Ag.9.3 Preparation of 2018 exercise Doc. A6465/18/10 Ag.9.3 Preparation of 2018 exercise Working Group on Articles 64 and 65 of the Staff Regulations Meeting in Luxembourg 21+22 March 2018

Content of this presentation WEIGHTS 1st test using 2016 data presented WG2017 From BH57 to BH80 weights (just ECP locations) New test using 2017 data now presented WG2018 Approach 1: From BH57 to BH80 (all locations) Approach 2: UN data used to produce regional weights Comparison of results PRICES WORKFLOW (early warning system)

Introduction Decision taken 2016 WG Art 64/65 in order to harmonize and make consistent data between Extra-Intra/EU & UN & ISRP-ECP. This presentation is about the updating of the expenditure weights derived from the family budget surveys used since 2010.

1st test: 2016 data, presented WG 2017 PPPs & weights are received at 80BHs, for 12 ECP DS (not 5x Balkans). Over 1 year coverage the % diff max is 0.7%.

2nd test: 2017 data, presented WG 2018 Two test approaches: Approach 1: Conversion of current set of data (Common Weights) from 57BH to 80BH Approach 2: Replacement of current set of data (Common Weights) with UN data converted to 80BH and used to construct Regional Weights.

Important note about 2017 tests In both approaches it is assumed that the same PPP as applies at the 57BH aggregate level will also apply to each of the underlying 80BH. Conversion of old UN structure to 80BH was rather complex as some in our 80BH structure do not exist in the UN one. Will be easier in future as classifications harmonised. 29 of the 144 EU DS were excluded: the 12 duty stations with CC=0 and 17 DS for which CCs are already established using 80BH (7 ECP-ISRP + 10 ECP-ESTAT). The sample is therefore constituted of 115 DS

Approach 1: Conversion from 57BH to 80BH -Impact limited, average change of +0.523% -Std Deviation 1.691% -Cluster range +-2% -Despite outlier: - China (+10.35%) - Gabon (-2.72%)

Approach 1: Impact of magnitude % change Value Mean (μ) 0.523% Standard deviation (σ) 1.691% Minimum (Gabon) -2.72% Maximum (China) 10.35% Change (Δ) = 0 Change > 0 72 (62.6%) Change < 0 43 (37.4%) Change between μ + σ 45 (39.1%) Change between μ - σ 44 (38.3%) 100% 77.4%

Approach 1: Impact on DS CC>100

Approach 2: UN weights used -Impact larger, average change of -2.76% -Std Deviation 3.87% -Cluster range +3% -7% -Outliers: -Chile (+18%) -Philippines (+13%) -Russia (-15%)

Approach 2: Impact of magnitude % change Value Mean (μ) -2.762% Standard deviation (σ) 3.87% Minimum -15.44% Maximum 18.26% Change (Δ) = 0 Change > 0 19 (16.5%) Change < 0 96 (83.5%) Change between μ + σ 35 (30.5%) Change between μ - σ 61 (53.0%) 100% 83.5%

Approach 2: Impact on DS CC>100

Approach 1 / approach 2 Impossible to say if impact reflects genuine differences in expenditure figures or if it is due to time gap between EU survey (2010) and more recent UN surveys (2010 – 2016): differences in sample size and composition, differences in economic environment However, approach 2 gives greater precision and may therefore be preferable

Comparison at COICOP 12 groups level

Price data -1 UN P2P surveys Complementary data collection for Group 2 All surveys to spring 2016 received and integrated Survey planning 2017 + 2018 7 duty stations not surveyed within 7 years target Complementary data collection for Group 2 Cars Flights (to/from BXL rather than NYC) Communication (to/from BXL rather than NYC) RTPC items (Real Time Price Comparisons)

Price data -2 ECP data from ESTAT and ISRP for 17 places Possible data for Israel, Chile in 2018 CPI availability 5 duty stations with long extrapolation time series…may stop CC publication in 2018 (Barbados, Congo, Central African Rep, Gabon, Myanmar)

Workflow No calendar change for data exchange/reporting “Early warning system” for administration (where possible) CC > 100 become CC < 100 CC < 100 become CC > 100 cease CC production (events, 7 year rule, CPI age) start CC production Corollary: early information about staff changes, opening/closing delegations, etc.

Conclusion: Delegates are invited to give their endorsement for the proposed approach for weighting structures And take note of the other information presented in this document

Thank you for your attention!