The Parliament blamed the Council, where EU member countries sit, for the inter-institutional blockage.
Even though the Commission proposal to amend the regulation has been public for 17 months, EU member states have basically ignored it.
Britain has pushed for additional cuts to those proposed by the European Commission, which has the sole right to initiate legislation at EU level.
The British proposal included increasing the retirement age to 68 years and abolishing the European school system, which provides free education for the offspring of EU civil servants in their native languages.
However, no counter-proposal has been made by other member states and the talks collapsed.
The main changes in the Commission proposal included a 5% reduction of staff in all EU institutions, between 2013 and 2017, which will be offset by a longer working day, from 37.5 to 40 hours without salary compensation. Also, the Commission proposed to increase the retirement age from 63 to 65 and cut - by 18% and 45% - the starting and end-of-career salaries for certain jobs.
The Commission also proposed that wages be indexed on the basis of salary fluctuations in the public services of all member states. Currently, salaries fluctuate following a basket of eight countries (Britain, Germany, France, Italy, the Netherlands, Spain, Belgium and Luxembourg). Under the latest salary adjustment, on this basis EU officials would have lost 1.1% in purchasing power.
Anthony Gravili, spokesperson for Commission Vice President Maroš Šefčovič, who is in charge of administration, said that “once again” the Council seemed to “break the law” and had in fact “decided not to decide”.
“We will wait for the exact wording of this rather unusual decision and will analyse the legal consequences. Any decision will not take place before January,” he said.
Gravili said the income of EU civil servants would rise as a result of the stand-off. This is because a special "solidarity levy" will expire, he said when asked by EurActiv to explain why this would be the case.
EU civil servants pay the 5.5% solidarity levy on top of income tax of up to 45%. This tax was introduced during the 1970s oil crisis and was maintained over time. The Commission proposed that the levy be increased to 6%.
“The failure of member states to agree on this proposal, and their subsequent refusal even to accept Vice President Šefčovič's suggestion to extend the tax for 12 months, to buy some extra time to reach agreement on our austerity and reform proposals, is the reason - and the only reason - why the special levy is expiring in this way. The Commission did not want it to expire. It is the member states' fault it is expiring,” Gravili said.
He said that it would be simplistic to say that all EU civil servants will get a pay rise of 5.5% because the tax is only applied to the basic salary and varies depending on employment status.
“What we can say is that obviously it does not mean that everyone will be a full 5.5% better off,” Gravili said.