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30/09/2016

European top court blocks pay rise for EU staff

Public Affairs

European top court blocks pay rise for EU staff

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The European Court of Justice has allowed member states to block a 1.7% increase in salary for employees of the EU institutions because of "exceptional circumstances" caused by the financial and economic crisis.

In a surprising move yesterday (19 November), the Court of Justice of the European Union ruled that member states had the right to block a 1.7% pay and pensions increase for EU institutions’ staff from 2011.

Although that same Court made an opposite ruling in 2010, this time judges took into account “the serious and sudden deterioration in the economic and social situation” in 2011, using an exception clause (Annex XI, article 10) to justify blocking the pay increase for the EU’s civil servants.

The EU executive’s calculation method of EU civil servants’ pay rise is based on a formula which links EU salaries to those of officials in Belgium, France, Germany, Italy, Luxembourg, the Netherlands, Spain and the UK, some of the wealthiest and most stable members of the EU. It also takes into account the cost of living in Brussels.

The calculation method remained unquestioned for years, until the global economic crisis erupted in 2008.

EU capitals welcome the ruling

The UK government hailed the decision. “Europe’s governments have stopped the unjustifiable increases to EU salaries and pensions for 2011. When governments and families across Europe are taking difficult decisions to make savings, it would be wrong and irresponsible for the EU to not show similar restraint,” said Nick Morgan, economic secretary at the UK treasury.

The European Commission, which defended the calculation method for the pay rise, “took note” of the ruling, saying it would implement it after studying it “carefully”, Commission spokesman Antonio Gravili told EurActiv.

“Assuming the 2012 pay adjustment court case is also withdrawn or receives the same judgment, it means that there is a pay freeze for EU officials in 2011, 2012, 2013 and 2014. The last pay increase (+0.1%) was in July 2010, and the next possibility of a pay adjustment will not be until 2015,” Gravili said.

The salaries of the 55,000 EU civil servants vary from €2,600 to €18,400. On top of that, they enjoy expatriation bonuses, family allowances and free schooling for their children.

The EU executive, however, came up with a proposal this year aimed at reforming staff regulations, including longer working hours and an increase of the retirement age.

“If all of these proposals were implemented it would mean roughly a 60% pay cut in real terms over the next 15 years," Gravili said at the time.

Background

As austerity tightens its grip on the continent, the salaries and benefits of the EU institutions’ staff have become a prized target, with British Prime Minister David Cameron pushing for a “real terms” cut to their income.

The European Commission estimates that the proposed cuts under a revised staff regulation would result in a 60% reduction in EU staff purchasing power over the next 15 years.

The proposals would also require EU staff to work longer hours for no more pay and increase the retirement age to 67 from 65. Staff contribution to pensions will also rise from 33 to 45%.

The average retirement age for national public servants is under 63.

Further Reading