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SMART PARITY An Overview of the OAS Salary System and its History Secretariat for Administration and Finance April 2013.

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Presentation on theme: "SMART PARITY An Overview of the OAS Salary System and its History Secretariat for Administration and Finance April 2013."— Presentation transcript:

1 SMART PARITY An Overview of the OAS Salary System and its History Secretariat for Administration and Finance April 2013

2 M ODIFICATION OF THE G ENERAL S ECRETARIAT S S TAFF C OMPENSATION S YSTEM CP/Res 631(989/94) (May 13, 1994), AG/Res 1275 (XXIV-O/94) (June 1994), and AG/Res 1319 (XXV-O/95) (June 1995) establish salary parity with the UN OAS staff at headquarters receive the same salary, post adjustment, and dependency allowances as UN agencies in Washington DC (i.e. PAHO and UN liaison offices in WDC) 2

3 History Parity with UN 1969 – 1976 – OEA Ser. G IV/C-i-893 – AG/Res 5 (I – E/70) Departure from parity – Principle of parity maintained, but resources were not appropriated – TRIBAD Judgment 37 (1978) awarded $9.5 million in retroactive pay for period Salary system cannot be rescinded unilaterally 3

4 History Departure from parity – AG/RES. 383 (VI-E/78): The acceptance, in principle, of parity with the UN … does not correspond to the financial reality of the Organization and should not be taken into account – Resolution instructed the PC to prepare a new salary policy – Gap at the end of 1978: 11.2% (GS) and 12.5% (Prof) 4

5 History Departure from parity – AG/Res 497 (X – O/80): The staff of the International organizations located in Washington, D.C. and the Civil Service of the host country received cost-of-living adjustments in the last two years because of inflation; and Justice dictates a salary adjustment for the staff of the General Secretariat – Salaries adjusted by 15% as of 1 January Salaries at OAS still well below those of the UN (7.4% for Professionals and 10.9% for General Services) – AG/Res 498 (X- O/80) instructs the Secretary General to present a formula for determining salary increases to the staff – AG/RES. 499 (X-O/80) complied with payment of $9.5 million 5

6 History Departure from parity – TRIBAD Judgment No. 64 (April 1982): Staff entitled to salary levels under parity and ordered payment for the difference , allowing payments to be satisfied by way of a cash settlement and annual leave. Though parity revoked, Organization obligated to replace parity with a reasonable salary policy subject to the approval of the staff. – AG/RES. 632 (XII-O/82) declared payments as follows: 40% cash ($1.6 million) 60% in annual leave that could be paid at the time of separation 6

7 History Comparator formula – AG/Res 632 (XII – O/82) required SG to present a cost of living adjustment to be included in the Program-Budget – Adjustment to equal the average increase granted at PAHO, the US Civil Service and the Inter-American Development Bank per formula requested under AG/Res 498 (X – O/80) – Single salary scale – New salary policy contingent upon a staff referendum – Comparator July 1983: 7.48% – Adjustment granted: 4.98% Increase equal to the comparator presented by the SG every year, but granted by the GA at a lower level, or none at all. 7

8 History Non-compliance with salary policy in 1985 brought about suit in 1986 TRIBAD Judgment 91 found suit without merit because the comparator was only considered as a base of a proposed cost of living adjustments subject to approval by the General Assembly In 1989, reduction in force (RIF) about 300 staff members (1/3 of staff) In subsequent years, situation markedly improved by payment of arrearages. 1993: 479 staff members claimed non-compliance and that the system had not been applied in good faith 8

9 Return to Parity Dissatisfaction among the member States and staff of the General Secretariat with the comparator system April 1993 Arthur Andersen Study finds OAS salaries 25% below other international organizations, 3% below private sector, and 16% below US Civil Service. September 1993 – March 1994: Growing consensus among member States, staff and General Secretariat in support of return to parity 9

10 Return to Parity TRIBAD Judgment 124 (May 1994) rules in favor of staff. Salaries to be raised by 11.41% to bring them in compliance with the comparator. Comparator is fully in force Cost of living is an indisputable right of the staff System is unconditional and can only be modified by mutual agreement between the Organization and its staff Cost estimate of Judgment: – $7.2 million due to active staff – $1.2 million to retired staff – $2.2 million for May-Dec 1994 – $5.6 million for

11 Return to Parity Secretary General requests 16.71% cost-of-living adjustment effective 1 January 1995 CP/Res 631 Modification of the General Secretariats Staff Compensation System replaces Comparator system with those of UN (on a limited basis) provided changeover is approved by a referendum of the staff of the GS. AG/Res 1275 (XXIV – O/94) ratifies above resolution and appropriates $9.0 million for the implementation of new compensation system 11

12 Return to Parity Cost estimates were subsequently re-computed by the External Auditors in Document CP/CAAP-2086/94: – Total $17,764,300 for the period, of which: US$9,394,300 to pay for the difference in salaries and the staffs attorneys fees; US$8,432,100 which could be paid in special leave with pay and the balance in cash; and US$ 8,400,000 for implementation of a COLA for in accordance with the comparator 12

13 Return to Parity Growing concern among staff regarding transition to parity Secretariat-wide audit conducted in accordance with UN classification standards during 1994 and first half of 1995 Over 50% of staff reclassified at a lower grade AG/Res 1319 (XXV – O/95) approves amendments to General Standards and new staff rules contingent upon a staff referendum approving acceptance of parity. Terms include a 2% transition payment in addition to COLA adjustments and assurances that no staff member would see a reduction in salary Over 80% of staff votes in favor of parity in July 1995 Cost of Secretariat-wide audit estimated at $446,000, including $29, for services of Arnold & Porter for certification of staff referendum. 13

14 Advantages of Parity Accepted by the member States and adopted ad referendum by the staff of the General Secretariat Automaticity assures staff of implementation of cost-of-living increases Independent third party calculates and recommends salary adjustments Mirrors the salary policy in force at comparable organization within the Inter-American system (i.e. PAHO) Minimizes the cost of implementing and maintaining a compensation system 14

15 Smart (i.e. partial) Parity Limited to selected elements of the UN common system of salaries, allowances and benefits – Salary tables and longevity requirements for step increases – Post Adjustment – Dependency and language allowances – Some termination benefits – DSA (per diem) rates OAS retained previous retirement plan and rates of contribution (7% and 14% at OAS vs. 7.9% and 15.8% at UN) Notably excluded: – Education allowance rates (restricted in amount and eligibility) – Hardship allowance, hazard pay – Accelerated step increases compensating for additional language skills 15

16 Salaries and Benefits under Smart Parity Salary = Basic pay (Prof & GS)+ Post Adjustment (Prof) Basic pay, post adjustment and other allowances and benefits set by International Civil Service Commission (ICSC) Basic salary scale, applicable to all UN System professionals worldwide, changes normally once a year Post adjustment for Professional staff reviewed annually on the basis of established indicators to take into account local changes in cost of living. Corroborated by a cost-of-living survey conducted every 5 years General Services salary scale adjusted annually, corroborated by a pay comparability survey every 4 years 16

17 Salaries and Benefits under Smart Parity Net Remuneration Margin compares take-home pay in UN scale with take-home pay in US Civil Service Salary by grade monitored periodically to ensure compliance with margin of 110% - 120%. In 2003, adjustment implemented raised pay in all grades above P-3 to reach 115% midpoint of range 17

18 Who Sets COLA under Smart Parity? ICSC meets to consider recommendations to the UNGA (June-July of every year) ICSC meetings encourage participation of staff associations: FICSA, UNISERV, CCISUA. ICSC submits annual report to UNGA in August of each year 18

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