PURPOSE: to adjust with the effect from 1 July 2012, the remuneration and pensions of the officials and other servants of the European Union and the correction coefficients applied thereto.

LEGISLATIVE ACT: Regulation (EU) No 423/2014 of the European Parliament and of the Council adjusting with effect from 1 July 2012 the remuneration and pensions of officials and other servants of the European Union and the correction coefficients applied thereto.

BACKGROUND: in its judgment in Case C-63/12, Commission v Council, the Court of Justice of the European Union clarified that the institutions are obliged to decide each year on the adjustment of remuneration, either by undertaking a ‘mathematical’ adjustment according to the method laid down in Article 3 of Annex XI to the Staff Regulations, or by setting aside that ‘mathematical’ calculation in accordance with Article 10 thereof.

The purpose of Article 19 of Annex XIII to the Staff Regulations, as last amended by Regulation (EU, Euratom) No 1023/2013 of the European Parliament and of the Council, is to enable the institutions to take the necessary measures to settle their disputes concerning the 2011 and 2012 adjustments of remuneration and pensions in compliance with a judgment of the Court of Justice, taking due account of the legitimate expectation of staff that the institutions are to decide each year on the adjustment of their remuneration and pensions.

In order to comply with the judgment of the Court of Justice in Case C-63/12, where the Council establishes that there is a serious and sudden deterioration in the economic and social situation within the Union, the Commission is to submit a proposal under the ordinary legislative procedure in order to involve the European Parliament in the legislative process. On 25 October 2012, the Council stated that the Commission's assessment as presented in its report on the exception clause did not reflect the serious and sudden deterioration in the economic and social situation in the Union in 2012, as the publicly available objective economic data suggested. The Council thus requested the Commission to submit an appropriate proposal for the salary adjustment for 2012.

The Court of Justice has confirmed that, under the exception clause, the European Parliament and the Council have a wide margin of discretion as regards the adjustment of remuneration and pensions.

On the basis of economic and social data, it has been judged necessary to adapt for 2011 and 2012 the remunerations of officials and other servants of the European Union. Those adjustments are laid out in this Regulation.

CONTENT: with effect from 1 July 2012 , the table of basic monthly salaries applicable for the purposes of calculating remuneration and pensions shall be replaced by the table set out in this Regulation.

The correction coefficients are also laid down in the Regulation with the amended dates as regards:

parental leave benefits, household allowance, dependent child allowance, education allowance, expatriation allowance, other types of compensation or unemployment including kilometric allowance.

Global approach as regards the adjustment of remunerations : during a period of five years (2010-2014), the adjustment of remuneration and pensions of officials and other servants of the European Union should be 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%; in 2011, the result of the global approach to settle the disputes regarding the 2011 adjustments of remuneration and pensions leads to an adjustment of 0% ; and in 2012 this leads to an adjustment of 0.8%; 2013 to 2014, furthermore, as part of the political compromise on the reform of the Staff Regulations and of the Conditions of Employment of Other Servants, it was decided to freeze remuneration and pensions for these years.

ENTRY INTO FORCE: 01.05.2014.

The European Parliament adopted by 479 votes to 164, with 25 abstentions, a legislative resolution on the proposal for a regulation of the European Parliament and of the Council adjusting with the effect from 1 July 2012 the remuneration and pensions of the officials and other servants of the European Union and the correction coefficients applied thereto.

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

Remuneration adjustments : it is recalled that the Court of Justice confirmed that, under the exception clause, the European Parliament and the Council have a wide margin of discretion as regards the adjustment of remuneration and pensions. Economic and social data for the period from 1 July 2011 to 31 December 2012, such as the aftermath of the economic downturn in autumn 2011 resulting in economic recession in the Union and a deteriorating social situation, as well as the continuing high levels of unemployment and of public deficit and debt in the Union, make it appropriate to set the adjustment of remuneration and pensions in Belgium and Luxembourg to 0.8% for 2012 .

That adjustment is part of a global approach to settle the disputes regarding the 2011 and 2012 adjustments of remuneration and pensions, which also involves an adjustment of 0 % for 2011.

Impact of the global approach for the 2010- 2014 period : the text stated that consequently, during a period of five years (2010-2014), the adjustment of remuneration and pensions of officials and other servants of the European Union should be 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 leads to an adjustment of 0% and 0.8%, respectively; 2013 to 2014 , furthermore, as part of the political compromise on the reform of the Staff Regulations and of the Conditions of Employment of Other Servants, it was decided to freeze remuneration and pensions for these years.

Technical modifications adjusting salaries : a series of technical amendments have been made ​​to the text including the amount of allowances, emoluments and reimbursements due to officials and other servants of the Union covered by the measure, to take account of the global approach defined above.

The Committee on Legal Affairs adopted the report by Dagmar ROTH-BEHRENDT (S&D, DE) on the proposal for a regulation of the European Parliament and of the Council adjusting with the effect from 1 July 2012 the remuneration and pensions of the officials and other servants of the European Union and the correction coefficients applied thereto.

It recommended that the European Parliament’s position adopted at first reading following the ordinary legislative procedure should amend the Commission proposal.

Remuneration adjustments : it is recalled that the Court of Justice confirmed that, under the exception clause, the European Parliament and the Council have a wide margin of discretion as regards the adjustment of remuneration and pensions. Economic and social data for the period from 1 July 2011 to 31 December 2012, such as the aftermath of the economic downturn in autumn 2011 resulting in economic recession in the Union and a deteriorating social situation, as well as the continuing high levels of unemployment and of public deficit and debt in the Union, make it appropriate to set the adjustment of remuneration and pensions in Belgium and Luxembourg to 0.8% for 2012 .

That adjustment is part of a global approach to settle the disputes regarding the 2011 and 2012 adjustments of remuneration and pensions, which also involves an adjustment of 0% for 2011.

Impact of the global approach for the 2010- 2014 period : the text stated that consequently, during a period of five years (2010-2014), the adjustment of remuneration and pensions of officials and other servants of the European Union should be 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 leads to an adjustment of 0% and 0.8%, respectively; 2013 to 2014 , furthermore, as part of the political compromise on the reform of the Staff Regulations and of the Conditions of Employment of Other Servants, it was decided to freeze remuneration and pensions for these years.

Technical modifications : a series of technical amendments have been made ​​to the text including the amount of allowances, emoluments and reimbursements due to officials and other servants of the Union covered by the measure, to take account of the global approach defined above.

PURPOSE: to adjust with the effect from 1 July 2012 the remuneration and pensions of the officials and other servants of the European Union and the correction coefficients applied thereto.

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

ROLE OF THE EUROPEAN PARLIAMENT: the European Parliament decides in accordance with the ordinary legislative procedure and on an equal footing with the Council.

BACKGROUND: in order to comply with the Judgment of the Court of Justice in Case C-63/12 , when the Council establishes that at this stage of the procedure there is a serious and sudden deterioration in the economic and social situation within the Union, the Commission must submit a Proposal under Article 336 in order to involve the European Parliament in the legislative process . Equally the Council and the European Parliament shall decide upon the Commission proposal having regard to the criteria set in Article 65 of the Staff Regulations respecting the rules set in Annex XI with the exception of its Article 3(2).

The Court has confirmed that the Commission has a margin of appraisal that should be based on Article 65 of the Staff Regulations, as regards the content of appropriate proposals. The review of remuneration may, where appropriate, take into account other factors, such as the human resources management and in particular the needs of recruitment. Within this margin of appraisal, the Commission may base its decision upon economic and social data such as the 2012 stagnation and the ongoing crisis as well as the high level of unemployment rate and the high level of public deficit and debt in the European Union. The Commission has taken into account as well developments since 2011 such as the reform of the Staff Regulations and especially the two years freeze imposed to EU officials and the increase of weekly working time to 40 hours .

According to the data supplied by Eurostat in agreement with the national statistical offices of the Member States, national civil servants lost 1.1% of their purchasing power , the same loss in purchasing power should have been applied to the EU officials and other servants for the period 1 July 2012 – 30 June 2013 if the Commission would have followed the normal application of the method.

The Commission considered however as appropriate to reduce the proposed adjustment to remuneration and pensions in Belgium and Luxembourg to 0.9% instead of 1.7% with regard to the economic crisis and the efforts already consented by EU officials.

The same approach would lead in 2011 to an adjustment of 0.9% instead of 1.7%. The total adjustment for both years would be therefore 47% lower than under the normal application of the method in force in 2011 and 2012.

The Commission has proposed the above measures in order to involve the European Parliament in the legislative procedure and to allow the co-legislators to decide on the appropriate measures in accordance with Article 336 TFEU.

Under Article 65 of the Staff Regulations the remuneration and pensions shall be updated before the end of each year, which is the purpose of this proposal.

CONTENT: under this proposal, with effect from 1 July 2012, the table of basic monthly salaries applicable for the purposes of calculating remuneration and pensions shall be replaced by the proposed amendments in this proposal.

The correction coefficients are also laid down in the proposal with the amended dates as regards:

parental leave benefits, household allowance, dependent child allowance, education allowance, expatriation allowance, other types of compensation or unemployment.

BUDGETARY IMPLICATIONS: the proposal has a financial impact on all budgetary lines relating to staff expenditure in all Institutions and Agencies, i.e. it concerns expenditure for salaries of staff in headquarters and in delegations, contract agents, staff in the administrative offices, Members, parliamentary assistants, research staff, staff financed under BA-lines, staff paid under the provisions of early termination of service, pensions.

In 2014, the budgetary impact of this change would be EUR 132.9 million and EUR 53.2 million/year in 2015 and subsequent years.