International Civil Service Commission

Transcription

1 United Nations ICSC/76/R.3 International Civil Service Commission Distr.: Restricted 31 December 2012 Original: English Seventy-sixth session New York, 25 February-8 March 2013 Item 5 (a) of the provisional agenda* Conditions of service of applicable to both categories of staff Contents Review of the common system compensation package Note by the secretariat of the International Civil Service Commission I. Introduction II. Overview of the present compensation package A. General B. Pay-setting philosophy Charter of the United Nations and the Noblemaire principle Noblemaire comparisons to identify the highest-paid comparator Net remuneration margin C. Salary structure Base/floor salary scale Gross salaries and staff assessment Net single and dependency rates: recognition of a primary dependant Net remuneration Pensionable remuneration and the common scale of staff assessment D. Allowances, benefits and other conditions of service Allowances related to dependants Leave-related entitlements Page * ICSC/76/R.1. (E) * *

2 3. Allowances related to travel Assignment/relocation, mobility and hardship Separation from service III. Conclusions A. Some issues with the present system B. Considerations specific to the common system C. Road map for the review D. Action by the Commission

3 I. Introduction 1. At its seventy-fifth session, the International Civil Service Commission (ICSC) decided to include in its programme of work for a review of the compensation package of staff of the common system. The present document is an opening paper under that review. 2. The Commission considers individual elements of the compensation system of the common system at regular intervals or on an as-needed basis. While this allows it to focus on specific elements of the compensation package and to deal with any potential problems, the narrow scope may be disadvantageous in that a holistic view of the system may be lost in the process. The fabric of the compensation package may gradually turn into a patchwork of independent arrangements, and the logical interrelationships between those arrangements may be jeopardized. It is thus important and, in fact, indispensable that the system be reviewed periodically in a global way, so as to ensure that it maintains its coherence and continues to meet its fundamental goals while expeditiously and effectively reacting to political, economic, social and other realities of a changing world. 3. While the general usefulness of periodic comprehensive reviews is indisputable, the impetus, scope and modalities of the present exercise are yet to be defined. Thus, before embarking on the project, the Commission might wish to first establish the scope of the review. In order to do that, the following questions will need to be addressed: Does the present compensation system continue to enable the organizations of the United Nations common system to recruit, motivate and retain staff of such standards as those required by the Charter of the United Nations and corresponding provisions of the other organizations constitutions? Is the present compensation system fair and still relevant to the overall operational goals, strategy, needs and budgets of the organizations? Is the present pay system entitlement-laden/driven? Is the present pay system such that it confers additional benefits to a group or segment of the workforce? Does the single/dependency base/floor salary scale provide for determining value for money? Does the present system motivate excellent performance? Does it take account of competency, breadth of experience and management skills? 4. If the response to any of the above is positive, then the review would be of a broader scope and, since compensation and benefits are but two elements of a sound human resources strategy, the Commission may also wish to consider whether other elements, such as performance and rewards, development and career aspects and work/life issues, should also be addressed. An additional consideration in defining the scope of a broader review would be whether all present categories of staff should be included. 3

4 5. If it is considered that the present system in general meets the overall needs of the organizations, then the following questions would need to be addressed to help identify an overall scope of the review: Which particular aspects need to be reviewed? What are the gaps, problems or challenges that have been identified? Should the focus be on reviewing the various elements of the present system and rationalizing and/or simplifying those elements? With personnel-related costs making up the major portion of most organizations budgets, should one of the goals be to benchmark the costs associated with the system against external practices? Cost is, no doubt, an important consideration for many organizations and Member States, with staffrelated costs comprising the single biggest component of any organization s budget. While it would be crucial to study alternative approaches and compare the relative costs of various approaches so as to get a clearer perspective in this regard, should cost neutrality be an underlying assumption? At the informal discussions of the sixty-seventh session of the General Assembly, some delegations suggested that the Commission should review the overall costs of the package of salaries and allowances. 6. It is relevant to recall that the General Assembly has reaffirmed the continued application of the two fundamental principles governing the conditions of service of staff in the common system the Noblemaire principle, applicable to staff in the Professional and higher categories, and the Flemming principle, applicable to locally recruited staff on many occasions, most recently in 2011 and 2009, respectively (see General Assembly resolutions 66/235 A and 64/231). The Commission itself suggested no changes to either of the principles in its latest studies and reviews (see ICSC/72/R.5, ICSC/72/R.10 and ICSC/72/R.11). In recalling the underlying principles, it is useful to note that a fundamental underpinning in the consideration of the remuneration system of the Professional and higher categories is the maintenance of equity in the conditions of service regardless of nationality of the staff member. This is of particular importance within the context in which an international organization operates and should remain a fundamental goal of any broader review. 7. The organizations and staff, as key stakeholders in the process, should consider whether the present system continues to meet their needs and, more fundamentally perhaps, whether and to what extent its various features remain relevant to the organizations strategic and immediate operational goals. To be meaningful and successful, the study should involve all of the Commission s interlocutors. Ongoing dialogue within and among all the interlocutors and consensus on the major objectives of the study will be of key importance to the success of the exercise. In particular, in order to assess the staff recruitment and retention situation, the latest relevant data should be requested from the organizations as a matter of priority. Such data would need to allow for analysis on an overall level, as well as based on various demographics, including age, gender, occupational group, grade/level, nationality and duty station, over a reasonable period of time. 4

5 8. In addition, the Commission may wish to consider a baseline survey of staff and the organizations so as to have as much information as possible prior to focusing on particular aspects. In this regard, the secretariat is aware that some organizations conduct periodic staff engagement or satisfaction surveys. The results of such surveys might provide some preliminary direction for a common systemwide survey of staff. II. Overview of the present compensation package 9. As a starting point, it would be advisable for the Commission to take stock of the present situation and to review the present compensation package in a holistic way. To keep the length of the present document reasonable, the secretariat tried to avoid excessive quoting from previous documents but rather to focus on the most salient points, which may be of relevance to this exercise. Yet, in certain instances, the historic background of an allowance is outlined to facilitate the understanding of its original purpose and rationale. It should also be noted that, although some possible issues with the present arrangements are identified, no solutions to those issues are being proposed at the present stage, in the assumption that the Commission may first wish to discuss those issues with the participation of its interlocutors, review and revise the list accordingly and provide guidance for further work. A. General 10. The common system of salaries, allowances, benefits and other conditions of service covers approximately 100,000 staff in more than 650 locations worldwide. It comprises 23 organizations, including the United Nations and its affiliated funds and programmes, and 13 specialized and related agencies. A number of other organizations, while not formally part of the common system, do follow its provisions, in full or to a substantial degree (see table 1 below). Table 1 Staff of the common system, by organization and category (as at 21 December 2011) Organization Professional and higher General Service National Professional Officer Total United Nations UNICEF UNDP WHO UNHCR WFP FAO ILO UNFPA IAEA UNESCO

6 Organization Professional and higher General Service National Professional Officer Total PAHO WIPO UNOPS UNAIDS ICAO ITU UNIDO IFAD UN-Women IMO WMO ITC UNRWA UPU UNU UNWTO Total Source: United Nations System Chief Executives Board for Coordination database. Abbreviations: UNICEF, United Nations Children s Fund; UNDP, United Nations Development Programme; WHO, World Health Organization; UNHCR, Office of the United Nations High Commissioner for Refugees; WFP, World Food Programme; FAO, Food and Agriculture Organization of the United Nations; ILO, International Labour Organization; UNFPA, United Nations Population Fund; IAEA, International Atomic Energy Agency; UNESCO, United Nations Educational, Scientific and Cultural Organization; PAHO, Pan American Health Organization; WIPO, World Intellectual Property Organization; UNOPS, United Nations Office for Project Services; UNAIDS, Joint United Nations Programme on HIV/AIDS; ICAO, International Civil Aviation Organization; ITU, International Telecommunication Union; UNIDO, United Nations Industrial Development Organization; IFAD, International Fund for Agricultural Development; UN-Women, United Nations Entity for Gender Equality and the Empowerment of Women; IMO, International Maritime Organization; WMO, World Meteorological Organization; ITC, International Trade Centre; UNRWA, United Nations Relief and Works Agency for Palestine Refugees in the Near East; UPU, Universal Postal Union; UNU, United Nations University; UNWTO, World Tourism Organization. 11. The common system is intended to prevent competition among member organizations in staff recruitment and to facilitate the inter-organizational exchange of staff. It is also aimed at ensuring equity and fairness of compensation, improving cost efficiency and cost control and allowing for economies of scale in administration. Recruitment criteria and salaries and related allowances differ between two main groups of staff: the Professional and higher categories and the General Service, National Professional Officers and other locally recruited categories. However, many features of the common system apply equally to all staff. 6

7 B. Pay-setting philosophy 1. Charter of the United Nations and the Noblemaire principle 12. The fundamental provisions underlying the establishment of the conditions of service of staff are contained in the Charter of the United Nations and corresponding provisions of the constitutions of the specialized agencies. The Charter, in particular, states that: Article The paramount consideration in the employment of the staff and in the determination of the conditions of service shall be the necessity of securing the highest standards of efficiency, competence, and integrity. Due regard shall be paid to the importance of recruiting the staff on as wide a geographical basis as possible. 13. Since the creation of the United Nations and the specialized agencies, in order to ensure the exclusively international character of the responsibilities of the staff, their highest standards of efficiency, competence and integrity and their recruitment on as wide a geographical basis as possible, the levels of pay for staff in what subsequently became the Professional and higher categories have been determined on the basis of the Noblemaire principle, named after the Chair of a committee of the League of Nations seized with the issue of remunerating international staff in In its first annual report (A/10030), in 1975, the Commission reaffirmed the continued validity of the principle and described it in the following terms: For the international civil service, only a global salary system could ensure both equity and the necessary mobility of staff. In line with the principle of equal pay for equal work, no distinction could be admitted in the remuneration of internationally recruited staff on the grounds of their nationality or of salary levels in their own countries. Since the organizations must be able to recruit and retain staff from all of the Member States, the level of remuneration must be sufficient to attract those from the countries where salary levels are highest with the inescapable consequence that the level would then be higher than would be needed to attract staff from countries with lower national salary levels and might appear excessive to the Governments and taxpayers of those countries. In order to determine the appropriate level of salaries for the United Nations, the preliminary conclusion of the Commission, like that of its predecessors, was that no acceptable alternative could be found to the existing practice of comparison with the salaries of the national civil service of the Member State whose levels were found to be highest and which otherwise lent itself to a significant comparison. 14. Although inherited from the League of Nations and dating back over 90 years, the Noblemaire principle is periodically reviewed by the Commission and the General Assembly, which, under article 10 of the ICSC statute, has the ultimate responsibility for establishing the broad principles for the determination of the conditions of service of staff. Both bodies have confirmed the continued validity of the Noblemaire principle on numerous occasions, most recently in 2011 (see ICSC/72/R.5 and General Assembly resolution 66/235 A). 7

8 2. Noblemaire comparisons to identify the highest-paid comparator 15. Approximately once every five years, the Commission makes a periodic check to identify the national civil service of the Member State which has the highest pay levels and which by its size and structure lends itself to a significant comparison. These comparisons are supplemented by reference checks with other international organizations that could be seen as competing for staff with the United Nations system. The comparisons are done on a limited total compensation basis: besides the net pay of a staff member with a primary dependant, they also include pension benefits and health insurance and are adjusted by the difference in the working hours and in the cost of living at base cities of the comparators. 16. Since the creation of the United Nations, the federal civil service of the United States of America has been retained as the highest-paid national civil service. At the same time, reference checks with other international organizations have shown that the United Nations lags consistently behind those in terms of overall compensation. 3. Net remuneration margin 17. In addition to total compensation comparisons to identify the highest-paid national civil service, the Commission also reports annually to the General Assembly on the comparison of net remuneration of the United Nations with netteddown salaries of employees at equivalent grades in the civil service being used as the current comparator. The comparison is expressed as the ratio of net remuneration in the two civil services, known as the net remuneration margin. In accordance with the Noblemaire principle, this margin should be in favour of United Nations salaries to account for the fact that: (a) International service offers less stability and security of employment than national civil service; (b) Prospects of promotion are more limited in an international secretariat than in most national civil services; (c) A large proportion of United Nations staff are required to incur additional expenses and to make certain changes in lifestyle as a result of living away from the home country. 18. The General Assembly has established that this margin should remain within a range of 110 to 120 (i.e. 10 to 20 per cent in favour of the United Nations), with a desirable midpoint of 115 at which it should be maintained over an average of five years. C. Salary structure 1. Base/floor salary scale 19. Staff in the Professional and higher categories are recruited internationally and are paid on the basis of a global United States dollar-denominated base/floor salary scale applied worldwide by all organizations, as established by the General Assembly on the Commission s recommendation. Underlying the salary scale is a common job classification structure developed by the Commission. 20. From 1946 to 1950, there was a single scale with 20 grades below the level of Assistant Secretary-General; appropriate grades within this scale were assigned to 8

9 each of 41 groups of staff defined by functions. Salaries for the posts of Secretary- General, Assistant Secretary-General and Director were set by the General Assembly. For other positions, pay rates were established by the Secretary-General and varied between the salary established by the Assembly for the top-ranking Director and a minimum figure based on prevailing conditions in New York. 21. In 1950, this single scale was divided into the Professional and higher categories and the General Service category, with five grades in the Professional category. There were three higher directorate levels from 1951 to 1954, when their number was reduced to two. In 1968, the single Under-Secretary-General level existing in the United Nations Secretariat since 1955 was replaced by two levels, namely Under-Secretary-General and Assistant Secretary-General. Similar levels, normally called Deputy Director General and Assistant Director General, were used in most of the other organizations. 22. In 1989, on the recommendation of the Commission, the General Assembly approved the establishment of a floor net salary level for staff in the Professional and higher categories by reference to the corresponding base net salary levels of officials in comparable positions serving at the base city of the comparator civil service. The Commission also made a number of recommendations on the structure of the salary scale (A/44/30, para. 356) which the Assembly approved. 23. In 1990, the number of steps per grade was revised, and additional steps were added at several grade levels. The grade and step structure of the scale has remained unchanged since then, except in 2003, when the General Assembly granted a differentiated salary increase, which resulted in a realignment of inter-grade differentials at the higher levels (P-4 and above). 24. At present, the salary scale consists of five Professional grades (P-1 to P-5), two Director levels (D-1 and D-2) and the levels of Assistant Secretary-General and Under-Secretary-General in some organizations and Assistant Director General and Deputy Director General in others. The number of steps varies from grade to grade, from a single step at the Assistant Secretary-General and Under-Secretary-General levels, to 15 steps at the P-3 and P-4 levels. Within-grade step increments are awarded on the basis of satisfactory performance. Most increments are granted annually, but there is a two-year qualifying period for the top step of the P-2 level, above step XIII of the P-3 level, above step XII of the P-4 level, above step X of the P-5 level, above step IV of the D-1 level and for all steps at the D-2 level. 25. The base/floor salary scale represents a salary minimum that a staff member would receive under any circumstance and at any duty station. It also serves as a basis for setting those allowances that have been established as a percentage of the salary. 2. Gross salaries and staff assessment 26. The salaries of United Nations staff were first expressed in net terms on the assumption that, in accordance with the conventions on the privileges and immunities of the United Nations and of the specialized agencies, salaries would not be subject to national income tax. However, a number of Member States continued to tax the United Nations emoluments of their nationals. These taxes were reimbursed by organizations to the staff members concerned, but objections were raised by Member States that did not tax their nationals working for the common system but were in fact paying for staff reimbursements to other States. In response 9

10 to this situation, the General Assembly, by its resolution 239 (III), introduced the gross salary system. The difference between the gross and net salaries was the staff assessment, a progressive scale similar to that found in national tax schemes. A Tax Equalization Fund, established by Assembly resolution 973 (X), provided for credits out of staff assessment income to those States whose nationals were not subject to national income tax on their United Nations salaries. As a result, national taxes paid by nationals of some countries were reimbursed by those same countries themselves. 27. Various structural changes have been made to the rates of staff assessment since they were first established, and at present these rates are revised every three years to ensure that the Tax Equalization Fund is financed without a deficit or a surplus. While larger common system organizations have tax equalization funds of their own, other organizations have direct tax reimbursement agreements with the Member States concerned. 28. The levels of staff assessment and corresponding gross salaries in the common system do not affect the take-home pay of staff. The reason for this is that the takehome pay levels of salaries are regulated by the margin arrangement described above, which compares only net levels of remuneration and excludes staff assessment on the United Nations side and income taxes on the comparator country s side. Unlike in the outside world, where the gross salary is reduced by income tax, staff assessment is an add-on to the net salary, which is the starting point of the pay-setting process. 29. While similar in form, national income taxes and United Nations staff assessment serve completely different purposes. National taxes could include budget revenues, social security, dependants care, unemployment insurance and many other elements. The United Nations addresses these tasks through different means, while the staff assessment is used for only one purpose, which is to finance the Tax Equalization Fund. They are therefore not comparable in terms of purpose or scope. 30. Finally, the staff assessment used in conjunction with gross salaries should not be confused with another form of internal taxation of the United Nations system, the common scale of staff assessment (see paras below), which is based on a different set of rates and is used to calculate pension contributions and subsequent pensions of staff. 3. Net single and dependency rates: recognition of a primary dependant 31. The staff assessment plan introduced in 1948 provided for a dependency credit, which, as no separate categories of staff existed, was the same amount for all qualifying staff. The dependency credit was also allowed for a spouse or for a child of a staff member with no dependent spouse, in addition to the child allowance. In 1951, when the two staff categories were established, a lower rate was set for the General Service category in accordance with the principle of establishing General Service salaries and allowances by reference to local conditions. As of 1957, the spouse allowance replaced the dependency credit. At the same time, for the Professional category, the dependency element was reflected in the post adjustment system that was being introduced (the rate for staff without dependants being two thirds of that for staff with dependants). 32. A major change for the Professional category occurred in 1977, when the spouse allowance was abolished and the differentiated rates of staff assessment were introduced. This arrangement had been recommended by the Special Committee for 10

11 the Review of the United Nations Salary System and was supported by the International Civil Service Advisory Board in 1974 and the Commission in When making its recommendation on the extent of the differentiation, the Commission noted wide variations in the ratio of single-to-married net income at the then seven headquarters countries owing to varying social policies and to the incidence of social security benefits. However, unlike in the other six countries, in the United States the ratio regressed from the lower income levels to the higher, which meant that the higher the income, the greater the proportion of the fiscal benefit given to the taxpayer with dependants. Further noting that the existing United Nations pattern followed that of the countries other than the United States, the Commission recommended that, in the interests of greater comparability, the United Nations pattern should follow the pattern of the United States, and the ratio of single-to-married remuneration should decrease as the salary level rose. 34. The recommended set of differentiated rates resulted in a single-to-married ratio of approximately 94 per cent at the P-1/1 level and 91 per cent at the highest level, meaning that the spouse factor was approximately 6 per cent of salary at the lowest level and 10 per cent at the highest. The Commission further recommended that the with dependants rate of staff assessment be granted to a staff member with a primary dependant other than a spouse, for example, a widow or a widower with a dependent child (but in that case the first dependent child would not attract a child s allowance) (see A/31/30, paras ). The General Assembly approved the proposed changes in its resolution 31/141 B. 35. In 2000, the separate single staff assessment rates were abolished, with staff assessment at the single rate defined as the difference between the gross and net single salary. This in effect cemented the single/dependency salary ratios established in 1976, which have remained unchanged despite the significant changes in the tax system of the United States since then. 36. Although the spouse allowance was originally considered to be a social benefit for all staff, its social concept lapsed for the General Service with the adoption of the principle of local practice as the determinant. It is therefore not paid at locations where it is not supported by local practice. 4. Net remuneration 37. The net remuneration of staff in the Professional and higher categories is made up of two main elements: net base salary (see paras above) and post adjustment. Post adjustment 38. Established in 1957, the post adjustment system has evolved significantly over the years and remains under constant review by the Commission and its subsidiary body, the Advisory Committee on Post Adjustment Questions. Its basic objective, however, has remained unchanged. It consists in ensuring that the net remuneration of Professional staff has the same purchasing power, no matter where they serve. 39. Post adjustment indices for duty stations, as determined by periodic place-toplace surveys conducted once every four or five years, are updated monthly to reflect changes due to inflation (local consumer price index) and exchange rate fluctuations (local currency vis-à-vis the United States dollar). The updated post adjustment indices provide the basis for establishing the post adjustment multipliers, which 11

12 directly determine net remuneration levels (base salary plus post adjustment). One multiplier point is equal to 1 per cent of base salary. Arrangements for updating post adjustment classifications differ between hard- and soft-currency duty stations. In hard-currency duty stations, a change in post adjustment to account for inflation is made after either a full 5 per cent movement of the post adjustment index or a 12-month period since the last change, whichever comes first. Exchange rate changes at these duty stations are reflected monthly in post adjustment classifications. In other (soft-currency) duty stations, the post adjustment classification is reviewed every four months for inflation and exchange rate changes. 40. Under article 10 of the ICSC statute, the Commission makes recommendations to the General Assembly on the scales of salaries and post adjustment for staff in the Professional and higher categories. Under article 11, the Commission establishes the classification of duty stations for the purpose of applying post adjustments. This has created some confusion as to the respective roles of the General Assembly and of the Commission in respect of post adjustment. In this context, a clarification on this matter may be useful. 41. Initially, the salary scales and post adjustment scales were established separately. However, as part of the comprehensive review of the post adjustment system in the 1990s, the use of separate post adjustment scales was abolished, and the current system, in which one post adjustment multiplier point equals 1 per cent of the base salary, was instituted. This means that the scales referred to in the statute, one relating to the base/floor salary and the other to the amount per post adjustment multiplier, are now established by a single decision of the General Assembly because the latter is implicit in the former. In other words, the Assembly decides the amounts per post adjustment index point, while the Commission establishes how many such points should be assigned to a particular location under the post adjustment system. Rental subsidies and deductions 42. The rental subsidy/deduction scheme, which is an integral part of the post adjustment system, was designed to ensure equal treatment of staff as regards housing costs. The post adjustment index of a duty station includes a housing element calculated on the basis of average rents paid by international staff at the location. Newcomers, however, tend to be faced with rents substantially higher than the average. Staff members who have been at the duty station for some time may be placed in the same position if they are forced to change dwelling for reasons beyond their control. On the other hand, staff are sometimes provided with housing by a host Government, which can result in a rent considerably below the market average. In the above circumstances, a rental subsidy or a rental deduction is applicable as described below. 43. Rental subsidies. A subsidy may be paid when a staff member s rent exceeds a so-called threshold rental. At field duty stations, the subsidy is 80 per cent of the excess of the staff member s actual rent over the rental threshold, up to a certain limit. At headquarters duty stations, the subsidy starts at 80 per cent of the difference for the first four years, and is reduced to 60 per cent, 40 per cent and 20 per cent, respectively, for the next three years, after which it is discontinued. Normally, subsidies do not exceed 40 per cent of the rent. However, in some field duty stations where commercial rents are excessively high, this limit may be waived. 12

13 44. Rental deductions. Staff are occasionally provided with housing by a Government, agency or organization at rents substantially below the average included in the post adjustment. In such cases, a deduction or rental charge may be applicable. Where such housing has been certified by the local head of office to be clearly below standard, the rental deduction may be reduced by one half and, in very exceptional circumstances, the Chair of the Commission may authorize a full waiver of the deduction. 5. Pensionable remuneration and the common scale of staff assessment 45. United Nations pensions are established on the basis of the income replacement approach, that is, in reference to the staff member s income while in service. The United Nations does not have agreements with Member States concerning taxation on the pensions of retired staff members similar to those regarding tax exemption for compensation of serving staff. To account for the fact that pensions are subject to national taxation, they are established and paid in gross terms, which include an add-on to cover the eventual national taxes of the pensions of United Nations retirees. This add-on is established on the basis of what is known as the common scale of staff assessment, which reflects an average income tax burden in the countries of the eight headquarters duty stations. 46. The staff assessment rates under the common scale are different from those used in conjunction with gross salaries (see paras above). Originally, though, they were part of the same scale used for both the Tax Equalization Fund and pension purposes for the Professional category. To address that dual task, the General Assembly decided annually how much post adjustment needed to be consolidated into base salary (i.e. by how much the assessable part of remuneration needed to be increased) to ensure the adequate financing of the Fund. At the same time, the Assembly reviewed the staff assessment rates to keep them in line with the tax rates of the headquarters countries. 47. In 1987, the General Assembly decided to delink the two processes, considering their fundamentally different purposes and adjustment vectors: the Tax Equalization Fund deficit at the time required a significant increase in the funding level, while the average tax burden on pension remained stable. As a result of this decision, the rates in effect continued to be used for calculating pensionable contributions and pensions, while a new-higher-set of rates was introduced to finance the Fund. 48. In addition to numerous separate adjustments over the years, in 1997 the assessment rates used for pension purposes were combined for the two categories of staff to form a common scale of staff assessment and address a phenomenon known as the income inversion, whereby pensions of General Service staff were higher than those of Professional staff at similar or even lower income levels. Since then, the two staff assessment regimes have evolved separately and have drifted significantly far apart. 49. The pensionable remuneration is arrived at by reversely applying the common scale of staff assessment to a portion of net remuneration in New York, which is the income replacement basis of Professional staff. The resulting scale is used to calculate the pension contributions of the staff member and the organization, which amount to 7.9 per cent and 15.8 per cent, respectively, as well as to establish the 13

14 subsequent pension benefits. As the pensions are established in gross terms, there is no distinction of pensionable remuneration rates by dependency status. D. Allowances, benefits and other conditions of service 50. The package of common system allowances, benefits and other conditions of service combines elements of a strictly compensatory nature with social benefits. This is explained by a dual role that international organizations have with respect to their staff. Most national Governments provide a package of social benefits to their citizens, the contents and size of which vary considerably depending on the social policy followed by the country concerned. The package usually includes financial assistance for citizens with dependants through tax abatements, direct payments under social legislation or both. Staff of the common system are not subject to national social or tax legislation and thus do not usually benefit from the social benefits packages provided by their home Governments. Thus, in addition to pure compensation elements, the common system organizations have a responsibility to function as a socially conscious employer and to provide, through the remuneration system, some of the social benefits that are provided under national policies but for which their staff may no longer be eligible. 51. Because the fundamental basis of the United Nations system social benefit package has not been explicitly enunciated, the elements that make up the package have at various times been set by differing methods. These include: an average of the practice at a selected group of countries (usually, the headquarters duty stations); the practice in the comparator country; or the application of judgement, taking the factors above into consideration. 52. The common system social benefits should not be a carbon copy of those of the comparator because for a system employing staff members from a large number of countries around the world and serving in almost 200 countries to mirror the practice of just one Member State in the area of social benefits would be highly questionable. Moreover, some entitlements related to expatriation are simply non-existent in the non-expatriate service of the comparator. Finally, most of the social benefits are not covered by total compensation comparisons to identify the highest-paid comparator. This, however, does add complexity to the overall package. 53. The figure below shows all major allowances, benefits and other entitlements and conditions of service that common system staff may become eligible to receive over their careers. It represents an inventory of benefits, most of which are circumstance-driven and are provided for the duration of the circumstance. This means that, with the exception of net remuneration, paid official holidays and annual leave, as well as some form of a separation payment, a staff member may never become entitled to any of the other package elements unless some specific additional eligibility criteria are met. At the same time, most of the entitlements, including ones not necessarily related to family status, have separate rates for staff with and without dependants. 54. In the figure, the package is broken down into groups of elements with a common overarching characteristic, for example dependency-related or mobility/ hardship-related. In many cases, the eligibility criteria for an allowance or benefit transcend these groupings boundaries, overlapping with two or more groups (for example, accelerated home leave is a leave-related benefit but is also expatriation- 14

15 and hardship-related). The breakdown provided below is obviously only one of the possible approaches by which the various common system compensation elements could be classified. It is suggested in an attempt to visualize all of the system s major elements in a single graph. Compensation package for Professional staff Accelerated home leave travel a,b,c b ) Abbreviations: CSSA, common scale of staff assessment; NET, net base/floor salary; NETREM (D-NY), net remuneration (dependency rate for New York); SA, staff assessment used in conjunction with gross salaries; PA, post adjustment; PR, pensionable remuneration. a Also related to expatriation. b Also related to dependency status. c Also related to leave. d Also related to travel. e Also related to service in hardship duty stations. 1. Allowances related to dependants 55. The family status of a staff member is recognized in a number of ways. The existence of a primary dependant (i.e. dependent spouse or first dependent child if there is no dependent spouse) is recognized mainly through a higher net base salary 15

16 and the resulting net remuneration described in paragraphs 31 to 36 above. Separate allowances specifically related to dependants are also in place, such as the children s and secondary dependant s allowances, as well as the education grant and maternity/paternity leave provisions. Finally, a staff member with a primary dependant also receives higher rates for many other allowances or benefits (e.g. assignment grant, hardship/mobility/non-removal allowances, rental subsidies, separation payments). These entitlements are, however, specific to circumstances rather than universally applicable to all staff. They are therefore discussed in the context of the allowances/entitlements concerned. 1.1 Children s allowance 56. Established in 1946, the children s allowance is a social benefit available to all staff. The current parameters of the allowance are: Eligibility: The child must be a recognized dependant under age 18 or in full attendance at a school or university in the case of a child under age 21. Basis/formula: Global flat amount calculated as the average of the United States dollar amounts of child benefits at the eight headquarters duty stations at the level equivalent to P-4/VI, weighted by the number of staff at those locations. Current amount: $2,929 per annum. In hard-currency duty stations the amount is converted to local currency at the date of promulgation and remains unchanged until the next review. The amount is doubled if the child is disabled. Limitations on payment: As the first child of a staff member without a dependent spouse is recognized through the dependency rate of pay, no children s allowance is payable for this child; if payments are received through national social security systems, the amount of the child allowance is reduced accordingly; the allowance is limited to six children in the case of locally recruited staff. Review: Every two years. 57. The Commission may wish to note that it has before it document ICSC/75/R.5, which was provided in response to a number of concerns expressed at its seventyfifth session about the methodology used to establish the children s allowance, in particular the dominant effect of larger duty stations on the resulting levels of the allowance, the removal of automaticity in deciding on the levels and the exchange rate used to convert the allowance in hard-currency locations. 58. In addition, some members questioned the rationale for the benefit for the first dependent child of single staff, which is not covered by the children s allowance but was derived from the eligibility of such staff to receive the dependency rate of pay. As seen in paragraphs 31 to 36 above, the increased benefit for a child as primary dependant has been a feature of the system since The extent of such a differentiation may indeed be significant, particularly when all benefits providing greater support to staff with dependants are taken into account. 16

17 1.2 Secondary dependant s allowance 59. Established in 1946, the secondary dependant s allowance is provided in recognition of the responsibility of a staff member without primary dependants to support a secondary dependant. Starting off as a dependency credit allowable to staff members with no primary dependants, it was established as a separate allowance in Eligibility: Where there is no recognized primary dependant, a dependent parent, brother or sister may qualify for this allowance, subject to well-defined criteria concerning proof of support. Basis/formula: 35 per cent of the children s allowance. Current amount: $1,025 per annum (same local currency conversion procedure as the children s allowance). Limitations on payment: May be claimed in respect of only one secondary dependant; not payable if the staff member is already receiving dependency benefits in respect of the primary dependant. Review: Every two years, linked to the level of the children s allowance. 1.3 Education grant (a) Regular education grant 60. Established in 1946, the education grant is designed to cover part of the additional cost of educating a staff member s children arising from the staff member s expatriation. Eligibility: Internationally recruited staff serving outside their home country. Basis/formula: Payable in respect of children in full-time attendance at an educational institution from the primary school level up to the end of the fourth year of post-secondary studies, subject to a maximum age limit of 25. The amount of the grant is equivalent to 75 per cent of allowable costs subject to maximum amounts indicated below. In addition, a staff member is entitled to travel expenses for the child for one return journey each academic year between the educational institution and the duty station, provided that the educational institution is outside the country of the duty station. Separate currency areas are established where claims and tuition fees are tracked individually. Exceptionally, the maximum education grant in some currency areas or in specific schools may be increased to a level not exceeding that for the United States dollar area inside the United States. Current amount: See table 2 below. 17

18 Table 2 Education grant entitlements applicable in cases where educational expenses are incurred in specified currencies (effective as from the school year in progress on 1 January 2011) (1) (2) (3) (4) (5) (6) Established by the General Assembly -(1)*0.75 Established by the General Assembly -(3)*1.5 -(2)+(4) =(1)-(3)/0.75 Currency Maximum amount admissible educational expenses and maximum grant for disabled children Maximum education grant Normal flat rate when boarding not provided Additional flat rate for boarding (at designated duty stations) Maximum grant for staff members serving at designated duty stations Calculation for maximum admissible educational expenses (attendance only) Euro Austria Belgium France Germany Ireland Italy Luxembourg Monaco Netherlands Spain Danish krone Japanese yen Swedish krona Swiss franc Pound sterling United States dollar (in the United States of America) United States dollar (outside the United States of America) Limitations on payment: Does not apply to staff members serving in their home country. However, a staff member reassigned to the home country following service elsewhere may continue to receive the education grant for the balance of the school year not exceeding one full school year after return from expatriate service. Boarding is only reimbursable if the school is outside the staff member s duty station: either at actual cost when provided by the school, as part of the overall grant, or, as a flat rate for boarding (see table 2, column (3)). The reimbursement of education grant travel expenses is limited to the cost of round-trip economy fare travel between the duty station and the staff member s recognized place of home leave. Review: Every two years, based on the level of claims and fees of representative secondary schools in areas. Levels are revised pragmatically, but the general guideline is that, to qualify for an adjustment, the school fees 18

19 in an area should have moved by at least 5 per cent since the previous adjustment, and at least 5 per cent of claims in that area (5 claims in smaller areas) should be above the established maximum. 61. The education grant is one of the most important allowances in the system and one of the major attractions for service in the common system. At the same time, it is one of the most complex and cumbersome allowances to administer and one of the most costly. The Commission will review the methodology for determining the grant at its seventy-seventh session, later in (b) (c) Special education grant 62. The special education grant was instituted in 1979, within the education grant arrangements, to provide assistance in covering education-related expenses to staff with disabled children. Eligibility: Expatriate and non-expatriate staff members with a disabled child under the age of 25 (may be extended until age 28). Basis/formula: Medical evidence required that the child is unable, by reason of physical or mental disability, to attend a normal educational institution; 100 per cent of maximum allowable expenses are reimbursed. Boarding is reimbursable even if the school is in the country of the duty station, when such boarding is an integral part of the educational programme. Current amount: See table 2, column (1). Review: Every two years, under the regular education grant. Additional education grant at designated duty stations 63. The mobility and hardship scheme established in 1990 provides for additional assistance under the education grant for staff serving in some hardship locations, the rationale being that, in duty stations with no or limited educational facilities, parents may be forced to send their children, including those of younger ages, to schools outside the country of the duty station and thus incur higher boarding expenses. Eligibility: Expatriate staff serving in designated duty stations where educational facilities are not available or are deemed to be inadequate. The adequacy of educational facilities is assessed through the hardship review. Basis/formula: In addition to the regular education grant, the following are provided: an additional flat rate for boarding (primary and secondary schools only), which is 150 per cent of the normal rate (see table 2, column (4)); and education grant travel, payable twice in a non-home leave year. Current amount: See table 2, column (5). Limitations: Staff for whom suitable and adequate education for their children is available in the curriculum and language of instruction offered in the duty station of the parent are excluded from eligibility. Review: Payment levels are reviewed every two years, with the education grant; the designation of the duty station is reviewed every three years, under the hardship review. 19