Ag.no.17 A65 Method Manual: Reference period for remuneration data Doc A6465/14/26 rev Ag.no.17 A65 Method Manual: Reference period for remuneration data Working Group on Article 64 and Article 65 of the Staff Regulations Meeting in Luxembourg 21st & 22nd March 2016

Methodological/procedural issue Method compares data at July of year T with corresponding data at July of year T-1 July remuneration data refers to a fixed month? vs. July remuneration data refers to a 12 month average preceding a reference month

Established practice Each year, Member States are asked to report remuneration per July of the current year Derived from these data a specific indicator shows the change in net/gross remuneration of this year July with July of the preceding year. Most countries extract monthly salary for July per pay scale according to legislation in force

Existing guidance Staff Regulations Annex XI article 1(4)(a) "… between July of the previous year and July of the current year …" Doc.A6465/14/26rev (version July 2014) Paragraph 4.4 "… the remuneration on a fixed date of the year t-1 is to be compared with the remuneration on the same date in the year t …" Appendix 4 "… establish annual earnings according to rules applicable in the reference month, review ad-hoc payment decisions during the year, divide total by 12 …"

Suggestion from Germany July 2015 Handbook (Appendix 4) is not sufficiently precise. Instead of comparing salaries according to legislation in force on a fixed day in the current year with salary of the same month in the preceding year … … calculate the average salary of the 12 months up to July of the current year with the average salary received in the 12 months up to July of previous year.

Principal considerations - 1 "Snapshot" intention of legislation (Art.65) is clear. Member States should apply a common approach in order to ensure maximum comparability. Similar data transmission for similar purposes should be compiled in similar way: a consistent approach is desirable for relations with international organisations. As a consequence the EU methodology handbook should be improved to become unambiguous.

Principal considerations - 2 Relax rules only where statistical system is unable to comply without imposing unacceptable burden. The 'average' approach is more complex and increases burden both to reporting countries and on Eurostat to validate the reported data. Net salary changes in a given month are result of several decisions in the past affecting different components of gross salary and statutory deductions at different moments. All these decisions would have to be attributed specifically month by month

Principal considerations - 3 Impact of proposed averaging procedure depends on multiple factors, including: timing in year (towards beginning or near end) magnitude of change direction of change (positive or negative) components concerned (gross pay, statutory deductions) applicability (grades, steps, household composition) weights independent decisions by other countries In consequence, may give unexpected outcomes compared to consideration of just one element.

Principal considerations - 4 Transparency is an important quality criterion. It is achieved by the snapshot approach. It can be difficult to relate actual changes to remuneration during reference period with what is calculated by the suggested averaging approach, as that can end up combining information from different periods.

Proposed change to method manual Extend first sentence in Appendix 4 paragraph 1.1.1 as follows: "Monthly earnings" are the monthly equivalent of "annual earnings". This should be interpreted to mean "earnings according to the legislation in force for that month". The snapshot approach applies. A simple average of monthly earnings throughout the year does not respect the snapshot approach. The only exception to this interpretation concerns unconsolidated "supplementary" payments.

Do delegates agree with the Commission proposal?