, Budget and Accounts, Department of Management, introduced the Secretary-General’s statement on the administrative and financial implications of the decisions and recommendations contained in the Commission’s annual report (document A/C.5/68/3).  Financial implications would stem from conditions of service of Professional and higher categories, namely the increase in the base/floor salary scale and education grant special measures in Belgium, and the conditions of service of the General Service and other locally recruited categories, namely the survey of best prevailing conditions of employment for General Service and related categories in Paris, and the survey of best prevailing conditions of employment for General Service and related categories in Montreal.

Financial implications would stem from resolution 67/257, through which the Assembly asked the Commission to report on the progress, preliminary findings and administrative aspects of the comprehensive review of the compensation package during the main part of the Assembly’s sixty-eighth, sixty-ninth and seventieth sessions.  To carry out the review, the Commission had requested additional resources of $606,000.  Section V of the Statement lays out the corresponding financial implications.  This would include, among other implications, for the biennium 2014-2015, an additional appropriation of $195,700 for the United Nations share in the proposed programme budget under section 31, jointly financed administration activities, which would present a charge against the contingency fund.

CARLOS RUIZ MASSIEU, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), introduced the Advisory Committee’s report (document A/68/7/Add.4), and said it agreed with the Secretary-General’s presentation of the financial implications resulting from the Commission’s recommendations and decisions.  At the Assembly’s request, the Commission was required to file an annual report on the progress, preliminary findings and administrative aspects of the comprehensive review of the compensation package. To carry out the review, the Commission had requested additional resources of $606,000.  The Advisory Committee had not objected to the Secretary-General’s proposal, but expected that efforts to achieve cost efficiencies from the proposed additional requirements would be made.

Statements

MAURO PACE, President of the Federation of International Civil Servants’ Association (FICSA) said this year’s report included several recommendations that would help strengthen the coherence of the United Nations common system.  The recommendation to align the mandatory age of separation for current staff to 65 years, from January 2016, meshed with the need to implement a common approach to separation for all staff across the system.  The Association backed the recommendation for several reasons, including its sound actuarial basis.  With proper human resources management, the extension of the mandatory retirement age for serving staff would not hamper the “rejuvenation” of the workforce or prevent gender balance or equitable geographical distribution.

Referring to the margin-management mechanism approved by the Assembly several years ago to prevent unpredictable fluctuations in salaries, the Association believed it was a sound approach not to alter the parameters governing the current compensation mechanism until the Commission’s comprehensive review had produced results.  “We would like to further stress our opinion that the review should not be driven by the need to respond to short-term needs dictated by time-bound emergencies,” he said.  Mr. Pace added that a sound methodology that would anchor the Organization’s remuneration package to market realities would be safe enough to ensure staff recruitment and retention, while being guided by the principles enshrined in Articles 100 and 101 of the United Nations Charter.

The United Nations compensation system was very flexible and backed by very good principles, such as Flemming and Noblemaire, that had stood the test of time, and mechanisms that had let competent and motivated staff be deployed where the United Nations presence was most needed.  “Some of them may need refinement and adjustment, but this should still happen within the framework of the solid structure developed so far,” he added.

PAULINA ANALENA, President of the Coordinating Committee for International Staff Unions and Associations of the United Nations System, said staff keenly awaited news on how the Assembly addressed issues of deep concern to them.  She had participated in the review of the common system’s compensation package, despite her concerns that it “may have been provoked by a dismaying trend to view staff as financial liabilities and not as critically important contributors”.  She asked that the review’s results be considered before any changes to the existing system were proposed, because changes to the status quo could compromise the review’s final outcome.  She expressed reservations about the technical soundness of the report on the compensation package, and encouraged a fully collaborative and open process to reassure all parties, including staff.

Expressing her support for the recommendation to increase the mandatory age of separation to 65 years, she pointed to worldwide trends to increase retirement age, and to the potential positive impact such a change could have on the Pension Fund.  She noted arguments that the change could negatively impact United Nations’ efforts to rejuvenate its workforce and could undermine efforts to improve geographical balance, but she did not see the changes having a long-term impact on administration of human resources and welcomed the Commission’s rational approach to the issue.

She said she was disappointed that the post-adjustment system had not been allowed to function in accordance with the methodology agreed by the Assembly, and was concerned about insufficient focus on basic agreed concepts such as the “Noblemaire principle”, which aimed to ensure attraction of a diverse, highly skilled workforce with a wide geographical representation.  She stressed that staff were a critical asset, not an “expense”, underlining their importance to mandate delivery, including in extremely high risk situations in the field.  She noted also a crisis in staff-management relations, with staff representatives having lost the right to negotiate directly with management on issues like safety standards in the field.  Staff unions were “not asking to co-manage the Organization, nor veto change”, but were asking for due process and a right to negotiate.

PETER THOMSON (Fiji), speaking on behalf of the “Group of 77” developing countries and China, said the Commission played a crucial role in ensuring working conditions were aligned with the new contractual framework, laid out in Assembly resolution 63/250, as the Organization worked to harmonize conditions of service.  The Group would seek additional information on this resolution’s implementation.  Regarding the Commission’s recommendation to increase the mandatory age of separation to 65 years old for current staff, the Group would listen to the input of United Nations staff representatives, the organizations, and the Pension Fund on this issue.

Turning to the evolution of the United Nations/United States net remuneration margin, he said the Group would wait for the Commission to clarify major margin calculation variables, particularly their impact on projected figures for February 2014, as well as the new post adjustment cycle, which began each February.  The Group was very concerned about the insufficient progress made by organizations within the United Nations system to achieve gender balance, especially at senior levels, as reported by the Commission.  The Group wanted more efforts to be directed towards recruiting women from developing countries.

GERTON VAN DEN AKKER, a representative of the European Union Delegation, supported the Commission’s significant and independent role. The Commission played a key role in enhancing the effectiveness of all organizations in the common system, especially during the global financial and economic crisis.  Staff made up the core of the Organization, and the Secretariat needed to pinpoint areas where new levels of efficiency, economy and transparency could be achieved in its business operations.  The European Union was committed to giving staff the appropriate support to let them work effectively and safely, especially those working in dangerous situations.  Yet it was no longer possible to “artificially insulate UN staff members from current economic realities without risking progressively impacting on the very sustainability of the system”, he said.

Regarding the post adjustment and methodology on the margin management procedure, approved in Assembly resolution 46/191, the data and projections provided by the Commission indicated the margin had veered away from the desirable midpoint of 115, he said.  This was reason for concern, and needed to be property addressed.  In addition, more information was needed on the merits and possible drawbacks surrounding the proposed increase in the mandatory retirement age for current staff.  Other questions that needed to be analysed included the remuneration of staff in the Professional and higher categories, the related proposed revised base/floor salary scale, and the conditions of service for the General Service and other locally recruited staff.

MD NADIMUL HAQUE ( India) expected the Commission’s ongoing comprehensive review of the compensation package to shape the future quality of the United Nations workforce, improving its geographic and gender diversity.  Repeated deferral of decisions on common system matters distorted the Assembly’s ability to consider the matter, he warned, adding that post-related re-costing continued to bedevil the entire budgetary process, while margin levels also approached acceptable thresholds.  Given the comparator civil service pay freeze and uncertainty over its continuation, measures were needed to ensure the margin stayed at the desired level of 115.  Post-adjustments should continue to function normally, he urged, while adequate resources were necessary to ensure implementation of the Commission’s recommendations on the United Nations common system.  Higher level posts were being created at a higher rate than ever in the past, he said, noting that it was impossible to get consistent lists of Under-Secretary-Generals and Assistant Secretary-Generals and that “mandate-creep” had blunted monitoring of posts, functions, levels and finances.

ERIKO YAJIMA ( Japan) said the United Nations greatest asset was its staff, yet increasing staff costs were a major factor behind budget increases.  For this reason, Japan welcomed the review of the common system’s compensation package in order to establish a transparent and realistic system.  There also was a need to review the margin. Japan believed the Commission’s recommendation to institute a mandatory separate age of 65 years old for current staff should be considered extremely carefully.  The change would greatly affect human resource management, including the Organization’s geographical distribution and rejuvenation.  Japan was willing to discuss the deferment of this proposal.

KIM JIHOON ( Republic of Korea) said staff members deserved remuneration and benefits that adequately rewarded their contributions and addressed their unique status as international civil servants.  At the same time, it was necessary to monitor the compensation package to ensure it attracted a competitive workforce and inspired the staff to excel.  Regarding the post adjustment and margin issue, his delegation commended the Commission for setting the one-year margin at 119.8, in response to the heavy financial burden of Member States.  Yet if the margin were maintained at that level, the five-year average would approach the upper limit of 120, which could create a financial burden for Member States.  The Republic of Korea reaffirmed its trust that the Commission would help the Assembly consider options to address the five-year margin issue.

STEPHEN LIEBERMAN ( United States) said staff costs made up 70 per cent of the United Nations regular budget and their growth, and that specifically the number of staff and size of their overall compensation package was the primary factor behind the budget’s growth over the past decade.  This trend had been magnified in the common system’s 23 other organizations, many of which relied on voluntary contributions that had dwindled since the global financial crisis.  The argument made by was familiar: by letting staff costs increase and not understanding the budget impact of these increases, organizations like the World Health Organization (WHO) had been forced to cut 800 critical HIV/AIDS workers in Africa.  This recent move had reduced its mandate delivery.  While past successes, such as an administrative pay freeze that stopped the automatic cost of living increase for a short time, would let the Organization address staff costs, it did not do so quickly enough to meet the concerns of many common system organizations.  Since the Committee’s first resumed session, the governing bodies of three organizations had adopted resolutions asking the Assembly and Commission to take immediate action to relieve their staff cost pressures.

“So the question is:  what can we do while long-term solutions are still under development?” he asked.  The answer, he said, was to revisit the mechanics of the margin management methodology.  The problem faced this year was that the one-year margin had increased from 13.3 per cent in 2010 to a projected 22.4 per cent in 2014.  The increase had caused the five-year average to increase to 15.7 per cent in 2013, above the desirable midpoint for the first time in history.  With this unprecedented five-year average margin, the Commission had planned to freeze the one-year margin at 19.8 per cent, in accordance with Assembly resolutions 43/226 and 46/191, as of 1 February 2014.  The United States welcomed this intention and commended the Commission for its action.

Even with this freeze, evidence suggested that the one-year margin would stay at 19.8 per cent for the foreseeable future, he said.  Unless additional action was taken, the margin would keep moving away from the desirable midpoint.  The only action to return the five-year margin to the midpoint was a downward correction in the post adjustment, a pay add-on that went up and down.  In this session, the Committee should give the Commission guidance on the single issue that the methodology did not clearly resolve: the duration over which this action should take place.  “We maintain that a downward correction should take place over a short duration to give common system organizations immediate relief,” he said.  The shorter the duration, the more quickly organizations could redirect overpayments to United Nations professionals into the strengthening of existing mandates.

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For information media • not an official record