Member states’ limit on EU civil service pay rise is overruled

Civitas, 24 November 2010

Earlier today (24^th November) the European Court of Justice (ECJ) overturned a member state imposed limit on EU salary increases. The ruling is an ill-timed move that is likely to further complicate the 2011 EU budget negotiations, writes Natalie Hamill.

The obscure mechanism by which Eurocrat salary increases are calculated (taking account of the civil service pay in 8 member states, but on a delayed timescale) meant that last year, the EU’s civil servants were entitled to a 3.7% pay rise. However, prompted by the austerity of the times (most national governments have been forced to freeze their civil service pay), the European Council decided at the end of last year to halve this above-inflation salary increase, and instead cap the pay rise at 1.8%. Despite the logic behind a minimal pay increase, the Council’s decision didn’t sit well with the EU Commission who referred the case to the ECJ. The Council’s decision has now been ruled illegal and as a result EU civil servants’ pay will be backdated, regardless of the heightening tension over next year’s EU budget discussions.

The EU Commission had proposed an increase of 6% for the 2011 EU budget (from the 2010 total); however, the UK and 12 other member states requested that the budget increase be limited to a maximum 2.9%. When the issue was debated in the EU Parliament last week, MEPs chose instead to support the Commission’s original proposal, and so negotiations broke down. EU spending next year will be based on the 2010 budget until agreement is reached.

Member states are reluctant to surrender more money to the EU when they are having to slash their national public spending, yet the EU refuses to accept that it too must limit its spending until the current economic situation stabilises. The EU’s ‘one rule for us and another for them’ attitude towards the size of its budget will only antagonise those who feel that the EU is out of touch with European citizens. The ECJ’s decision to allow the increased EU pay rise to go ahead will simply fuel this sense of isolation.

A new attempt to negotiate the 2011 EU budget is about to commence, with an ‘in-progress’ draft hinting that the Commission supports plans for EU self-funding through direct taxation, a concept that several member states, along with EU Council President Herman Van Rompuy, are uncomfortable with. The new budget draft is also likely to support MEPs’ calls to be granted greater powers in EU budget negotiations in the future, something that member states were reluctant to approve in the first round of negotiations.

This all comes a matter of weeks after EU auditors refused – for the sixteenth year in a row – to sign off the EU accounts. Many people feel that the EU’s spending should be straightened out before the EU demands further budget increases.

National leaders will meet with the EU Commission on 6^th December, hoping to finally conclude next year’s budget. The latest ECJ ruling is a provocative decision before these discussions resume, and is unlikely to make negotiations smoother.