28 Officials sent to early retirement this year!

You may have already heard that 28 officials will benefit from article 42c of the SR this year. The 28 beneficiaries will be exempt from doing actual work or showing up at their service, while continuing to receive a comfortable allowance and increasing their pension rights up to the day they are eligible to fully retire:

What does art 42c say?

“At the earliest five years before the official’s pensionable age, an official with at least ten years of service may be placed by decision of the appointing authority on leave in the interests of the service for organisational needs linked to the acquisition of new competences within the institutions… An official thus placed on leave shall receive an allowance … The period of service as an official on leave in the interests of the service shall be taken into account for the purpose of calculating years of pensionable service”

What does an Art 42 allowance consists of?

” for three months, … a monthly allowance equal to his basic salary; for a period varying with his age and length of service in accordance with the table shown in paragraph 3, to a monthly allowance equal to:

  • 85 % of his basic salary from the fourth to the sixth month;
  • 70 % of his basic salary for the next five years;
  • 60 % of his basic salary thereafter.”

This rather generous scheme looks very much as if DG HR is trying to reinstall one of the very few positive outcomes of the 2014 staff reform, which was precisely the scrapping of the early-retirement-without-pension-reduction scheme. Interestingly, the number of beneficiaries of the article 42c scheme “shall not be higher than 5 % of the officials in all institutions who retired the previous year”. This explains why only 28 people are going to benefit from it in 2016. This explains in turn the complete absence of transparency of DG HR in the implementation of this scheme. When only a handful of people can benefit from something, DG HR tends to look out for who is interested in their old boys’ networks rather than advertising the opportunities to everyone in a transparent manner.

As always, with this kind of hidden reward schemes, budget considerations don’t seem to play a role. We have not seen any estimate from DG BUDG of what this generosity will to cost to heading 5 of the EU budget (administrative expenses) and most probably we never will!

But why is DG HR sending people to early retirement?

You all know that the Commission has to cut staff by 5% before the end of 2017. What do the cuts look like so far? Here is what is available on the website of DG BUDG (you have to dig into Staff Working Documents[1] to find the interesting figures, you won’t find anything useful in the annual reports of DG HR…We use 2012 as the baseline since the cuts started in 2013):

In April of each year, DG HR compiles an estimate of the number of Full Time Equivalents employed by the Commission. This is what the table above shows. Clearly, the Commission is respecting its commitment to decrease staff. As of 1 April 2016, it has reduced staff by slightly more than 4% (see line “total” in the table). Interestingly, the only category of staff that is not decreasing is the Contract Agent category (a negative cut in the table means that staff numbers have actually increased).

Overall, the number of statutory staff (Officials, Temporary Agents and Contract Agents, see last row of table) has only slightly decreased (-1% over 4 years). In fact, until 2015, it had not decreased at all. Instead, the Commission had cut other staff, in particular other staff at the headquarters. This “other staff” category is a mix of Seconded National Experts, service providers and agency staff (‘interimaires‘). However, it seems that now DG HR has cut down to the bone and is obliged to target statutory staff. In other words, it seems that the current rates of retirement are not sufficient to free the required number of posts to accommodate the 5% cuts2.

It will be interesting to see how these figures evolve when the next update on the number of FTEs employed by the Commission is carried out in April 2017. In theory, 2017 should be the last year of staff cuts because the cuts started in 2013, even before the 2014 SR came into force. However, with the Brexit kicking in, we can expect more cuts. Indeed, the planned departure of the UK means that the EU population is decreasing by 12%. It would be rather surprising if the MS did not ask for a similar cut in staff numbers (staff was increased when the EU was enlarged in 2004, why should it stay the same when the EU shrinks?). A 12% cut would be much more difficult to implement than the 5% cut already underway, especially if the fact that we are already to the bone as far as HR resources are concerned is confirmed in 2017.

What can DG HR do?

The SR has a number of provisions to make staff redundant (apart from firing people as a disciplinary measure). These are summarized in the table below:

A few remarks can be made on the provisions listed in the table above:

  • We know that many of the current senior managers in charge of HR policies in the Commission are soon going to retire. Why not accelerate the process and replace them with new people who understand the current situation in Europe3 and reflect the diversity of Commission staff (about 80% of the HR managers in the Commission are pre-2004 staff whereas more than 50% of the staff are post-2004…)? The conditions under article 50 (see table above) are rather generous (there are not many places left in Europe where you can retire at the age of 58), so they would leave under reasonably good conditions, this would not be unfair to them.
  • Article 42c: This article can be used again year after year but next time there should be an open call for expression of interest so that the scheme is applied in all transparency rather than granted to whoever is a friend of DG HR.
  • In order to accommodate the Brexit cuts without bringing the recruitment of new people4 to a halt, the Commission will probably need to resort to article 41. Indeed, this scheme can be applied on a wide scale. Here again, things should be done in all transparency and the scheme should be open to those who are still far from retirement age but want to leave the institutions (our information is that there is an increasing number of people who would be happy to return to the normal world – Ms Georgieva will not contradict us, she is leaving …). Extrapolating the current trend, there should be 23,200 FTEs occupying establishment plan posts by the end of 2017. Applying a 12% ratio to this number would mean that about 2,800 people could use article 41 (and to a more limited extent articles 42c and 50). Factoring in the fact that the European Parliament will probably refuse to cut its staff, the Commission will probably have to compensate and to absorb 3000 staff cuts. Assuming that these cuts are spread over 3 years (it would have to be 2018-2020 because it is now apparent that a new reform of the SR would be imposed on us as of 1 January 2021), that would require applying article 41 to about 1000 Fonctionnaires/TA each year for 3 years. Not totally unrealistic since according to the 2015 staff survey, about 1000 people expressed a wish to leave the institutions.

1 For instance, http://ec.europa.eu/budget/library/biblio/documents/2013/DB2013/DB2013-WDII-HR.pdf for the year 2016

2 This is most probably a consequence of the ultra-generous Barcelona incentives offered to pre-2004 staff but not available to post 2004 staff!!: for each year they stay in service after the age of 60, they acquire an additional 5% of pension rights (see article 22.2, 2nd alinea  of Annex XIII of the SR). Thanks to this generous measure, they are ensured to reach 70% of their last salary even if they have entered the service after the age of 40. Compare this to the situation of post-2014 colleagues…

3 And stop rambling about “Jacques Delors’ good old days”.

4 Including current CA who have accepted their precarious situation because they hope to eventually get a fonctionnaire post.

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