Speakers Assess Methodology for Calculating Cost‑of‑Living Adjustments, as Budget Committee Examines Changes to Staff Compensation Package
Delegates emphasized that cost‑of‑living adjustments must be applied consistently throughout the United Nations common system in line with current economic realities, as the Fifth Committee (Administrative and Budgetary) today examined new and proposed compensation rules that governed, among other things, separation payments, dependency allowances and salary scales for staff in Geneva.
Prompting their remarks was the decision by several Geneva‑based organizations and staff associations to challenge the results of a cost‑of‑living survey by the International Civil Service Commission (ICSC) last year which called for an overall post adjustment decrease of 4.7 per cent for staff in that city.
Paid in addition to base salaries, post adjustments vary according to the cost of living at a given duty station and the exchange rate of the United States dollar, with the aim of ensuring that all staff members on the same salary level have similar purchasing power, wherever they might be working.
Introducing the Commission’s 2017 annual report, Kingston P. Rhodes, its Chairman, acknowledged that some Geneva‑based organizations had yet to revise their post adjustments to reflect the results of the 2016 survey. He added that the Commission had engaged an independent expert to review the methodology behind the post adjustment index and determine if it was still fit for purpose.
The United States’ representative was dismayed about the organizations’ unwillingness to comply. “The very methodology that resulted in upward adjustment for several consecutive years cannot suddenly and capriciously be deemed erroneous when the outcome is a downward adjustment,” she said, adding that: “It is not in the Organization’s best interest to allow a single duty station or a few agencies within that duty station to jeopardize the legitimacy of the Commission and the integrity of long‑standing practices which have served the entire [UN] common system well for decades”. Noting that her country’s own diplomats in Geneva had seen a 50 per cent reduction in their cost‑of‑living adjustment, she supported the Commission’s position and encouraged all heads of Geneva‑based agencies to implement it fully and promptly.
The representative of the European Union delegation said that it was essential to implement consistent policies and common standards to maintain a level playing field for staff members doing similar work of equal value at different duty stations. It was also important for staff morale, he added, emphasizing that uneven implementation of the Commission’s decision would pose a challenge to the future of the common system.
Ian Richards, President of the Coordinating Committee for International Staff Unions and Associations of the United Nations System, cited a 70‑page report on the Geneva survey which revealed errors in calculation and application of the post adjustment methodology and non‑verification of the quality of data from third-party sources. “Confidence in the system must be restored,” he said, emphasizing that the issue had prompted 300 legal appeals, several demonstrations, a petition and a strike in Geneva. He asked the General Assembly to consider a tripartite review of post adjustment, as well as immediate restoration of the original 5 per cent margin of error to all duty stations covered by 2016 cost‑of‑living surveys “before the damage spreads”.
Diab el‑Tabari, President of the Federation of International Civil Servants’ Associations, warned that the manner in which the calculations had been made could lead to costly, disruptive litigation that would harm staff morale. The Commission’s proposal to employ a consultant to review the post adjustment methodology would produce one‑sided results, he said, stressing that only a tripartite working group comprising the Commission, organizations and staff representatives could complete the task fairly. He emphasized the need for broad reform of the common system, saying it must start with Member States and include a comprehensive review of mandates, duplication of services, excessive bureaucracy and the classification of posts.
Besides post adjustment, the Commission’s report covered its review of the use of the National Professional Office and Field Service staff categories, performance management, the evolution of the net remuneration margin between the United Nations and the United States, and the status of women in the United Nations common system.
Johannes Huisman, the Director of the Programme Planning and Budget Division of the Department of Management, introduced the Secretary‑General’s statement on the administrative and financial implications of the decisions and recommendations in the Commission’s 2017 report. Carlos G. Ruiz Massieu, Chair of the Advisory Committee on Administrative and Budgetary Questions (ACABQ), presented its corresponding report.
Also speaking today were the representative of Ecuador (on behalf of the “Group of 77” developing countries and China) and Japan.
The Fifth Committee will meet again at a date and time to be announced in the Journal.
International Civil Service Commission
KINGSTON P. RHODES, Chairman, International Civil Service Commission (ICSC), introduced its annual report for 2017 (documents A/72/30 and A/72/30/Corr.1), noting that the Commission this year had completed its review of the Use of the National Professional Officer and Field Service categories. The former, accounting for approximately one quarter of the Professional workforce, was the fastest‑growing group of staff in the United Nations common system. With global organizations increasingly competing for talent, it was imperative to devise consistent and mutually reinforcing policies to ensure the strategic use of the National Professional Officer category, he said, adding that guidelines proposed in the report addressed the need to support the use of such staff members in ways that were consistent with their mandates while taking into account their operational needs. “Use of the [National Professional Office] category will allow common system organizations to continue to benefit from this pool of highly educated and qualified local talent available in many parts of the world,” he said. Turning to the Field Service category, he said the Commission had updated the criteria for the use of that group of staff — who dealt primarily with peacekeeping, peacebuilding, and humanitarian and emergency operations — so as to reflect current realities. Further details were in the report.
On performance management, he said the Commission, having reviewed the General Assembly’s requests in that regard, was resubmitting its earlier recommendations, along with two enhancements to the performance and rewards framework. Those included the introduction of an overall budgetary cap of 1.5 per cent of an organization’s remuneration costs, as well as more detail regarding the limit for individual awards. He emphasized that those proposals updated a framework, approved by the Assembly in 1997, which formed the basis for the introduction of performance recognition and rewards schemes in many organizations.
Turning to the evolution of the net remuneration margin between the United Nations and the United States, he said the Commission had estimated that margin in 2017 to be 113.4, as stated in the report. However, taking into account updated common system personnel statistics, the margin had been revised to 113.7. He noted that the margin had been on a downward trend since 2013 when it stood at 119.6. With the margin being close to the trigger point of 113.0, the Commission would continue monitoring its level in order to take corrective action if necessary in 2018. Regarding the new unified base/floor salary scale, which took effect on 1 January 2017, he said that in view of the movement of comparator salaries this year and tax changes in the United States, the Commission was recommending a 0.97 per cent increase, effective 1 January 2018. The same adjustment was recommended for the pay protection points introduced under the comprehensive review of the common system compensation package. Keeping with the usual practice, the increase would be implemented with a commensurate reduction in post adjustment multiplier points.
He went on to discuss some of the Commission’s other activities, saying 2016 cost‑of‑living surveys had resulted in overall post adjustment decreases of 4.7 per cent for Geneva, 2.2 per cent for Madrid and 2.5 per cent for Rome; increases of 2.1 per cent for Montreal and 0.4 per cent in London; and no change for three Headquarters duty stations. Several Geneva‑based organizations and staff associations had challenged the analysis of the Geneva survey, but at its eighty‑fifth session, the Commission reaffirmed its original conclusion that its secretariat had correctly implemented the Commission‑approved methodology in the survey process. It also approved a recommendation by the Advisory Commission on Post Adjustment Questions to augment by a 3 per cent margin those survey results which fell below the prevailing pay index by more than 3 per cent. Furthermore, the Commission modified the transitional measures under gap closure arrangements which guaranteed no change in salary for existing staff for six months after the implementation date of the survey, and adjusted downwards by 3 per cent every four months. In addition, the Commission decided to change the implementation date of the Geneva survey results from May to August 2017 to align it with those of Rome and Madrid.
“It is, however, our understanding that some Geneva‑based organizations are yet to implement the survey results,” he said. The Commission had engaged an independent expert to review the methodology used for compiling the post adjustment index and determine whether it remained fit for purposes, he said, adding that that expert would submit its report in early 2018 to the Advisory Commission, which would in turn make recommendations to the Commission at its eighty‑sixth session in spring 2018.
Concerning the status of women in the United Nations common system, he said the Commission, at its eighty‑fifth session, had considered several diversity‑related issues, noting that the field of diversity and inclusion had evolved at a considerable pace in recent years. Many studies had made the business case that diversity and inclusion enhanced an organization’s reputation while increasing productivity and innovation. The Commission thus urged all organizations to do more to strengthen diversity and inclusiveness. Finally, he said the Commission had initiated a comprehensive review of pensionable remuneration that would continue through 2018, as well as a working group to explore options following recent policy‑related changes in the common system, including an increase in the mandatory age of separation. A contact group set up by the United Nations Joint Staff Pension Fund’s Board to liaise with the Commission on the matter would meet early next year and report its findings to the Commission’s 2018 session. The Commission would cooperate closely with the Pension Fund and report on its review’s outcome to the Assembly next year.
JOHANNES HUISMAN, Director of the Programme Planning and Budget Division of the Department of Management, introduced the Secretary‑General’s statement, submitted in accordance with rule 153 of the rules of procedure of the General Assembly, which detailed the administrative and financial implications of the decisions and recommendations contained in the Commission’s 2017 report (documents A/C.5/72/3 and A/C.5/72/3/Corr.1) related to separation payments for Professional and higher categories; remuneration of the General Service and other locally recruited categories in Vienna and adjustment of dependency allowances based on the new salary scale; and danger pay. He said that the budgetary implications of those recommendations for the 2016‑2017 programme budget and the proposed 2018‑2019 programme budget were estimated at $391,000 and $4.5 million, respectively. Should the General Assembly approve the recommendations of the Commission, the requirements for 2016 2017 for the United Nations would be addressed, as necessary, in the context of the second performance report. The financial requirements for the proposed 2018‑2019 programme budget would be taken into account in the context of the revised estimates: effect of changes in rates of exchange and inflation for the period.
CARLOS G. RUIZ MASSIEU, Chair of the Advisory Committee on Administrative and Budget Questions (ACABQ), presenting its corresponding report (document A/72/7/Add.21), said the Advisory Committee noted the financial implications of the decisions and recommendations in the Commission’s 2017 report and recommended that the General Assembly take note that, should it approve the Commission’s recommendations, requirements for 2016‑2017 would be addressed in the second performance report, and requirements for 2018‑2019 would be taken into account in the context of the revised estimates: effect of changes in rates of exchange and inflation for the period. Requirements for the budgets for peacekeeping operations would be addressed in the performance reports for the 2017/18 financial period and in the proposed budgets for the 2018/19 financial period.
IAN RICHARDS, President of the Coordinating Committee for International Staff Unions and Associations of the United Nations System, said that several agencies had already declared that they would not implement the latest post adjustment results and had questioned the calculations. A 70‑page report had been produced showing errors in calculation, errors in application of the post adjustment methodology and non‑verification of the quality of data from third‑ party sources. The 5 per cent margin of error applied by the Commission to serve as a cushion in case of negative adjustments to salaries was abolished prior to the new round of post adjustment surveys under the pretence that the Commission had reached a state of perfection; some commissioners were even told that the move would save money. It was later restored, but at 3 per cent, with no explanation given for the lower figure. The Commission had also reversed a verbal promise to heads of organizations and staff unions to create a tripartite working group to review how post adjustment worked. Such events had led to 300 legal appeals, several demonstrations, a petition and a strike.
“Confidence in the system must be restored,” he stressed, and asking the General Assembly to consider a tripartite review of post adjustment, focusing on transparency and frequency. “Pending completion of the review, we also ask the General Assembly to consider the immediate application of the prior 5 per cent margin of error to all duty stations in this round [of surveys]. This must be done before the damage spreads to other duty stations,” he said.
Turning to the Pension Fund, he said that newly issued Office of Internal Oversight Services (OIOS) report 2017/104 noted that the Fund knew the Integrated Pension Administration System payment system was not working properly, particularly for calculating benefits for widows and orphans, but it still went ahead, resulting in a serious payment backlog that currently stood at 15,000. Further, OIOS report 2017/110 showed that $1.8 million had been misspent with the consulting firm PricewaterhouseCoopers. Last year, the General Assembly wisely did not approve the Pension Board’s proposed to remove OIOS as an auditor and give greater freedom in terms of procurement. The Board of Auditors noted that a much‑needed actuarial valuation of the Pension Fund had to be scrapped after it was discovered that the Fund’s management had provided incorrect data to the actuaries, costing the Organization $280,000. The poor management of the Fund led him to question the need for additional posts, when so many remained vacant.
Furthermore, the Board of the Fund had failed in its duty to effectively oversee the Fund’s operations, he said. “When most pension funds have five to ten board members meeting once every month or two months, it should come as no surprise that a board of 33 plus alternates and others is unwieldly,” he said, adding that by meeting only once a year, the board was also ineffective. In that context, he asked the General Assembly to consider creating a redesign panel to reinforce management accountability at the Fund and give the Secretary‑General full power in the appointment of the body’s leadership.
DIAB EL‑TABARI, President of the Federation of International Civil Servants’ Associations, said the latest round of cost‑of‑living surveys for staff had produced alarming results, especially for Geneva and European‑based United Nations and common system organizations. The results were being contested not only due to the methodology employed, but also because of the manner in which the calculations had been carried out, which must be revisited in order to safeguard the principle of fairness and transparency and to protect the integrity of the system. He asked the Fifth Committee to consider the matter and the grave consequences it could have, such as costly, disruptive litigation that would harm staff morale, and to restore the protective gap closure measure to its original level of 5 per cent. The cost‑of‑living survey methodology must be revised and that could only be done through a tripartite working group comprising the Commission, organizations and staff representatives, instead of through a consultant, as proposed by the Commission, which would be costly and produce one‑sided results.
He went on to call attention to the reform efforts currently underway, which he said must be comprehensive, involve all those concerned and cover the entirety of the common system. Reform needed to start with the Member States and must include a comprehensive review of mandates, duplication of services, excessive bureaucracy and the classification of posts. Addressing reform on a piecemeal basis would not be effective, he warned. He noted that some parts of the Organization had already indicated they would not comply with the 1 January 2018 implementation date of the new mandatory age of separation of 65 for existing staff recruited before 1 January 2014, which was yet another sign of dysfunction. He noted with “extreme regret” that the Food and Agriculture Organization (FAO) and World Food Programme (WFP) had not even decided on an implementation date, and asked the Fifth Committee to bring them in line with the new policy. Turning to the Pension Fund, he said that while much progress had been made in processing pensions for newly retired staff in a timely manner, he saw no need for giving the Fund additional funds and personnel or upgrading positions at the Fund’s secretariat, and urged the Fifth Committee to reject any requests for increased resources. On the whistle‑blower policy, he noted then need to rectify staff’s lack of access to external arbitration and to fully address the grievances of whistle‑blowers.
AMERICA LOURDES PEREIRA SOTOMAYOR (Ecuador), speaking on behalf of the “Group of 77” developing countries and China, regretted that the Commission’s report and its annexes had not been translated into all of the United Nations official languages. The Group therefore looked forward to a fully translated report very soon. Regarding new guidelines for the employment of National Professional Officers, she recalled the principle that all staff serving under similar conditions should receive equal treatment across the United Nations common system and said that during informal consultations the Group would seek further information on the implications of the recommendation that such Officers receive local salaries while on short‑term assignments outside their country of employment. Regarding performance management, the Group noted the Commission’s intention to reaffirm its earlier recommendation to the Assembly with two revisions to the recognition and rewards framework; it would like to learn more about the added value of a bonus system, the criteria for granting merit awards and related funding.
On the Commission’s decision regarding danger pay, the Group would seek further clarification on the three years periodicity. Regarding post adjustment, the Group ‑ taking note of the intention of some Geneva‑based organizations not to implement the Commission’s decision — would be interested in getting more information on the impact of the 2016 cost‑of‑living survey on the preservation of the common system, as well as lessons learned for future surveys.
JAN DE PRETER, European Union, said United Nations staff members could not be insulated from current economic realities, including comparison with the condition of Member States’ own civil services. He emphasized that the post adjustment system — a cornerstone of the common system — was designed to provide all staff members with the same purchasing power at all duty stations. Implementing consistent policies and common standards was essential to maintain a level playing field for staff members doing similar work of equal value at different duty stations. It was also important for staff morale. Uneven implementation of the Commission’s decision would pose a challenge to the future of the common system, he said, adding that European Union member States would follow carefully the discussions in Geneva while expecting to see Commission decisions implemented in full, and within timelines, for new and existing staff members.
He went on to note with concern that gender balance remained a persistent issue, especially at the senior level and in field operations, and that European Union member States would also look closely at guidelines for employment of National Professional Officers, proposals regarding performance incentives, the base/floor salary scale for the remuneration of professional and higher categories, the survey of best prevailing conditions in Vienna, and danger pay for general service staff in the field.
KEISUKE FUKUDA (Japan), expressing serious concern about the operation of the post adjustment system, said it must be managed transparency and consistently. Uneven implementation of the results of the cost‑of‑living surveys was contrary to the spirit of the United Nations common system of compensation. He urged all participating organizations to fully implement the decisions of the General Assembly and the Commission on time and in full. Further, the Commission should monitor implementation and take steps to ensure uniform application. The post adjustment system should be designed to compensate for the actual cost‑of‑living at duty stations, and therefore, the results of a cost‑of‑living survey, even if significantly negative, should be considered an accurate reflection of reality. Imparity among duty stations should be corrected promptly, he underscored.
CHERITH NORMAN‑CHALET (United States) welcomed the Commission’s continuing efforts to modernize the common system, including its recommendations to the General Assembly on the guidelines for the use of the National Professional Officer category outside of Headquarters duty stations and the recommended principles and guidelines for performance appraisal and management for the recognition of different levels of performance. “Exploring ways to reward outstanding performance as well as how to best address underperformance are long overdue,” she said. In that connection, her delegation looked forward to the positive changes based on the proposed performance incentives. The United States also recognized the Commission’s report on diversity, including gender balance and geographical distribution in the United Nations common system.
The United Nations and its 24 organizations of the Common System could not be isolated from Member State budgetary and global marketplace realities, she said, noting with serious concern the resistance by some agencies to implement the Commission’s decision regarding the post adjustment level for staff serving in Geneva. “The very methodology that resulted in upward adjustment for several consecutive years cannot suddenly and capriciously be deemed erroneous when the outcome is a downward adjustment,” she said. She went on to note that over the past few years, United States diplomats in Geneva had seen a 50 per cent reduction in their cost‑of‑living adjustment, which was deemed fair and appropriate. “It is not in the Organization’s best interest to allow a single duty station or a few agencies within that duty station to jeopardize the legitimacy of the Commission and the integrity of long‑standing practices which have served the entire UN common system well for decades,” she emphasized, adding that her delegation fully supported the Commission’s post adjustment decision and encouraged all heads of agencies based in Geneva to implement it fully and promptly.