Civil service staff are due to receive a 3.7% pay hike, in line with legally-binding agreements linking EU pay with salaries of public sector workers in a sample of eight Western European member states.
However, ambassadors for most EU countries say their governments cannot justify the pay rise at a time when national budgets are being slashed. Yesterday, the Irish government announced cuts of up to 15% for the highest-paid civil servants.
In Lithuania, public sector workers went on hunger strike earlier this year in protest over plans to reduce their salaries, while the Hungarian government axed a '13th month' payment and instituted a pay freeze.
Staff at the European Council of Ministers are expected to down tools on Monday in protest, while civil servants at the European Commission and European Parliament have been meeting throughout the week to consider industrial action.
Extensive negotiations by diplomats in Brussels ran late into Wednesday night (9 December) in a bid to find a solution which is legally sound but satisfies governments' desire to ensure that EU workers are not seen as escaping the impact of the crisis.
There is widespread acceptance that the pay rise is legally binding but other options are currently under consideration – much to the chagrin of unions.
Diplomatic sources indicated it may be possible to proceed with the 3.7% pay rise, but to initiate a parallel move which would effectively negate the increase. This could include increasing the so-called 'crisis levy', which allows European civil servants to be taxed in exceptional circumstances.
Union hits out at 'political interference'
Pierre-Philippe Bacri, president of the European Civil Servant Federation (FFPE), said there is no way to reverse the pay rise as it is based on a legally-binding agreement.
"They have to follow the formula. This is a matter of law not political discretion," he said.
Bacri said any new tax or levy would mean reopening the regulation on EU staff pay, which would have to go through the European Parliament. He added that EU civil servants have already been hit with a 0.5% pension levy and a 0.2% increase in the crisis levy, meaning the planned pay increase will still be lower than inflation.
Diplomats said some EU civil servants are concerned that the dispute could open a can of worms if the spotlight is turned on their generous pay and benefits, including the permanent repatriation allowance paid to civil servants – even if they have been in Brussels for 30 years.
The proposed increase is calculated based on civil servant salaries in eight Western European member states over the twelve-month period from July 2008 to July 2009. Public sector pay cuts introduced in recent months or planned for 2010 are not yet factored into the formula for calculating changes to pay rates. These cuts will hit EU staff pay next year.
If the pay rise is effectively cancelled out by an increase in the crisis levy, it could affect the salaries of the new European Commission which takes office early next year. It could also mean the new EU executive begins its mandate amid major industrial unrest.