Correction coefficient for Luxembourg: myth or reality? 2/4

In our first newsletter, we attempted to frame the overall question, in view of the practice adopted for 30 other places where EU staff are assigned.


Which provisions of the Staff Regulations apply?

The legal basis is provided in Article 64 of the Staff Regulations: “An official's remuneration ... shall ... be weighted at a rate above, below or equal to 100%, depending on living conditions in the various places of employment.”
Article 64 also states, in its 3rd paragraph: “No correction coefficient shall be applicable in Belgium and Luxembourg, having regard to the special referential role of those places of employment as principal and original seats of most of the institutions.”

This suggests a comment, i.e. when the legislator refers to Belgium and Luxembourg, he refers to these countries.
And therefore, a correction coefficient specific to part of the territory of the Grand Duchy of Luxembourg would not automatically be ruled out.
There are already correction coefficients for cities such as Bonn, Varese, Munich, etc.


Chapter 4 of Annex XI of the Staff Regulations (Rules for implementing articles 64 and 65 of the Staff Regulations) deals with the creation and withdrawal of correction coefficients.

Art. 9.1

"The appropriate authorities of the Member States concerned, the administration of an institution of the Union or the representatives of officials of the Union in a given place of employment can request the creation of a correction coefficient specific to that place.
Such a request should be supported by objective factors revealing an appreciable difference over some years in the cost of living between that place of employment and the capital of the Member State concerned........ If Eurostat confirms that the difference is appreciable (more than 5 %) and sustainable, the Commission shall enact, by means of delegated acts ... a correction coefficient for that place".

These conditions are met because, due to the cost of housing, a disparity in purchasing power greater than 5% has existed in Luxembourg-Ville since 2006. Obviously, that can be verified based on work by ESTAT presented to the Technical Group on Pay.


What about the joint Belgium-Luxembourg index introduced in January 2014?

The legislator, but introducing a 'joint index' (weighting between the IPCH in Belgium and the IPC in Luxembourg according to the breakdown of staff employed in these Member States - cfr. Article 1.2 of Annex XI of the Staff Regulations) implicitly recognises the existence of the problem of Luxembourg, but makes a serious mistake about the therapy, for several reasons:
1. No solution has been provided for the disparity in purchasing power that was present from the outset, i.e. 10.2% in 2013.
2. Statistically, the joint index method is not correct because the indices that provide the input are specific to each place, and reflect the change in the price index in that place.
3. Combining the two (weighting between the Belgian IPCH and the Luxembourg IPC) makes no sense, and incorporates a serious error from the economic viewpoint (Belgium's harmonised IPC is incompatible with the Luxembourg IPC which is calculated by excluding certain products like fuel and cigarettes).
4. From a political and social viewpoint, that is inexplicable, because how can one imagine that in the case of Luxembourg's IPC being higher than Belgium's IPC, staff assigned to Belgium would receive a pay increase due to inflation "somewhere else"?
5. The absence of surveys about housing and household spending among EU staff assigned to Luxembourg distorts the result of the joint index.

The systematic refusal by DG.HR and ESTAT of the Commission to carry out these surveys, although Annex XI imposes a monitoring obligation, remains hard to accept.


What has Union Syndicale Luxembourg done from the legal viewpoint?

A court case supported by USL is pending before the European Tribunal, and seeks the abolition of this joint index (objection of illegality) and the introduction of a correction coefficient for Luxembourg.


To be continued in our next 2 newsletters.

Kind regards,

Miguel Vicente Núñez
USL President