International Civil Service Commission

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1 United Nations ICSC/83/R.7 International Civil Service Commission Distr.: Restricted 25 May 2016 Original: English Eighty-third session Geneva, 25 July-5 August 2016 Item 5 (a) of the provisional agenda* Conditions of service of the Professional and higher categories Base/floor salary scale Note by the secretariat of the International Civil Service Commission 1. The concept of the base/floor salary scale was introduced, with effect from 1 July 1990, by the General Assembly in its resolution 44/198 (sect. I.H, para. 1). The scale is set by reference to the base General Schedule salary scale of the federal civil service of the United States of America, which has been the comparator civil service since the establishment of the United Nations. Periodic adjustments have been made on the basis of a comparison of the net salaries of United Nations officials at the midpoint of the scale (P-4, step VI, at the dependency rate) with the corresponding salaries, excluding locality pay, of their counterparts in the comparator civil service (those at step VI in grades GS-13 and GS-14, with a weight of 33 per cent and 67 per cent, respectively). 2. In its resolution 70/244, the General Assembly, within the framework of the comprehensive review of the common system compensation package, approved a unified base/floor salary scale structure, with effect from 1 January The Assembly also decided that, before its implementation, the scale should be updated to reflect any adjustments in reference salaries of the comparator that might take place between the approval of the unified scale and its implementation. Such an adjustment was made in the comparator service, with effect from 1 January 2016, and an update of the unified base/floor salary scale as approved in resolution 70/244 is therefore required. 3. Given that the adjustment is applied to common system salaries expressed in net terms, the level of the adjustment reflects the combined effect of the movement of gross comparator General Schedule salaries and of the tax changes introduced in the United States as of 1 January To assess the latter, the procedure approved by the Assembly for netting down the United States gross salaries is therefore applied. * ICSC/83/R.1. (E) * *

2 Adjustment of the unified base/floor salary scale 4. A 1 per cent increase was implemented with effect from 1 January 2016 in the General Schedule scale. In addition, changes with respect to tax schedules were introduced in the United States for At the federal level, together with the updating of tax brackets, the personal exemption amount increased by $50. For the State of Maryland and the State of Virginia, no changes were recorded in the tax legislation for For the Federal District of Columbia, a decrease in the tax rate from 7.00 to 6.50 per cent for taxable income between $40,000 and $60,000 was implemented, and a tax bracket for taxable income exceeding $1 million was introduced. The personal exemption amount increased by $ The aforementioned increase in the General Schedule and tax changes together resulted in a net increase of 1.02 per cent compared with 2015 levels. The following table shows the details of the computation of the current comparator reference base salary: Weight Grade Gross Taxes Net 0.33 GS-13/VI GS-14/VI Weighted average As set out in the table, the weighted average GS-13/GS-14 reference net base pay level, excluding locality pay, currently stands at $78,331. That amount is $791 greater than the United Nations P-4/VI net base/floor level of $77,540 set out in the unified salary scale as approved by the General Assembly. Rounded to two decimal places, the difference amounts to 1.02 per cent. 7. In order to maintain the base/floor salary scale in line with the General Schedule levels of the comparator, the unified salary scale approved in General Assembly resolution 70/244 should be increased by 1.02 per cent with effect from 1 January In accordance with the established practice, the adjustment of the base/floor salary scale is implemented by means of the standard method of consolidation, namely, by increasing the base salary by 1.02 per cent while commensurately reducing post adjustment multiplier points. That method of consolidation, known as the no-loss/no-gain adjustment, normally results in no change in take-home pay for staff and produces no additional salary-related costs for the common system organizations. 8. While generally neutral in terms of salary-related costs, the adjustment of the base/floor scale could, however, have a financial impact on duty stations where the post adjustment is too low to absorb a base salary increase. In such duty stations, the new base salary scale would serve as a floor scale for net remuneration. At present, no duty stations have a post adjustment that could otherwise fall below the new base/floor salary scale, and therefore no financial implications are currently projected under that item. However, the situation would need to be monitored given that, in certain duty stations with low post adjustment levels (e.g. Guimarães, Portugal; Romania; and South Africa), it could be affected, inter alia, by standard updating procedures or the implementation of cost-of-living survey results in the 2/6

3 coming months. The secretariat will provide the Commission with any updates in that regard as may be required in due course. 9. Finally, the Commission may recall that the General Assembly, in its resolution 70/244 (sect. III, paras. 9 (a) and (b)), decided that the salary levels of staff members that were higher than those at the maximum step of their grade upon conversion to the unified salary scale should be maintained by the Commission as a pay protection measure. The Assembly also decided that those salaries should be adjusted for any changes in post adjustment, including consolidation of post adjustment to base salaries approved by the Assembly. The Commission may therefore apply to the pay protection points the same adjustment applied to the unified scale, provided that the Assembly approves the recommended adjustment to the unified scale. Costs not related to salaries 10. With regard to costs not related to salaries, changes in the base/floor salary normally result in increases in separation payments that are linked to the base/floor scale but do not take account of post adjustment. Consequently, such payments are affected by increases in base/floor salaries but do not reflect the corresponding decreases in post adjustment as reflected through the process of consolidation. 11. Separation payments for staff members with primary dependants are currently linked to the dependency rate base salaries, and those for staff without primary dependants are currently linked to the single rate base salaries. As the recognition of dependency status in the salary scale would cease with the introduction of the unified salary scale, separation-related payments for staff with a primary dependant would decrease, as previously recognized by the Commission (see A/70/30, para. 194). The result would be an overall decrease in respect of the financial implications relating to the scale of separation payments. 12. On the basis of the considerations set out above, the resulting annual system - wide financial implications are estimated as follows: (a) For duty stations with low post adjustment where net salaries would otherwise fall below the level of the new base/floor salary (b) In respect of the scale of separation payments ( ) a Total annual financial implications ( ) a Estimated amount reflecting the currently available common system separations statistics. An updated estimate may be necessary, based on the latest statistics, which the secretariat was in the process of collecting at the time of writing. The updated estimate will be presented to the Commission at its eighty-third session. Proposed actions by the Commission 13. The Commission may wish to recommend to the General Assembly, for approval, with effect from 1 January 2017, an adjustment to the unified base/floor salary scale for the Professional and higher categories by 1.02 per cent, to be implemented through the standard no-loss/no-gain consolidation method of increasing the base salary and commensurately reducing post adjustment multiplier 3/6

4 points. The adjusted unified base/floor salary scale is set out in annex I to the present document. 14. Subject to approval by the General Assembly of the aforementioned adjustment to the base/floor salary scale, the Commission may wish to approve the pay protection salary points, set out in annex II, which are maintained for staff whose salaries are higher than those at the maximum steps of their grade in the unified salary scale. 4/6

5 5/6 Annex I Salary scale for the Professional and higher categories showing annual gross salaries and net equivalents after application of staff assessment (effective 1 January 2017) a Level I II III IV V VI VII VIII IX X XI XII XIII USG Gross Net ASG Gross Net D-2 Gross Net D-1 Gross Net P-5 Gross Net P-4 Gross Net P-3 Gross Net P-2 Gross Net P-1 Gross Net Abbreviations: ASG, Assistant Secretary-General; USG, Under-Secretary-General. a The normal qualifying period for in-grade movement between consecutive steps is one year. The shaded steps in each grade are granted after two years of qualifying service at the preceding step.

6 Annex II Pay protection points for staff whose salaries are higher than the maximum salaries on the base/floor salary scale showing annual gross salaries and net equivalents after application of staff assessment (effective 1 January 2017) Level PP1 PP2 P-4 Gross Net P-3 Gross Net P-2 Gross Net P-1 Gross Net /6