*Update 17.11.2023, many of you got in touch to mention the end of the solidarity levy. Unfortunately, this is extremely unlikely to happen, but we do always appreciate your input, please continue to send us your ideas and sources thanks!*
Original article: The news is out, Eurostat has published its report on the 2023 annual update and the residual salary update amounts to +1.0%, after the intermediate update from June. This is far better than what we had hoped for, so this good news. The main reason for this positive development is a substantial change in the developments in the Member States versus the forecast. If you look at table 2.2 (page 12) of the report, you will see that the forecasted value for the net specific indicator in real terms was 96.2 points (a decrease of –3.8 %) whereas the actual value turned out to be “only” 98.2 points (a decrease of –1.8 %). We should however be clear: this is still an overall loss of purchasing power of almost 2 %, which will hardly help to increase the EU institutions’ attractiveness as an employer. In comparison, Belgium civil servants gained(!) 6.1 % in purchasing power.
The salary update is however only half of the story. At the same time, our pension contribution rate will increase by 1.0%, see the corresponding Eurostat report (page 21 of the report). This will bring our pension contribution rate to a value of 11.1 %. In principle, the pension contribution rate should be even higher, namely at 11.7 %. But Article 2.1 of Annex XII of the staff regulations limits any update to a maximal change of one percentage point.
For most colleagues, these two opposing updates will still result in a (very small) positive adjustment: the pension contribution is paid only from the basic salary, whereas the salary update is applied also to many allowances, most notably the expatriation allowance.
There is however one group of staff that risks having a real negative update, which means that these colleagues have to pay money back! We give a small example calculation to explain why this is the case. Please understand that this calculation is extremely simplified and does not take into account our progressive taxation scheme. Nonetheless, the problem is real!
Let’s say that your basic salary is right now 3000 EUR and that you do not benefit from any allowance. In this case, the calculation looks like the following:
|Gross salary before update (EUR)||3000||Gross salary after salary update of 1%||3030|
|Current pension contribution of 10.1 % (EUR)||-303||Future pension contribution of 11.1 % (EUR)||336.33|
|Current take home pay (EUR)||2697||Future take home pay (EUR)||2693.67|
As you can see, the future take home pay is lower than the current one. The update is retrospective with effect of July 2023, so the affected colleagues have to pay the surplus money back that they received since July.
We have been in contact with the relevant services to see whether this is a hypothetical problem only, but it is not. There are indeed colleagues who will see a negative update: for these colleagues, the Office for the Administration and Payment of Individual Entitlements (PMO) will have to recover the money. The problem here is that, from preliminary simulations, it seems that this will affect mostly colleagues who earn so little that they do not have to pay taxes in our system. And of course, if you are already at the bottom of the pay grid, then every euro counts.
HR is, at this moment in time, unable to say who exactly will be affected by this claw back of funds; they need to wait for PMO to calculate the pay slips for December to have a clear picture. Of course, Generation 2004 has pointed out that that this will affect the most vulnerable categories of staff and has urged the administration to look for solutions. The staff regulations are quite strict when it comes to recuperating overpaid money (Article 85, Staff Regulations), but where there’s a will, there’s a way. If you are affected by this negative result, please rest assured that we will do our utmost to convince the administration that they should be flexible in their approach.
Finally, the Eurostat report also updates the correction coefficients for all duty stations. If you work inside the EU, but outside Brussels and Luxembourg, then table 10.2 on page 32 is for you. If you work outside the EU, then please consult table 12.2 on pages 54-56.
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