Growing inequalities in the Institutions

Oxfam, the well-known international confederation of charitable organizations has recently published its annual report on social inequalities. What about inequalities in the EU institutions? Since the infamous Kinnock reform of 2004, inequalities have greatly increased in the EU civil service. Before the Kinnock reform, careers of non-management staff were limited to the equivalent of AD12.

For a decade, between 2004 and 2013, this upper limit became AD14. The 2014 staff regulations re-introduced the AD12 cap, but in the meantime, more than 2000 ADs had managed to sneak in to the AD13 grade and another 500 to the AD14 grade, most of them without taking managerial responsibilities. Moreover, the 2014 Staff Regulations did not put an end to what could be perceived as an overly generous scheme:

Several hundred senior experts are still managing to sneak in (see previous newsletter). In addition, the pre-2004 staff who haven’t managed to become AD14 have nonetheless benefitted in January of last year from a pay rise that raised their salary to the level of an AD14 salary, without having to go through any painstaking promotion exercise. They achieved this pay rise via the additional steps that the 2014 staff regulations have granted them, supposedly to maintain their motivation at work (See the “Generation Edith Cresson” article – for those interested, the additional steps are explained in great details in article 30 of annex XIII of the Staff Regulations).

The whole range of measures in favour of pre-2004 staff is illustrated in the graph below. The pre-2004 salary scale for administrators is shown in orange (large squares if you are looking at the graph in black and white) and the post-2004 salary scale (modified to take the 2014 reform into account) is shown in green (or small squares if you are looking at the graph in black and white). The horizontal axis lists the grades in the post-2004 career structure, the grades of the pre-2004 career structure are super-imposed on the same axis but not explicitly mentioned. The vertical axis indicates monthly basic salaries in 2004 values (the figures come from Annex XIII of the Staff Regulations). For instance, the basic salary at entry level has become €3810/month for post-2004 ADs whereas it was €4259/month for pre-2004 ADs (i.e. 12% less for post-2004 ADs; the amounts quoted here were those valid in 2004; since then, salaries of both pre-2004 and post-2004 ADs have been adjusted in equal proportions according to the “method”; the salaries of pre-2004 ADs have benefitted from a further increase, which is not represented here, via the gradual convergence of the so-called correcting coefficients to a value of 1, so the present graph is a conservative estimate of the gains achieved by pre-2004 staff through the 2004 reform).

One can clearly see how the range of salaries has increased since 2004. How does this increased range affect post-2004 staff and pre-2004 staff? As mentioned above, the 2004 reform has substantially reduced the salaries of entry grades, i.e. the salaries of the newcomers recruited after 2004. In contrast, the graph shows that AD13 with no management responsibilities, who would have had their careers capped at a basic salary of about €11000/month before 2004 (here again, figures are those that were in force in 2004 in order to allow for comparison between pre and post-2004 salary scales) can now reach a maximum basic salary of €12046/month (2004 values – this figure takes into account the 2 pay rises described in article 30 of Annex XIII of the Staff Regulations, represented in the graph as 2 additional steps in the careers of AD13 for the sake of simplicity). This is 10% more than the maximum salary for non-management staff before the 2004 staff reform. Even more generous is the possibility for non-management staff that had reached the AD14 grade before 1 January 2014 to achieve a basic salary of €13100/month (2004 values), i.e. 20% more than the maximum salary allowed for non-management staff before the 2004 staff reform. The point here is that those who have benefited from this generous salary increase are staff recruited before the 2004 reform. Indeed, no non-management post-2004 staff were recruited at a high-enough grade to benefit from the increase. Thus, what the graph illustrates is a generous salary policy in favour of pre-2004 ADs combined with a very significant loss in salary inflicted on post-2004 ADs. Social inequalities among ADs have thus greatly increased in 2004.

Inequalities between the best-paid non-management staff and staff at the bottom of the salary ladder have also increased because of the 2014 reform. Before 1 January 2014, the ratio of the highest basic salary for non-management staff (AD14, step 5, i.e. €15944/month in 2017 values) to the lowest basic salary of permanent officials (AST1, step 1, i.e. €2830/month in 2017 values) was 5.6. With the Staff Regulations in force since 1 Jan 2014, the highest salary has been untouched but the lowest salary has become that of the new category SC1, step 1 (€2481/month): as a result, the ratio is now 6.4, almost +15% compared to what it was before the 2014 reform. It now takes less than 2 months for the best paid non-management official to earn as much as what an entry-level official earns in a year. This inequality index looks even worse when applied to Contract Agents: the lowest salary for a Contract Agent is €1970/month, which gives an inequality ratio larger than 8 (it takes only 1.5 month for an AD14 to earn as much as what a CA earns in a whole year). Interestingly, the lowest salary of a Contract Agent is below the minimum wage in Luxembourg [*].

Taking into account that Contract Agents do not have the same job security as AD14 permanent official (CA3b in the Commission actually have no job security at all …), the inequality is even more difficult to justify. Note that here we have not considered the highest possible salary of an EU official, which is the salary of the president of the European Commission; this would be another debate that we will leave to the British tabloids. In any case, the conclusion is clear: the rise in inequalities is not limited to ADs, it is widespread among the entire staff of the institutions.

When releasing its report on inequalities, Oxfam made the following statement: “Our economy must stop excessively rewarding those at the top and start working for all people. Accountable and visionary governments, businesses that work in the interests of workers and producers, a valued environment, women’s rights and a strong system of fair taxation, are central to this more human economy.

You don’t have to agree with this statement. But if you do, you should ask yourself whether HR policies that lead to increasing inequalities within the EU civil service are not a way to format us to accept that inequalities should also increase outside the bubble of the EU institutions. That our former boss, Jose Manuel Barroso, has deemed perfectly acceptable to go and work for one of the banks that wreaked the financial system havoc in 2008 and thus contributed to greatly increased inequalities in the world, could be interpreted as a sign that the successive 2004 and 2014 reforms Staff Regulations may have been less fortuitous than a naïve observer might think. Let us hope that the next reform of the Staff Regulations tackles this inequality trend in a serious manner.

[*] ‘Let me remind you that not so long ago, AST base grade was in Luxembourg was under the national poverty threshold and they are now just above it.’ Luxembourg local staff committee, 2020, Message of the LSC President to Commissioner Hahn / Message du Président du CLP au Commissaire Hahn

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