Facts do matter !
Before explaining in detail the results of this year’s salary and pension contribution update, it is worthwhile to recall that the present method is the result of several long strikes which took place in the 80ties and 90ties, at which time Union Syndicale was at the forefront to defend an automatic salary adjustment, against the opposition of the Council as well as other trade unions which were insisting to have a yearly negotiated adjustment.
Following several years of salary stagnation, during which EU staff lost over 12% (Member States officials lost less than 4%), one of the very few good results Union Syndicale was able to achieve during the 2014 Staff Regulations reform is the creation of an automatic salary and pension contribution adjustment, leaving no possibilities for the Council to change of block the adjustment.
Annual update of salaries and pensions : +3.3% retroactively as from 1 July 2016
This update if based on statistical data elaborated by Eurostat and composed of two elements :
1.Global specific indicator : changes in purchasing power of salaries on national civil servants in central government in 11 Member States. Apart from Luxembourg, the purchasing power increased in the 10 other Member States, notably in Spain (5.9%), The Netherlands (6.6%) and Poland (7.7%). On average the increase was 1.9%.
2.Joint Belgium – Luxembourg index (changes in the cost of living in Belgium and Luxembourg). The inflation in Belgium was 1.8%, in Luxembourg 0.0%. In the calculation Belgium counts for 80%, Luxembourg for 20%, which gives a weighted average of 1.4%.
Put the two elements together and you have a +3.3% increase, which applies both to salaries as well as to pensions.
New pension contribution rate : 9.8%
The EU pension scheme does not consist of an actual pension fund, but is based on a contribution that has to cover future pension payments. Taking into account a number of actuarial formula, contained in Annex XII of the Staff Regulations, the pension contribution is recalculated annually, retroactively to 1 July of the given year.
The recalculation has resulted in an adjustment of the pension contribution from 10,1% to 9,8%, so a decrease of the pension contribution by -0.3% retroactively from 1 July 2016. [ii]
Following years of stagnation, this year’s figures are favorable to staff and pensioners; they are likely however to feed unease in the ranks of the Member States and trigger moves to review the method in future. A USF trade-union family based on strong membership is the best defense of staff.[i] Please note that the so-called moderation clause does not apply because the global specific indicator does not exceed 2%. Also the exception clause does not apply, given that the forecasts foresee the GDP to grow in the European Union. It should also be stressed that the +3.3% increase constitutes a net salary and pension increase, given that the allowances and well as the EU tax brackets are adjusted accordingly.[ii] Please note that this decrease does not result in a net salary increase of +0.3% ; because allowances, tax and solidarity levy are not affected in the same way. The net salary increase will, depending on the grade, be around +0.15%.