74. In 1995, in the context of the comprehensive review of the application of the Noblemaire principle, the Commission conducted a study of total compensation comparison between the German and United States federal civil services. Based on the results of the study, the Commission reported to the General Assembly, inter alia, that the total compensation comparison showed that the German civil service remuneration package was 110.5 per cent of that of the United States federal civil service.3 The Commission also reported that it would continue to monitor the total compensation of the German civil service and would update the current data annually.4
75. The Commission was informed of the result of the total compensation comparison between the United States and the German civil service, which showed that for 1998, the German remuneration package was 108.5 per cent of that of the United States federal civil service.
Views of the organizations
76. The Chairman of CCAQ noted that the total compensation comparison between the German and the United States federal civil services confirmed that the United States was no longer the highest-paying civil service. Thus, the Noblemaire principle was not being applied. The Committee noted the small narrowing of difference between the total compensation levels of the United States and the German federal civil services from 10.9 to 8.5 per cent. There remained, nevertheless, an 8.5 per cent gap between the two civil services, as measured in accordance with the total compensation methodology approved by the Assembly.
77. The Committee referred to the specific proposals that it had made in 1997 in respect of adjusting the margin range to accommodate the difference between the remuneration levels of the United States and the German federal civil services, namely, to use margin management to remedy this situation. These proposals had not been favourably received by ICSC, and were not passed on to the General Assembly. The Committee noted that the General Assembly, in section I.A of its resolution 52/216 of 22 December 1997, had reconfirmed the continued application of the Noblemaire principle; reaffirmed the need to continue to ensure the competitiveness of the conditions of service of the common system; and acknowledged its option of margin management. The Committee asked how the Commission intended to deal with the ongoing non-application of the Noblemaire principle. It requested that the Commission reconsider its 1997 proposals, inter alia, in the area of margin management.
78. The Committee strongly supported the concluding paragraph of the document before the Commission, namely that based on the results of the total compensation comparison between the United States and German civil services:
(a) The total compensation comparison showed that the German civil service was 108.5 per cent of that of the current comparator;
(b) Retirement and health insurance benefits and leave and work hours provisions of the German civil service were superior to those of the comparator, the United States;
(c) Consequently, the current update of the study to identify the highest paid national civil service had again shown that the current comparator under the application of the Noblemaire principle was no longer the best.
Discussion by the Commission
79. The Commission noted that although this item had been on its agenda B and consequently that of the Assembly B for a number of years, it had not been resolved. Some members of the Commission considered that the process of replacing the current comparator could lead to organizational and technical complications that would also result in financial consequences. Furthermore, noting the significant ongoing reforms by the German Government, including the relocation of the capital to Berlin, some members of the Commission considered that there were a number of relevant factors that could not be included in the comparison at this stage. However, one member considered that based on a series of studies showing German civil service conditions to be superior to those of the current comparator, the
Commission should proceed to the conclusion that the current comparator should be replaced by the German civil service.
80. With regard to the current exercise, the Commission noted that the non-salary remuneration elements of the German service were superior to those of the United States service, while net salary levels of the United States service remained superior to those of the German service by some 14 per cent. The German advantage in pension and health insurance benefits, together with advantages on all le ave items and working hours, had been maintained since 1995. This advantage more than offset the net salary disadvantage. With regard to the net salary comparisons, it was further noted that vis -à-vis the United States service, the German service paid relatively higher salaries at lower grade levels and lower salaries at higher grade levels. The realignment of the salary scale discussed in paragraphs 67 to 68 above would therefore be a less relevant issue if the German civil service were to be the comparator.
81. Some Commission members considered that the net salary relationship between the United Nations common system and the German civil service could be arrived at from the current comparison. It seemed to these members that if the United States civil service salaries were 14 per cent above those of the German civil service and United Nations common system salaries were 15 per cent above the United States service, it followed that United Nations common system salaries were 29 per cent above German civil service salaries.
82. Others considered that such a triangular comparison incorporated a number of different computational bases that were not mutually compatible. It was noted that the German/United States comparison included a Bonn/Washington, D.C., cost-of-living adjustment based on expenditure patterns of German consumers. The United States/United Nations comparison, on the other hand, included a New York/Washington, D.C., cost-of-living adjustment based on expenditure patterns of United States consumers. Furthermore, to calculate net salaries the United States/United Nations comparison was based on the tax status of married taxpayers, while in the German/United States comparison it was based on married taxpayers with one child. Accordingly, the composition of the base populations was different for the German/United States and United Nations/United States comparisons and thus, a United Nations/German comparison (by triangulation) would not be comparing like with like. For these and other computational differences in the two comparisons, it was considered that the conclusion that United Nations common system salaries were 29 per cent above German civil service salaries was not valid. The Commission noted that ACPAQ had addressed such triangular comparisons earlier and concluded that a direct comparison between the two comparators would be the correct approach.
83. Some Commission members noted that since the German/United States comparison was based on a total compensation comparison, if net salaries were to be compared separately then some of the social security aspects would also need to be compared separately. If this were done, the same deductive reasoning that had led to the conclusion that United Nations common system salaries were higher than German civil service salaries would lead to the conclusion that German pension benefits were higher than United Nations common system pension benefits.
84. The Commission noted that in 1995, it had decided to conduct annual updates of the United States/German total compensation margin. When the Assembly addressed this item in 1997, it had requested the Commission to continue to monitor the situation and report when appropriate. The Commission therefore considered whether it was necessary to conduct annual updates in view of the time and resources required. The next study of the identification of the
highest paid national civil service would be fast approaching if the five-year cycle of such studies were to be maintained. Accordingly, it was desirable to establish a schedule that would take account of the need to continue to monitor German/United States total compensation levels and prepare for another cycle of studies to identify the highest paid national civil service.
85. In the context of the next study of the highest paid national civil service, some Commission members considered that it would be essential also to conduct a total compensation comparison between the United States federal civil service and the United Nations common system. It was recalled that such studies had been conducted annually by the Commission in the 1980s. Furthermore, the Board of Auditors had recommended that such comparisons be reinstituted.
86. The Commission recalled that at the time of its recent German/United States total compensation comparisons, the issue of the impact of exchange rates in the comparison had arisen. On each occasion, it had reviewed information that demonstrated that specific exchange rates had no real impact on the total compensation comparison results. However, some members remained skeptical. It was therefore suggested that the views of ACPAQ be requested.
87. Some Commission members recalled that the total compensation comparison between the United States and German civil services involved a number of controversial aspects, such as the underlying grade equivalencies which continued to be contested by German officials. It was suggested that some of the controversial aspects of these studies could possibly be eliminated by giving consideration to the use of a basket of comparators. It was noted, however, that the selection of specific comparators to be included in the basket would inevitably lead to further controversy. Some Commission members considered that some international organizations could be included in the basket of comparators. The Commission noted that there was a sufficient interest in the basket approach to justify further examination of this approach at the time of the next study of the identification of the highest paid national civil service.
Decision of the Commission
88. The Commission decided to report to the General Assembly that:
(a) Retirement and health insurance benefits and leave and work hours provisions of the German civil service were superior to those of the comparator, the United States, while net salaries in the United States civil service remained higher;
(b) Consequently, the current update of the study to identify the highest paid national civil service had again shown that the current comparator, under the application of the Noblemaire principle, was no longer the best. However, the Commission continued to believe it was not opportune to change the comparator for the reasons previously stated;
(c) It might be concluded, based on the series of German/United States total compensation comparisons conducted in recent years, that the German/United States total compensation difference had narrowed significantly and stood at 108.5;
(d) Annual reporting of the German/United States total compensation margin would be suspended and the Commission would undertake a study, scheduled for 2001, that would include but would not be limited to the following:
(i) Study the use of a basket of comparators for possible application in the United Nations common system context;
(ii) Conduct total compensation comparisons between the United States and other potential comparators, including Germany, according to the criteria laid down by the Commission;
(iii) Conduct a United Nations/United States total comp ensation comparison.