The objective of the present report is to fulfil the obligation of the Commission under Article 65(1) of the Staff Regulations and the Conditions of Employment of Other Servants of the European Union (SR) to provide data pertaining to the budgetary impact of remuneration and pensions of Union officials in the light of the 2017 update of the remuneration and pensions of the officials and other servants of the EU and the correction coefficients applied thereto.

The 2017 update of the remuneration and pensions of the officials and other servants of the EU shall take place before the end of the year. It is based on statistical data prepared by the Statistical Office of the EU in agreement with the national statistical offices of the Member States that reflects the situation as at 1 July 2017 of the Member States.

Pursuant to Article 65(4) of the SR no update of the remuneration and pensions of the EU staff serving in Belgium and Luxembourg shall be made in the years 2013 and 2014 . This came on top of the limited adjustment of salaries and pensions for 2011 and 2012 of 0 % and 0.8 % respectively that resulted from the global approach to settle the disputes regarding the 2011 and 2012 adjustments of remuneration and pensions.

The report noted that:

the EU staff lost around 9.9 % of their purchasing power , due to the combined effect of the reforms of the Staff Regulations in 2004 and in 2013 and cuts in salary adjustments. Over the same period civil servants in central governments of the Member States lost 1.4 %; the combined effect of the non-application of the method for salary adjustment in 2011 and 2012 and the freeze of remuneration and pensions in 2013 and 2014 resulted in around EUR 3 billion savings over the 2014-2020 Multiannual Financial Framework (MFF) and around EUR 500 million per year in the long-term; the last review of the Staff Regulations generated around EUR 4.3 billion administrative savings over the MFF; specific measures with no direct budgetary effect, such as increased working hours and reduced annual leave with no salary compensation are worth around EUR 1.5 billion for the institutions.

The Commission presented its report 2009-2015 on the financial situation of the unemployment benefit scheme for former members of the temporary or contract staff and accredited parliamentary assistants who are unemployed after the termination of their service in a European Union institution.

The regulations governing the Conditions of Employment of Other Servants (CEOS) state that the Community Unemployment Benefit is intended for the former members of the contract staff (CAs), parliamentary assistant (APAs) or temporary (TAs) who are involuntarily unemployed against their will. It is complementary to any national unemployment benefit. These allowances are paid from the Special Unemployment Fund , which is financed partly by contributions from the staff who would be eligible to benefit from the allowance and partly by contributions from the employer.

Persistent deficit: the report shows that, since 2008, the Unemployment Fund has a persistent annual deficit. This was particularly large in 2009 with EUR 4.3 million. It then gradually decreased to EUR 1 million in 2013.

In 2014, the Unemployment Fund deteriorated sharply , reaching a deficit of more than EUR 4.8 million. The deficit declined in 2015 (EUR 3 million).

The cumulative reserve of the Unemployment Fund increased from EUR 16.1 million at the beginning of 2009 to EUR 2 million at the end of 2015 .

Among the reasons for this situation, the report mentions in particular the increase in the number of members (+ 42%), the increase in the number of TA beneficiaries compared to the number of active TAs, the introduction of the APA category or the increase in the average monthly allowance (from EUR 1,980 in 2009 to EUR 2,063 in 2010).

Reform of 2014: the reform of the Staff Regulations of Officials and Conditions of Employment of Other Agents (CEOS) regime of the European Union set the maximum duration of the CA contracts at 6 years (instead of 3). This change led to a reduction in the number of beneficiaries of the Unemployment Fund as early as 2014.

This positive impact did not, however, offset the significant increase in the number of beneficiaries from the European Parliament (more than 600 APAs) following the start of the new legislative term in 2014.

Short- and medium-term trends: while the high level of spending in 2015 contributed to the depletion of the reserve, 2016 is expected to be in surplus due to a sharp decline in the beneficiaries of the reserve. The APA category (also in 2017 and 2018) and the effect of the 6-year extension of the maximum duration of CA contracts.

However, the medium-term situation remains a concern , due to the following risk factors:

a substantial increase (of more than 30%) in the average monthly allowance paid in 2015 compared to 2013; the increase (starting in 2017) in the number of CA recipients arriving at the end of the new maximum term of 6-year contracts; continued increase in TA beneficiaries from agencies; a new spending spending to be anticipated in 2019-2020 linked to the end of the European Parliament 2014-2019 term.

In view of these developments, the Commission envisages:

initially, a limited increase (about 0.1% of basic salary) of contributions to the financing of the unemployment insurance scheme by means of a delegated act; secondly, the setting up of a working group to ensure regular monitoring of the financial situation of the scheme.

The objective of this report is to fulfil the Commission’s obligation under Article 65(1) of the Staff Regulations and the Conditions of Employment of Other Servants of the European Union. It provides data pertaining to the budgetary impact of remuneration and pensions of Union officials in the light of the 2015 update of the remuneration and pensions of the officials and other servants of the EU and the correction coefficients applied thereto.

The 2015 update of the remuneration and pensions of the officials and other servants of the EU is implemented in accordance with Annex XI to the Staff Regulations and shall take place before the end of the year . It is based on statistical data prepared by the Statistical Office of the EU in agreement with the national statistical offices of the Member States that reflects the situation as at 1 July 2015 of the Member States.

To recall, Regulation (EU, Euratom) No 1023/2013 of the European Parliament and of the Council of 22 October 2013 amended the mechanism for pay update, known as 'the method', by allowing for an automatic update of all salaries, pensions and allowances . To that effect, the relevant amounts and weightings contained in the Staff Regulations should be understood as reference amounts and weightings which are subject to a regular and automatic update. Those updated amounts and weightings should be published by the Commission within two weeks after the update in the C series of the Official Journal (OJ) of the EU for information purposes.

It is recalled that no update of the remuneration and pensions of the EU staff serving in Belgium and Luxembourg shall be made in the years 2013 and 2014. Consequently, during a period of four years (July 2010 – July 2014) the adjustment of remuneration and pensions of officials and other servants of the EU was as follows:

in 2010, the application of the method laid down in Article 3 of Annex XI to the Staff Regulations resulted in an adjustment of 0.1 %; for 2011 and 2012 the result of the global approach to settle the disputes regarding the 2011 and 2012 adjustments of remuneration and pensions led to an adjustment of 0 % and 0.8 %, respectively; furthermore, as part of the political compromise on the reform of the Staff Regulations, it was decided to freeze remuneration and pensions for the years 2013 and 2014.

The combined effect of the non-application of the method for salary adjustment in 2011 and 2012 and the freeze of remuneration and pensions in 2013 and 2014 resulted in around EUR 3 billion savings over the 2014-2020 Multiannual Financial Framework (MFF) and around EUR 500 million per year in the long-term.

Overall the last review of the Staff Regulations generated around EUR 4.3 billion administrative savings over the MFF. In addition, specific measures with no direct budgetary effect, such as increased working hours and reduced annual leave with no salary compensation are worth around EUR 1.5 billion for the institutions.

It is in this context that the Commission presents its report on data pertaining to the budgetary impact of the 2015 annual update of remuneration and pensions of the officials and other servants of the European Union and the correction coefficients applied thereto.

PURPOSE : amend the Staff Regulations and the employment conditions of other servants of the European Union.

LEGISLATIVE ACT : Regulation (EU, Euratom) No 1023/2013 of the European Parliament and of the Council amending the Staff Regulations of Officials of the European Union and the Conditions of Employment of Other Servants of the European Union

CONTENT : Parliament and Council amended the EU’s Staff Regulations. The revision of the statute ensures considerable saving in the context of the multiannual financial framework for 2014-2020.

The revision contains the following key elements:

Salaries frozen: salaries and pensions of EU officials are to be frozen in 2013 and 2014. A new clause provides that salaries will not be increased if gross domestic product in the EU shrinks by more than 3%.

Calculation of salaries : in order to respond to budgetary constraints and the severe measures taken by Member States as a result of the unprecedented financial crisis and the particularly difficult social and economic context in the Member States and the Union as a whole, it is necessary to provide for suspension of the method for two years for all remuneration, pensions and allowances of officials. From 2015 onwards salaries and pensions will be adjusted according to a new method aimed at ensuring that the purchasing power of EU officials develops in parallel with that of national civil servants in central governments of eleven Member States (Belgium, Germany, Spain, France, Italy, Luxembourg, Netherlands, Austria, Poland, Sweden and United Kingdom.)

The principle of a multi-annual mechanism for pay update, known as 'the method', will apply until the end of 2023 with a review at the beginning of 2022, and include a mechanism for the provisional prolongation of the method.

Solidarity levy : a new solidarity levy of 6% will be imposed as from 1 January 2014; for top ranking officials the levy will be 7%.

Reduction in staff numbers by 5%: in addition to the reform of the staff regulations, the number of staff in all EU institutions will be reduced by 5% over the 2013-2017 period.

Raising the retirement age : in view of demographic changes and the changing age structure of the population, it is necessary for the pension age be increased, subject however to transitional measures for officials and other servants of the European Union already in service. The normal retirement age will be increased from 63 to 65 , and for new staff it will be 66. EU officials may continue to work until the age of 67 in the interest of the service, and until 70 on an exceptional basis.

Grade and responsibility : the link between grade and responsibility is strengthened, in particular by establishing a new career structure limiting access to the four top grades to officials working in management or other equivalent posts entailing a higher level of responsibility. From now on, administrators can only progress as far as grade AD 12 unless they are appointed to a specific post above that grade, and grades AD 13 and 14 should be reserved for those staff whose roles entail significant responsibilities.

The minimum of two years in the grade before promotion of an official to the next higher grade is maintained in order to allow for faster promotions for high performers. Each institution should ensure that its internal human resources policies use the possibilities provided in the Staff Regulations to allow for appropriate careers for high-potential and high-performing officials.

New function group 'AST/SC' : with a view to adjusting career structures in the current domains of AST staff even further to different levels of responsibility and as an indispensable contribution to limiting administrative expenses, a new function group 'AST/SC' for secretarial and clerical staff is introduced.

Working hours and working-time arrangements : working hours applied in the institutions should be aligned with those in force in certain of the Member States of the European Union to compensate for the reduction of staff in the institutions. The minimum working time per week will be extended from 37.5 hours to 40 hours, without compensatory wage adjustments.

Conditions of work : working conditions for staff employed in third countries are modernised to render them more cost-effective whilst generating cost savings.

Probationary period : officials should serve a nine-month probationary period . When deciding on the establishment of an official, the appointing authority should take into account the report on the probationary period made at the end of that period and the probationer's conduct with respect to his obligations under the Staff Regulations.

Recruitment on a geographical basis: recruitment and appointments should ensure that staff are employed on the broadest possible geographical basis from among the nationals of all Member States without, however, posts being reserved for nationals of any specific Member State. To that end and in order to address possible significant imbalances between nationalities among officials, which are not justified by objective criteria, each institution should be given the possibility to adopt justified and appropriate measures. Such measures should never result in recruitment criteria other than those based on merit . The Commission should report to the European Parliament and to the Council on the implementation of the appropriate measures by the institutions.

Highest standards of ethics : the European civil service is expected to live up to the highest standards of professional ethics and to remain independent at all times. To that end, Title II of the Staff Regulations, which provides a framework for rights and obligations, is further clarified. Any failure by officials or former officials to comply with these obligations will render them liable to disciplinary action.

Contract staff: the Regulation ensures a more flexible framework for the employment of contract staff. The latter will be engaged for a maximum period of six years in order to perform tasks under the supervision of officials or temporary staff. In addition, while the vast majority of officials will continue to be recruited on the basis of open competitions, the institutions are authorised to organise internal competitions which may exceptionally and subject to specific conditions be open to contract staff.

Staff of agencies: in common with other staff to whom the Staff Regulations apply, the staff of agencies are covered by the EU pension scheme. Agencies which are fully self-financed currently pay the employers’ contribution to the scheme. In order to ensure budgetary transparency and more balanced burden-sharing, agencies which are partly financed from the general budget of the European Union will pay that part of the employers’ contributions which corresponds to the proportion between the agency's revenues without the subsidy from the general budget of the EU and its total revenues. As this new provision may require the adjustment of the relevant rules on the fees collected by the agencies, it will apply only with effect from 1 January 2016. Where appropriate, the Commission should submit proposals for the adaptation of those rules.

Financing the European Schools : the institutions should strive to support multilingual and multicultural education for the children of their staff. It is provided that a contribution by the Union to the financing of the European Schools, determined by the budgetary authority in accordance with the relevant rules, will be charged to the budget of the Union. The Commission should be able to ask the competent authorities to reconsider the location of a new European School.

Other provisions : the Regulation makes amendments to the following:

the rules on travelling time and annual payment of travel expenses between the place of employment and the place of origin; the rules on the reimbursement of removal costs; rules on reimbursement of expenses regarding missions to the other principal places of work of an institution’ the conditions for granting the accommodation allowance to take better account of local conditions; rules on maternity leave and parental leave etc; methods of evaluating staff; the rules on advancement to a higher step or promotion in grade; rules on retirement, invalidity allowance and retirement pension, working arrangements for staff enabling them to work part-time to care for children up to the age of 14.

ENTRY INTO FORCE : 02.11.2013. The main provisions of the Regulation are applicable from 1 January 2014.

The European Parliament adopted by 522 votes to 150, with 39 abstentions, a legislative resolution on the proposal for a regulation of the European Parliament and of the Council amending the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union.

Parliament adopted its position at first reading following the ordinary legislative procedure. The amendments adopted in plenary are the result of a compromise negotiated between the European Parliament and the Council. They amend the Commission proposal as follows:

Maintaining highly qualified staff : it is recalled that the EU should continue to be equipped with a high-quality European public administration, so as to enable it to achieve its objectives, implement its policies and activities and perform its tasks to the highest possible standard in accordance with the Treaties to meet the challenges, both internal and external, that it will face in the future and to serve the citizens of the Union.

It is necessary to ensure a framework for attracting, recruiting and maintaining highly qualified and multilingual staff, drawn on the widest possible geographical basis from among citizens of the Member States , and with due regard to gender balance.

The measures to select staff must be justified and shall never result in recruitment criteria other than those based on merit .

Automatic update mechanism for staff pay (the method) : in the interest of guaranteeing that the purchasing power of officials and other servants of the European Union develops in parallel with that of national civil servants in central governments of the Member States, it is essential to preserve the principle of a multi-annual mechanism for pay update , known as ‘the method’, by ensuring its application until the end of 2023 with a review at the beginning of 2022, while including a mechanism for the provisional prolongation of the method.

Moreover, in order to remedy the difficulties with the application of the method in the past, provision should be made for a method to allow for an annual update of all salaries, pensions and allowances in an automatic manner, including an automatic crisis clause . To this effect, the relevant amounts contained in the Staff Regulations and the Conditions of Employment of Other Servants of the European Union should be understood as reference amounts which will be subject to a regular and automatic update. Those updated amounts should be published by the Commission in the C series of the Official Journal of the European Union for information purposes.

The new ‘method’ of automatic update of remuneration shall be calculated on the basis of actual sample salaries of 11 Member States: Belgium, Germany, Spain, France, Italy, Luxembourg, Netherlands, Austria, Poland, Sweden and United Kingdom and on the use of a joint index made up of the Belgian and Luxembourg systems of price inflation.

Solidarity levy on staff remunerations : the potential advantages for officials and other servants of the European Union of the application of the method should be balanced by the reintroduction of the system of a ‘levy’ . As in the case of the method, the application of the solidarity levy may be provisionally prolonged. Such a solidarity levy should thus apply to all officials and other servants of the Union as from 1 January 2014 .

Temporary suspension of the method : in order to respond to the future budgetary constraints as well as to show solidarity of the European civil service with the severe measures taken by Member States as a result of the unprecedented financial crisis and the particularly difficult social and economic context in the Member States and the Union as a whole, it is necessary to provide for the suspension of the method for two years (2013-2014) for all remuneration, pensions and allowances of officials and to apply the solidarity levy despite such suspension .

Retirement age raised : the retirement age is raised from 63 to 66 for the new staff and to 65 for those already recruited. The pension age should also be made more flexible by making it easier for staff to continue to work voluntarily until the age of 67 and by making it possible, in exceptional circumstances and under specific conditions, to work until the age of 70 .

Career development : it is appropriate that promotion to a higher grade should be made conditional on personal dedication, improving skills and competences, and performing duties whose importance justifies the official's appointment to that higher grade. The minimum of two years in the grade before promotion of an official to the next higher grade is maintained in order to allow for faster promotions for high performers. Each institution should ensure that its internal human resources policies use the possibilities provided in the Staff Regulations to allow for appropriate careers of high potential and high performing officials.

Improve the transparency of staff costs : provisions have been introduced to simplify and make more transparent all staff costs of all categories of staff across the institutions and agencies.

The rules on annual travelling time and annual payment of travel expense between the place of employment and the place of origin should be modernised, rationalised and linked with expatriate status in order to make their application simpler and more transparent. In particular, the annual travelling time should be replaced by home leave and limited to a maximum of two and a half days .

Strengthen independent professional ethics : Title II of the Staff Regulations, which provides a framework for rights and obligations, should be further clarified. Any failure by officials or former officials to comply with these obligations should make them liable to disciplinary action.

Probationary period : officials should serve a nine-month probationary period. A report should be made at the end of the probationary period.

AST/SC Staff : With a view to adjusting career structures in the current domains of AST staff even further to different levels of responsibility and as an indispensable contribution to limiting administrative expenses, a new function group ‘AST/SC’ for secretarial and clerical staff should be introduced . Salaries and promotion rates should establish a suitable correspondence between the level of responsibility and the level of remuneration.

The Commission should assess and report on the scale and effects of introducing this new function group, taking particular account of the situation of women, so that the preservation of a stable and comprehensive European civil service can be ensured.

AD Staff : the career stream in the AD and AST function groups should be restructured in such a way that the top grades will be reserved for a limited number of officials exercising the highest level of responsibilities . Therefore administrators can only progress as far as grade AD 12 unless they are appointed to a specific post above that grade, and grades AD 13 and 14 should be reserved for those staff whose roles entail significant responsibilities. Similarly, officials in grade AST 9 can be promoted to grade AST 10 only in accordance with the procedure laid down in the Staff Regulations.

Staff employed in third countries : it is appropriate to modernise working conditions for staff employed in third countries and to render them more cost-effective while generating cost savings, annual leave entitlements should be adjusted, and a possibility to include a wider range of parameters to fix the allowance for living conditions should be provided without effecting the overall aim of generating cost savings. The conditions of granting the accommodation allowance should be revised to take better account of local conditions and to diminish administrative burden .

Disabled staff : measures have been introduced to take account the principle of equal treatment which shall not prevent the appointing authorities of the institutions from maintaining or adopting measures providing for specific advantages in order to make it easier for persons with disabilities to pursue a vocational activity or in order to prevent or compensate for disadvantages in their professional careers.

Conflicts of interest : new measures are introduced in order to stress that an official shall not without the permission of the appointing authority accept from any government or from any other source outside the institution to which he belongs any honour, decoration, favour, gift or payment of any kind whatever, except for services rendered either before his appointment or during special leave for military or their national service and in respect of such service. Before recruiting an official, the appointing authority shall examine whether the candidate has any personal interest such as to impair his independence or any other conflict of interest. To that end, the candidate shall inform the appointing authority using a specific form of any actual or potential conflict of interest .

Leaving the service : the official shall, after leaving the service, continue to be bound by the duty to behave with integrity and discretion as regards the acceptance of certain appointments or benefits.

Officials intending to engage in an occupational activity, whether gainful or not, within two years of leaving the service shall inform their institution thereof using a specific form. If that activity is related to the work carried out by the official during the last three years of service and could lead to a conflict with the legitimate interests of the institution, the appointing authority may, having regard to the interests of the service, either forbid him from undertaking it or give its approval subject to any conditions it thinks fit.

In the case of former senior officials as defined in implementing measures, the appointing authority shall, in principle, p rohibit them, during the twelve months after leaving the service, from engaging in lobbying or advocacy vis-à-vis staff of their former institution for their business, clients or employers on matters for which they were responsible during the last three years in the service.

Leave in the interests of the service : maximum five years before the official's pensionable age, an official with at least ten years of service may be placed by decision of the appointing authority on leave in the interests of the service for organisational needs linked to the acquisition of new competences within the institutions. The total number of officials placed on leave in the interests of the service each year shall not be higher than 5% of the officials in all institutions who retired the previous year. Such leave shall not constitute a disciplinary measure. However, in exceptional situation, the appointing authority may decide to put an end to the leave and reinstate the official. A series of rules are provided to lay down the framework for this new type of leave.

European schools : in order to facilitate recruitment on the broadest geographical basis, the institutions should strive to support multilingual and multicultural education for the children of their staff. It is desirable that a contribution of the Union to the financing of the European schools. The Commission should be able to ask the responsible authorities to reconsider the location of a new European school.

Report : the Commission shall, by 31 December 2020, submit a report to the European Parliament and to the Council assessing the functioning of these Conditions of Employment of Other Servants. Further technical report should evaluate the impact of the amendments made in the annexes to the statutes.

Other technical provisions: other provisions have been revised such as:

adapt working conditions so as to reconcile working life with family life;

the system of financing the pensions of officials of agencies of the Union which do not depend entirely on the EU budget, so that in 2016 they provide part of the financing of pensions without involving the EU budget; opening some internal competitions to contract staff; the procedure for granting leave for personal reasons, parental leave or other special leave; procedures for evaluating staff; procedures for promotion of employees; improvement of working conditions of officials to enable them to go part-time in order to care for a child until the age of 14;

It should be noted that all of the annexes have also been amended in the light of the above-mentioned modifications.

PURPOSE: to amend the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union.

PROPOSED ACT: Regulation of the European Parliament and of the Council.

BACKGROUND: the Staff Regulations constitute the legal framework for employment and working conditions for the approximately 55 000 officials and other agents employed by more than fifty institutions and agencies located in different places of employment in the European Union and in third countries.

Recent events in the global economy as well as the subsequent need to consolidate public finances cannot fail to have an impact on the European civil service and the administrations of all EU institutions, bodies and agencies.

In this context, it is important to take account of a certain number of elements weighing on the administrative budget, in particular:

the upcoming retirements in EU institutions, which will mainly affect staff from the 15 Member States of the Union before 2004, it will be a particular challenge to maintain the geographical balance of all Member States among staff; the demographic changes in Europe, attracting and retaining excellent staff from all Member States will be even more difficult in the future.

The main amendments concern in particular the method of calculation of pensions, given that the current system weighs heavily on the administrative budget.

The Commission proposal strikes the balance between cost-efficiency and the needs of the institutions in the field of human resource management. The European Commission considers that, if this proposal is adopted, the EU institutions will continue to be assisted by an independent, efficient and modern European civil service that will allow them to fulfil the tasks which they have been entrusted with by the treaties.

IMPACT ASSESSMENT: no impact assessment was carried out.

LEGAL BASIS: Article 336 of the Treaty on the Functioning of the European Union (TFEU) and Article 12 of the Protocol on the Privileges and Immunities of the European Union.

CONTENT: the main elements of the proposal are as follows :

- reducing staff by 5% : it is proposed to reduce the staff of each institution and agency by 5%, and this would be done by not replacing a certain number of departures, i.e. those who retire and those whose contracts come to an end;

- method for adjusting salaries and pensions : the new method would preserve the principle of parallelism between the evolution of salaries of national officials and that of the EU officials, and would address the shortcomings of the current method:

the new method would reflect nominal salary changes (instead of real salary changes) in all Member States. In this way the method will precisely follow salary changes in all Member States of the European Union and not only in a limited sample; in order to reduce the time lag in an extraordinary situation, the new exception clause would be automatically applied in case two conditions are met: 1) a decrease in the EU's GDP, and 2) the gap between the adjustment value of the remuneration and pensions of EU staff and the change in the EU's GDP exceeds two percentage points. If both conditions are fulfilled, half of the adjustment value would be postponed to the next year. For instance, this clause would have been triggered in 2009; the Brussels International Index would be suppressed. The differences in the increase in the cost of living between each place of employment and that of the Member States would be calculated and reflected in correction coefficients. A new joint correction coefficient would be introduced for Belgium and Luxemburg, considering these Member States as a single place of employment. It will be fixed at 100 for the first year.

- solidarity levy : since 1982, the method has been linked to an additional tax on salaries, due to the effects of the oil crisis. Despite the improvement in the economic situation, this additional tax has not been phased out, but has become a measure linked to the automatic application of the method. It is suggested that, for the duration of the proposed method, the solidarity levy be increased at the rate of 6%;

- modifications to the pension system in order to keep pace with demographic developments :

increasing the normal retirement age to 65 years : currently, the normal retirement age is 63 years for officials recruited after 1 May 2004. Officials recruited before 1 May 2004 are subject to transitional provisions according to which the retirement age varies from 60 years to 63 years. It is proposed to increase the normal retirement age for officials recruited as of 1 January 2013 at 65 years . Similar transitional rules as those applied in 2004 would be implemented, i.e. the retirement age of officials recruited before 1 May 2013 would vary from 60 to 65 years. Furthermore, it will no longer be only on an exceptional basis that the possibility to continue working until 67 years would be granted; raising the age for early retirement to 58 years and reducing the number of officials benefiting from early retirement : currently, the minimum early retirement age is set at 55 years. Under the new proposal, the minimum early retirement age would be set at 58 years. In addition, the maximum number of officials retiring in a given year without a reduction of their pension rights would be fixed at 5% of the officials in all institutions who retired during the previous year (as opposed to 10% in the current system). This scheme is maintained since it has proven useful for all institutions as a HR management tool in the course of the last enlargement exercise; aligning the methodology for calculating the pension contribution rate to international actuarial practice : the computation system for the pension contribution rate expires on 30 June 2013. It is proposed to keep the same methodology, but to increase the moving average for interest rates and salary growth to 30 years. A transitional period of eight years would apply.

- adapting the conditions of employment : it is proposed to:

introducing a minimum number of weekly working hours : the 5% staff cut would require that every staff member take a share of the additional work burden, if the same policy objectives are to be achieved. It is therefore proposed to introduce in the Staff Regulations a minimum number of working hours per week, i.e. 40 . maintaining flexitime working-time arrangements : flexible working-time arrangements allow reconciling work and private life and facilitate suitable gender balance within the Institutions while respecting the mandatory working time obligations. It is therefore appropriate to introduce a clear reference to these arrangements in the Staff Regulations.

- allowances and entitlements : staff members are currently entitled to a maximum of six days per year of travelling time to their place of origin. It is proposed to limit the annual travelling time to a maximum of three days. The annual travel allowance is based on kilometric distance by railway, which is often not the most habitual route to travel to the place of origin. Therefore, the distance would be calculated as a great circle distance, which would have an effect of decreasing individual allowances. Furthermore, the payment of annual travel expenses would be limited to territories of the Member States of the EU.

In order to reduce the administrative burden both for the staff members concerned and the administration, the rules on the reimbursement of removal costs should be simplified. It is therefore proposed to introduce cost ceilings which take account of the official's or agent's family situation and of the average cost of removal and associated insurance.

The rules on mission should be adapted in order to take account of the specific need of an institution whose staff members must frequently go on mission to the principal places of work of their institution. It is proposed to allow in such cases the reimbursement of accommodation costs on the basis of a flat-rate sum;

- transparency measures for Institutions and agencies : the Staff Regulations are implemented through a series of measures adopted by the Institutions and agencies. In order to ensure coherent and harmonised

implementation of the Staff Regulations and for reasons of simplification, the Commission implementing rules would apply by analogy to agencies. However, in order to take account of the specific situation of agencies, they will be able, after receiving an authorisation from the Commission.

- career of assistants, new career stream for secretaries and more flexibility in recruiting contract staff :

reserving the highest grades for staff with the high level of responsibilities : in order to establish a clear link between responsibilities and grade, the career stream in the assistants' function group would be restructured in such a way to reserve the two highest grades (AST 10 and 11) only for officials and temporary agents who exercise significant responsibilities for staff management, budget implementation and/or coordination. new function group "AST/SC" for secretaries and clerical staff : a new function group "AST/SC" for secretarial and clerical staff should be introduced. Salaries and promotion rates proposed for this new function group establish a suitable correspondence between the level of responsibility and the level of remuneration. In this way it will be possible to preserve a stable, comprehensive and well-balanced European civil service, as considered necessary by many institutions. recruitment of contract staff : in order to give more flexibility to the institutions, the maximum length of contracts for auxiliary contract staff would be extended from 3 to 6 years. In addition, while the vast majority of officials will continue to be recruited on the basis of open competitions, the institutions would be authorised to organise internal competitions which are also open to contract staff. addressing unjustified geographical imbalances : the Staff Regulations stipulate that European Union officials are to be recruited on the broadest possible geographical basis. However, the statistical data show that, while some nationalities are overrepresented in comparison with the relative weight of their population in the European Union, others are largely under-represented. These imbalances are particularly noticeable in certain grades. Therefore, Article 27 of the Staff Regulations should be amended in order to allow the institutions to take measures correcting long lasting and significant geographical imbalances, while preserving the principle of recruitment based upon the highest standard of ability, efficiency and integrity. This measure shall be adopted by way of general implementing measures and shall be subject to a report after five years.

- increasing efficiency in staff management for the agencies : t oday there are 45 structures (32 regulatory agencies, 7 joint undertakings and 6 executive agencies). In total, they employ almost 8 000 members of staff, mostly engaged as temporary agents. However, the provisions of the Staff Regulations and the Conditions of Employment of Other Servants are not fully adapted to the needs of small structures such as agencies. For this reason the Commission suggests introducing a new category of temporary staff for agencies . They would be recruited following a transparent and objective selection procedure and could be engaged for an indefinite period of time. If necessary, agencies would be able to second them in the interests of the service. Also, temporary staff in agencies could take unpaid leave up to a maximum of 15 years throughout their entire career.

BUDGETARY IMPLICATIONS: the proposal would have a budgetary impact on the expenditure and revenue of the European Union. Due to transitional provisions, the financial impact of certain provisions would gradually increase and would reach its full effect only in the long term. The savings over the next multiannual financial framework are estimated to exceed EUR 1 billion . In the long run, the savings from the proposed amendments would be 1 billion Euros per year. More details are provided in the financial statement, which is annexed to this proposal.

PURPOSE: to amend the Staff Regulations of Officials and the Conditions of Employment of Other Servants of the European Union.

PROPOSED ACT: Regulation of the European Parliament and of the Council.

BACKGROUND: the Staff Regulations constitute the legal framework for employment and working conditions for the approximately 55 000 officials and other agents employed by more than fifty institutions and agencies located in different places of employment in the European Union and in third countries.

Recent events in the global economy as well as the subsequent need to consolidate public finances cannot fail to have an impact on the European civil service and the administrations of all EU institutions, bodies and agencies.

In this context, it is important to take account of a certain number of elements weighing on the administrative budget, in particular:

the upcoming retirements in EU institutions, which will mainly affect staff from the 15 Member States of the Union before 2004, it will be a particular challenge to maintain the geographical balance of all Member States among staff; the demographic changes in Europe, attracting and retaining excellent staff from all Member States will be even more difficult in the future.

The main amendments concern in particular the method of calculation of pensions, given that the current system weighs heavily on the administrative budget.

The Commission proposal strikes the balance between cost-efficiency and the needs of the institutions in the field of human resource management. The European Commission considers that, if this proposal is adopted, the EU institutions will continue to be assisted by an independent, efficient and modern European civil service that will allow them to fulfil the tasks which they have been entrusted with by the treaties.

IMPACT ASSESSMENT: no impact assessment was carried out.

LEGAL BASIS: Article 336 of the Treaty on the Functioning of the European Union (TFEU) and Article 12 of the Protocol on the Privileges and Immunities of the European Union.

CONTENT: the main elements of the proposal are as follows :

- reducing staff by 5% : it is proposed to reduce the staff of each institution and agency by 5%, and this would be done by not replacing a certain number of departures, i.e. those who retire and those whose contracts come to an end;

- method for adjusting salaries and pensions : the new method would preserve the principle of parallelism between the evolution of salaries of national officials and that of the EU officials, and would address the shortcomings of the current method:

the new method would reflect nominal salary changes (instead of real salary changes) in all Member States. In this way the method will precisely follow salary changes in all Member States of the European Union and not only in a limited sample; in order to reduce the time lag in an extraordinary situation, the new exception clause would be automatically applied in case two conditions are met: 1) a decrease in the EU's GDP, and 2) the gap between the adjustment value of the remuneration and pensions of EU staff and the change in the EU's GDP exceeds two percentage points. If both conditions are fulfilled, half of the adjustment value would be postponed to the next year. For instance, this clause would have been triggered in 2009; the Brussels International Index would be suppressed. The differences in the increase in the cost of living between each place of employment and that of the Member States would be calculated and reflected in correction coefficients. A new joint correction coefficient would be introduced for Belgium and Luxemburg, considering these Member States as a single place of employment. It will be fixed at 100 for the first year.

- solidarity levy : since 1982, the method has been linked to an additional tax on salaries, due to the effects of the oil crisis. Despite the improvement in the economic situation, this additional tax has not been phased out, but has become a measure linked to the automatic application of the method. It is suggested that, for the duration of the proposed method, the solidarity levy be increased at the rate of 6%;

- modifications to the pension system in order to keep pace with demographic developments :

increasing the normal retirement age to 65 years : currently, the normal retirement age is 63 years for officials recruited after 1 May 2004. Officials recruited before 1 May 2004 are subject to transitional provisions according to which the retirement age varies from 60 years to 63 years. It is proposed to increase the normal retirement age for officials recruited as of 1 January 2013 at 65 years . Similar transitional rules as those applied in 2004 would be implemented, i.e. the retirement age of officials recruited before 1 May 2013 would vary from 60 to 65 years. Furthermore, it will no longer be only on an exceptional basis that the possibility to continue working until 67 years would be granted; raising the age for early retirement to 58 years and reducing the number of officials benefiting from early retirement : currently, the minimum early retirement age is set at 55 years. Under the new proposal, the minimum early retirement age would be set at 58 years. In addition, the maximum number of officials retiring in a given year without a reduction of their pension rights would be fixed at 5% of the officials in all institutions who retired during the previous year (as opposed to 10% in the current system). This scheme is maintained since it has proven useful for all institutions as a HR management tool in the course of the last enlargement exercise; aligning the methodology for calculating the pension contribution rate to international actuarial practice : the computation system for the pension contribution rate expires on 30 June 2013. It is proposed to keep the same methodology, but to increase the moving average for interest rates and salary growth to 30 years. A transitional period of eight years would apply.

- adapting the conditions of employment : it is proposed to:

introducing a minimum number of weekly working hours : the 5% staff cut would require that every staff member take a share of the additional work burden, if the same policy objectives are to be achieved. It is therefore proposed to introduce in the Staff Regulations a minimum number of working hours per week, i.e. 40 . maintaining flexitime working-time arrangements : flexible working-time arrangements allow reconciling work and private life and facilitate suitable gender balance within the Institutions while respecting the mandatory working time obligations. It is therefore appropriate to introduce a clear reference to these arrangements in the Staff Regulations.

- allowances and entitlements : staff members are currently entitled to a maximum of six days per year of travelling time to their place of origin. It is proposed to limit the annual travelling time to a maximum of three days. The annual travel allowance is based on kilometric distance by railway, which is often not the most habitual route to travel to the place of origin. Therefore, the distance would be calculated as a great circle distance, which would have an effect of decreasing individual allowances. Furthermore, the payment of annual travel expenses would be limited to territories of the Member States of the EU.

In order to reduce the administrative burden both for the staff members concerned and the administration, the rules on the reimbursement of removal costs should be simplified. It is therefore proposed to introduce cost ceilings which take account of the official's or agent's family situation and of the average cost of removal and associated insurance.

The rules on mission should be adapted in order to take account of the specific need of an institution whose staff members must frequently go on mission to the principal places of work of their institution. It is proposed to allow in such cases the reimbursement of accommodation costs on the basis of a flat-rate sum;

- transparency measures for Institutions and agencies : the Staff Regulations are implemented through a series of measures adopted by the Institutions and agencies. In order to ensure coherent and harmonised

implementation of the Staff Regulations and for reasons of simplification, the Commission implementing rules would apply by analogy to agencies. However, in order to take account of the specific situation of agencies, they will be able, after receiving an authorisation from the Commission.

- career of assistants, new career stream for secretaries and more flexibility in recruiting contract staff :

reserving the highest grades for staff with the high level of responsibilities : in order to establish a clear link between responsibilities and grade, the career stream in the assistants' function group would be restructured in such a way to reserve the two highest grades (AST 10 and 11) only for officials and temporary agents who exercise significant responsibilities for staff management, budget implementation and/or coordination. new function group "AST/SC" for secretaries and clerical staff : a new function group "AST/SC" for secretarial and clerical staff should be introduced. Salaries and promotion rates proposed for this new function group establish a suitable correspondence between the level of responsibility and the level of remuneration. In this way it will be possible to preserve a stable, comprehensive and well-balanced European civil service, as considered necessary by many institutions. recruitment of contract staff : in order to give more flexibility to the institutions, the maximum length of contracts for auxiliary contract staff would be extended from 3 to 6 years. In addition, while the vast majority of officials will continue to be recruited on the basis of open competitions, the institutions would be authorised to organise internal competitions which are also open to contract staff. addressing unjustified geographical imbalances : the Staff Regulations stipulate that European Union officials are to be recruited on the broadest possible geographical basis. However, the statistical data show that, while some nationalities are overrepresented in comparison with the relative weight of their population in the European Union, others are largely under-represented. These imbalances are particularly noticeable in certain grades. Therefore, Article 27 of the Staff Regulations should be amended in order to allow the institutions to take measures correcting long lasting and significant geographical imbalances, while preserving the principle of recruitment based upon the highest standard of ability, efficiency and integrity. This measure shall be adopted by way of general implementing measures and shall be subject to a report after five years.

- increasing efficiency in staff management for the agencies : t oday there are 45 structures (32 regulatory agencies, 7 joint undertakings and 6 executive agencies). In total, they employ almost 8 000 members of staff, mostly engaged as temporary agents. However, the provisions of the Staff Regulations and the Conditions of Employment of Other Servants are not fully adapted to the needs of small structures such as agencies. For this reason the Commission suggests introducing a new category of temporary staff for agencies . They would be recruited following a transparent and objective selection procedure and could be engaged for an indefinite period of time. If necessary, agencies would be able to second them in the interests of the service. Also, temporary staff in agencies could take unpaid leave up to a maximum of 15 years throughout their entire career.

BUDGETARY IMPLICATIONS: the proposal would have a budgetary impact on the expenditure and revenue of the European Union. Due to transitional provisions, the financial impact of certain provisions would gradually increase and would reach its full effect only in the long term. The savings over the next multiannual financial framework are estimated to exceed EUR 1 billion . In the long run, the savings from the proposed amendments would be 1 billion Euros per year. More details are provided in the financial statement, which is annexed to this proposal.