Hundred and seventy-fourth session ANNUAL REPORT (2005) BY THE INTERNATIONAL CIVIL SERVICE COMMISSION (ICSC): REPORT BY THE DIRECTOR-GENERAL SUMMARY

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1 ex United Nations Educational, Scientific and Cultural Organization Executive Board Hundred and seventy-fourth session 174 EX/28 PARIS, 10 February 2006 Original: English Item 27 of the provisional agenda ANNUAL REPORT (2005) BY THE INTERNATIONAL CIVIL SERVICE COMMISSION (ICSC): REPORT BY THE DIRECTOR-GENERAL SUMMARY This report is submitted to the Executive Board for information, in pursuance of 114 EX/Decision 8.5 and 171 EX/Decision 37. Decision proposed: paragraph 26.

2 174 EX/28 Introduction 1. Article 17 of the ICSC s Statute provides that (it) shall submit an annual report to the General Assembly including information on the implementation of its decisions and recommendations. The report shall be transmitted to governing organs of the other organizations through their Executive Heads, and to staff representatives. 2. In this context, the Executive Board approved a proposal by the Director-General at its 114th session (May 1982) to submit future annual reports of the ICSC to the Executive Board at its spring session in the year immediately following the year to which the report relates (114 EX/Decision 8.5). 3. The General Conference took note of 114 EX/Decision 8.5 at its 22nd session (1983) and invited the Director-General to continue to submit ICSC annual reports to the Executive Board in line with this decision. It also decided that the annual reports will not normally be submitted to the General Conference except when in the opinion of the Director-General, or the Executive Board, they contain conclusions or recommendations calling for action within the sole competence of the General Conference or which, in the opinion of the Director-General or the Executive Board, are otherwise of such importance that they should be brought to the notice of the General Conference (22 C/Resolution 37). Thirty-first annual report of ICSC 4. In pursuance of these decisions, ICSC s thirtieth annual report, covering 2005 (and hereinafter referred to as the annual report ) is available to the Board for information. The annual report and ICSC s accompanying recommendations were examined by the General Assembly at its 60th session (September-December 2005). Membership of the Commission 5. The membership of the Commission for 2005 was as follows: Chairperson: Mohsen Bel Hadj Amor (Tunisia) Vice-Chairperson: Eugeniusz Wyzner (Poland) Members: Mario Bettati (France) Minoru Endo (Japan) Fatih Bouayad-Agha (Algeria) Shamsher M. Chowdhury (Bangladesh) Lucretia Myers (United States of America) Emmanuel Oti Boateng (Ghana) José R. Sanchis Muñoz (Argentina) Alexis Stephanou (Greece) Anita Szlazak (Canada) Vladimir Titov (Russian Federation) Gilberto C.P. Velloso (Brazil) Xiaochu Wang (China) El Hassane Zahid (Morocco)

3 174 EX/28 page 2 Annual Report The General Assembly adopted Decision 60/544 at its 60th session, in which it deferred to its resumed 60th session consideration of much of ICSC s report for 2005; this session is expected to resume in March The description of the report in this document is, therefore, divided into two parts: items presented to the General Assembly for information purposes only or where a decision was taken and items where consideration is deferred until the General Assembly s next session. (i) Decisions taken or items presented for information only Base/floor Gross Salary Scale 7. In order to address imbalances in the Tax Equalization Fund, the Commission recommended a reduction in the level of staff assessment for Professional and higher categories, with effect 1 January These would lower the TEF by 20%, and cut gross salaries by the same amount. The General Assembly subsequently adopted resolution 60/248 on special subjects relating to the proposed programme budget for the biennium, in Part XI of which it approved the new staff assessment rates for Professional and higher category staff. This should have no cost implications for UNESCO. The revised gross salary scale is attached as an annex. Monitoring of the Pilot Study of Broad-Banding/Reward for Contribution 8. The Commission has been monitoring over the course of a number of recent sessions its pilot of broad-banding and reward for contribution arrangements. These are designed to improve organizational performance by linking pay to performance; by rewarding staff in a fair and competitive manner based on merit, competence and performance; and by encouraging staff to develop the competences required to meet ever-changing programme needs. 9. UNESCO s International Centre for Theoretical Physics (ICTP) in Trieste is taking part in ICSC s pilot study. This project has now entered its second year, which will focus primarily on development of the competency framework and refinement of ICTP s existing feedback mechanism. Implementing UNESCO s new performance evaluation system in ICTP was the project s most significant achievement during The three elements providing the basis for moving staff within the new salary and grade bands (performance, competency development and client feedback) should be in place by the end of 2006; and the first rewards for contribution made in early This corresponds to the progress of the study in the other four participating organizations (WFP, UNDP, IFAD and UNAIDS). Evolution of the United Nations/United States net remuneration margin 11. In accordance with its General Assembly s standing mandate, the Commission reported that the margin between the net remuneration of United Nations Professional and higher category staff and comparable United States federal staff in 2005 was estimated at The General Assembly has reaffirmed on several occasions a margin of , with a desirable mid-point of 115, on the understanding that it should be maintained at a level about the mid-point over a period of time. The margin is, therefore, 3.9 percentage points below its desirable mid-point of 115. Review of the Noblemaire Principle: Progress Report on phase II of the Total Compensation Comparisons. 12. The base salaries of Professional and higher categories are determined on the basis of the Noblemaire principle, by reference to the National Civil Service with the highest overall

4 174 EX/28 page 3 compensation package. This arrangement is designed to ensure that United Nations organizations can recruit from all of their Member States. 13. The Commission started its review of Nobelmaire during 2005 following the concerns expressed by some Organizations that salaries were not sufficiently competitive with the private sector or other international organizations, which in turn was leading to problems recruiting and retaining staff with appropriate qualifications. While it found no reason to re-examine the principle itself, given its clearly stated aims, it commissioned on the basis of its initial studies further work on pay levels in Belgium, Germany, Singapore and Switzerland, as well as the United States (the current comparator), in order to establish the National Civil Service with the highest overall compensation package. 14. The Commission subsequently decided to discontinue its analysis of the levels of remuneration in the civil services in Germany, Singapore and Switzerland, but to continue its study with respect to Belgium. It also decided to continue the reference checks with the World Bank and OECD. These studies will be considered further during (ii) Items deferred until the General Assembly s resumed 60th session Modernizing and simplifying allowances (i) Spouse benefits 15. During 2005, the Commission continued its examination of the rationale and purpose of the spouse benefits for Professional staff including the rationale for separate salary scales for single staff and those with dependants. 16. The Commission decided to maintain the distinction in remuneration for staff with or without dependants, which recognized the additional expenses incurred by staff with dependants and the operation of tax systems in the majority of Member States; and to maintain the current pay ratios between the single and dependency rates of the base salary scale. (ii) Mobility/hardship allowance, hazard pay and strategic allowances 17. The Commission also reviewed the mobility and hardship scheme as part of its wider review of pay and benefits, taking into account the General Assembly s request that the allowance should be de-linked from the base/floor salary scale, in order that the three elements (i.e. mobility, hardship and non-removal) can be considered as discrete entities. 18. A working group comprising representatives of the Commission, organizations and staff associations was established to develop options. The Group s guiding principle was cost neutrality, to be attained by transferring funds between the three elements, if deemed appropriate, without eroding staff s overall entitlements. 19. The Commission accepted the group s proposals, which involve lump sums for each of the three elements, to be established independently of the base/floor salary scale. The proposals increase the relative share of the total cost of the scheme spent on hardship, recognizing its importance in encouraging mobility and the increasing number of hazardous and non-family duty stations where United Nations staff now work. The proposals also extend the coverage of the mobility element to recognize up to seven different postings (the current limit is five) as a further encouragement to mobility. Finally, the proposals will streamline and simplify the existing administrative procedures.

5 174 EX/28 page The Commission also accepted the group s proposal to broaden the definition of hazard pay to include the risk of life-threatening diseases such as SARS and the Ebola virus, to which medical staff are directly exposed in the performance of their duties. 21. The Commission proposed an implementation date of July 2006, which would allow organizations sufficient time to modify their payroll systems; develop an appropriate communication strategy to announce the change; and introduce the transitional arrangements for staff whose allowances may be affected by these changes. Contractual arrangements 22. Following an extensive review of the existing contractual arrangements within the Common System, the Commission decided that three types of appointment will correspond to organizational needs. It approved, therefore, a framework of guidelines for the different types of contracts, developed in collaboration with representatives of organizations and staff associations, and which cover issues such as length of contract, probation and mobility requirements, and extension or termination procedures. 23. UNESCO will need to review these recommendations, if subsequently adopted by the General Assembly, as part of its review of contractual arrangements. Hazard pay: review of the level 24. The Commission reviews every three years the level of hazard pay, an allowance which recognizes the difficulties of staff assigned to hazardous or non-family duty stations. It subsequently decided to recommend increases in the level of hazard pay for internationally recruited staff from $1,000 to $1,300 per month, effective 1 January 2006, but to maintain the level for General Service staff at 25% of the mid-point of the local salary scale. Base/floor net salary scale 25. The Commission recommended, effective 1 January 2006, a 2.49% increase in the net salary scale of Professional and higher category staff, in line with pay increases in the United States federal comparator. The increase would be introduced on a no loss, no gain basis, i.e. the net salary increase would be offset by a reduction in post adjustment, leaving net salaries unchanged. If adopted, the increase in the net base salary scale would however result in increases in the mobility and hardship allowance, repatriation grant and termination indemnity. Draft decision 26. The Executive Board may wish to adopt a decision along the following lines: The Executive Board, 1. Recalling 114 EX/Decision 8.5 and 171 EX/Decision 37, 2. Having examined document 174 EX/28, 3. Takes note of its contents and of General Assembly resolution 60/248; 4. Invites the Director-General to continue to ensure UNESCO s participation in the work of the International Civil Service Commission and to take due account of the results of its work.

6 ANNEX BAREME DES TRAITEMENTS ANNUELS BRUTS ET NETS APPLICABLE AU PERSONNEL DU CADRE DES SERVICES ORGANIQUES OU DE RANG PLUS ELEVE (en dollars des Etats-Unis) (a) et (b) ANNUAL GROSS AND NET SALARIES FOR THE PROFESSIONAL CATEGORY AND ABOVE (in US dollars) (a) and (b) Date d'entrée en vigeur : 1 JANVIER 2006 Effective date : 1 JANUARY 2006 Step Grade I II III IV V VI VII VIII IX X XI XII XIII XIV XV Gross DDG Net D Net S Gross ADG Net D Net S Gross D-2 Net D Net S Gross D-1 Net D Net S Gross P-5 Net D Net S Gross P-4 Net D Net S Gross P-3 Net D Net S Gross P-2 Net D Net S Gross P-1 Net D Net S (a) A l'exclusion de l'ajustement de traitement, lorsqu'il est applicable. (b) Voir la disposition (a) du Règlement du personnel. (a) Excluding post adjustment, if applicable (b) See Staff Rule (a) 174 EX/28 Annex