2021 annual update of remuneration
R&D answers your questions
Many of you have asked us questions about the 2021 update of remuneration and how the Method is applied.
You have informed us of the growing confusion between the old and new methods, the taking into account of inflation and the evolution of GDP, the effects of the exception clause and the moderation clause, etc.
In keeping with its commitment to always listen to colleagues, R&D answers your questions and is at your disposal for any further clarification you may require.
The new “Method” in force since 2014
In order to respect the principle of parallelism in the purchasing power of European and national officials, the Staff Regulations provide for an annual update of remuneration method.
During the 2014 reform, a new method was defined to avoid the problems encountered in the past and in particular differences and discussions between the Member States and the institutions (see Annex XI).
On the basis of this new Method, the procedure for updating remuneration and pensions has thus become automatic and no longer involves arduous negotiations with the Council or the adoption of additional legal acts, as was previously the case, requiring each adjustment to be the subject of a Council Regulation.
Annual update of the remuneration
On the basis of the new Method’, the annual update of remuneration is calculated from two components:
1. The cost of living (inflation) in Belgium and Luxembourg (Joint index ) calculated between June of the previous year and June of the current year according to the distribution of the staff serving in those Member States (see. Annex XI, Section 1, Article I (2))
And
2. The evolution of the purchasing power of national civil servants in central governments (specific indicators) in a set of 10 EU countries accounting for 80 % of EU GDP. (see Annex XI, Section 1, Article (4))
Reminder of the results of the application of the Method in 2020
In 2020, the annual update of remuneration should have been 3.2%: 0.7 % inflation and 2.5 % increase in purchasing power.
Staff only received 0.7 % because of the application of the exception clause (see. Annex XI, Section 2, Chapter 5, Article 11) which was triggered by the 5.9 % fall in GDP.
The exception clause applies in the event of a fall in GDP.
However, unlike the method in force until 2014, which allowed the Council simply to invoke “a serious and sudden crisis” to definitively refuse any annual increase — as it would undoubtedly have been the case on this occasion of such a significant fall in GDP — due to the new exception clause, the increase is not definitively lost but postponed until GDP reaches its pre-crisis value. And the increase in inflation is paid for in all cases.
This has a significant positive impact on the calculation of our wages and pensions.
Thus, given the fall in GDP (-5.9 %), the part of the 2020 adjustment brought about by comparing the purchasing power of national civil servants in the EU (+ 2.5 %) was not paid in 2020 and was postponed until GDP returned to its initial value in 2019.
Application of the Method in 2021
Between July 2020 and July 2021, the cost of life was estimated at + 2.1 % (joint index), while the changes in the purchasing power of national civil servants in central governments is 0.2 % (specific indicators).
The sum of the two, i.e. 1.9 %, will be reflected in our December 2021 salary slip with retroactive effect from 1 July 2021.
Furthermore, the GDP of the 10 countries will only increase by 4.8 %, not reaching the pre-crisis value and not compensating for the decrease recorded in 2019 (-5.9 %).
The 2.5 % increase in 2020 will therefore be postponed until December 2022 in the absence of a new crisis.
There is also a moderation clause, which is implemented if the increase exceeds 2%. (see. Annex XI, Section 2, Chapter 5, Article 10).
This could be the case in December 2022 if the 2.5 % in 2020 is added to the (so far unknown) calculation of inflation and the evolution of purchasing power in 2022.
But again any increase above 2 % is not lost and is carried over the following year.
Conclusion
There will therefore be a positive adjustment in December 2021 but limited of 1.9% in December salary slip with retroactive effect from 1 July 2021.
Unfortunately, the increase in GDP in 2020 was not sufficient to recover its value in 2019 and the 2.5 % adjustment, which was not paid in 2020, is postponed until 2022.