European Commission taken to court over automatic pay rises

National governments are taking the European Commission to court after it refused to consider the current economic crisis severe enough to suspend automatic pay rises for EU officials.

By Bruno Waterfield, Brussels
6:00PM GMT 27 Dec 2011

European civil servants will get a salary increase of 1.7 per cent next year despite the worst recession in a generation and austerity measures imposed by the EU in many eurozone countries.

Unless stopped by the legal challenge, the pay rise means Baroness Ashton, Europe’s foreign minister and a Labour peer, will pocket an extra £4,000 during a year when most Britons will be tightening their belts.

The Daily Telegraph can also disclose that the commission is proposing a 0.6 per cent decrease in personal contributions to pensions that net EU staff an average £60,000 a year on retirement.

British taxpayers will have to pay £170 million next year towards EU pensions as the cost of the scheme, worth 70 per cent of final salary on retirement, soars to £1.2 billion, up four per cent.

Britain, Germany, France and other national governments had asked that the “significant, abrupt deterioration in the economic and social situation” trigger a pay freeze for EU officials.
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But the commission, which has power under the EU treaty to calculate and set staff salaries, refused.

“With the economic situation in the EU still clearly very serious, and national governments across Europe taking tough decisions to control the pay and pensions of their own civil servants, the EU institutions cannot be immune from having to make similar savings on pay for their own staff,” said a British government spokesman.

The Council of the EU, which represents national governments has now filed a case at the European Court of Justice in a bid to stop the pay rise. It lost a similar challenge in 2010.

The commission has cited pay rises for civil servants in Germany, France and the Netherlands as evidence that the economic situation is not serious enough to freeze pay for EU officials.

“There are no grounds for suspending the annual pay adjustment, because while of course there is a serious crisis going on, the method used to calculate the adjustment has delivered precisely what it should: a pay adjustment that mirrors what member states are giving their own national civil servants,” said a commission spokesman.

To counter the call for cuts from national governments, the commission has tabled proposals to make savings “of more than £840 million by 2020”.

But an official protest signed by the British, Germans, French and 12 other governments, last month, warned that the commission’s saving plans are “unconvincing” and unlikely ever to be implemented.

The alliance of countries is particularly angry that the commission has failed to overhaul the system for calculating automatic salary increases instead of “adjustments decided according to the economic situation and affordability”.

Governments are also angry because the commission has completely refused to plug a pension black hole that will present an annual bill of £1.3 billion to taxpayers in 2013.

Meanwhile, Brussels civil servants are concerned that the political row over their pay and perks is damaging their public image, especially at a time when the EU is imposing austerity “policies which are hostile to the populations” in many euro area countries.

Pierre-Philippe Bacri, president of the Federation of European Civil Servants, said: “We well know that we suffer from an image problem.”

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