The yearly salary update: time for the exception clause

Eurostat has published its 2020 report on the yearly salary update. While in the recent past this update was essentially a percentage number, this year the exception clause introduced in the 2014 Staff Regulations, will be triggered for the first time.

The relevant provisions regarding the exception clause are in Annex XI, Chapter 5, ‘moderation and exception clauses’ of the Staff Regulations. The provisions do not make for easy reading for non-lawyers, but essentially the exception clause consists of two ingredients:

  1. A decrease in the European Union’s gross domestic product (GDP)
  2. A positive specific indicator

Specific indicator

We will have a look at the specific indicator first and limit ourselves to the most important points. If you want to dive into the details, Eurostat has a very elaborate explanation on its website. The specific indicator is the evaluation of the real net income of civil servants in the EU Member States. Put differently, the specific indicator describes how much you can buy with the salary you receive (purchasing power). As you can see from the Eurostat report, the specific indicator has a value of + 2.5% this year.

Union GDP

The most recent forecast by DG Economic and Financial Affairs (ECFIN) predicts a decrease in the EU GDP of – 7.4%. Looking at the table in the just-mentioned part of the Staff Regulations, we see that we are indeed in the worst situation.

Union GDP Consequences on the specific indicator Date of payment of the second part
[– 0,1 %; – 1 %] 33 %; 67 % 1 April of year n + 1
[– 1 %; – 3.0 %] 0 %; 100 % 1 April of year n + 1
below – 3 % 0 %

Now, what does this mean in practice? It means that we will not get the normal yearly salary update this year. Instead, the value of the specific indicator will be taken into account once the economy is back to its pre-crisis level, i.e. the GDP is once again at its pre-crisis value. The next normal update will then take the missing parts of the specific indicator into account. However, there is no retrospectivity in this: the money of this year’s salary update is lost. If you earn €40 000 a year, you would not get €1000 for 2020 (this calculation is simplified, because the salary update does not follow the normal calendar year, but you get the idea).

However, once the economy is back to normal, the next normal salary update after the crisis would be 2.5% higher. In one catchy phrase: your current salary suffers, your future salary and pension will not suffer (once we are back to normal).

Finally, the ‘freeze’ we just discussed applies only to the specific indicator in the sense that a value of 0% is assigned to it. Inflation however, as measured by the Joint Belgium-Luxembourg Index, will still be taken into account. Indeed, looking at the Eurostat report, we see that the Joint Belgium-Luxembourg Index has a value of + 0.7%. So the total update is + 0.7% and will appear on your December payslip.

Correction coefficients

Together with the salary update, Eurostat has also published updated correction coefficients. This applies to you if you work outside of Brussels and Luxembourg. We will not replicate the tables in this article, but you can find them in the report on page 19  (Table 5) for Intra-EU places of employment (‘duty stations’) and (starting) on page 27 (Table 9) for Extra-EU duty stations. You can calculate the updated basic salary as follows:

  1. Take your current basic salary in Euro from the published salary grid.
  2. Add + 0.7% to it.
  3. Multiply it with the parity value for your duty station from Table 5 of the report. This gives you your future basic salary in the currency of your duty station.

As always, if you have questions, feel free to contact us.

1 thought on “The yearly salary update: time for the exception clause

  1. The nice thing about this system in the eyes of EU member states is that the national civil servants got their 2.5% while we did not. Yet again, we have got what we deserve. The silver lining though is that it is all automatic and there are no hold ups anymore. At least not until 2023 when the method is up for review.

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