Sixty-Second Session

ADVANCE ICSC United Nations

International Civil Service Distr.: Restricted Commission ICSC/62/R.12 20 January 2006

ORIGINAL:ENGLISH

Sixty-second session Vienna, 13-31 March 2006 Item 9 (c) of the provisional agenda*

TOTAL COMPENSATION COMPARISONS UNDER THE NOBLEMAIRE PRINCIPLE TO DETERMINE THE HIGHEST PAID CIVIL SERVICE: REFERENCE CHECK WITH WORLD BANK AND ORGANIZATION FOR ECONOMIC COOPERATION AND DEVELOPMENT (OECD).

Note by the secretariat of the International Civil Service Commission

Summary

At its sixtieth session (Bangkok, 28 February-11 March 2005) the International Civil Service Commission (ICSC) commenced its current Noblemaire study by reviewing data collected by its secretariat as part of phase I of the study. The Commission noted that the phase I analysis resulted in the identification of a number of civil services which could be considered for the phase II analysis, namely, the national civil services of Belgium, Germany, Singapore and Switzerland. It further decided to proceed to collect information on the remuneration levels of the World Bank and the Organization for Economic Cooperation and Development (OECD) only as a reference check.

The present document reports on the results of remuneration comparisons carried out by the secretariat with regard to OECD and the World Bank. The remuneration comparisons are presented in a step-by-step analysis using Washington, D.C. salaries as a basis for comparison. They show that the World Bank maintains net salaries that are currently 28.6 per cent above equivalent positions in the United Nations common system and OECD salaries are 28.8 per cent above common-system salary levels.

* ICSC/62/R.1 ICSC/42/R.1 English Page 2

INTRODUCTION

1. At its sixtieth session (Bangkok, 28 February-11 March 2005) the International Civil Service Commission (ICSC) commenced its current Noblemaire study by reviewing data collected by its secretariat as part of phase I of the study. The Commission noted that the phase I analysis resulted in the identification of a number of civil services which could be considered for the phase II analysis, namely, the national civil services of Belgium, Germany, Singapore and Switzerland. At its sixty-first session the Commission reviewed a preliminary Phase II analysis which demonstrated that the total compensation packages of Germany, Switzerland and Singapore would not be expected to exceed that of the current comparator. Accordingly, the Commission decided to cease any further work on the Phase II comparison for these three national civil services. It noted that data had yet to be collected for the Belgium civil service and that the collection of remuneration data from the Organization for Economic Cooperation and Development (OECD) and the World Bank (IBRD) only for reference purposes was proceeding.

2. The present document provides information on the remuneration comparison with OECD and the World Bank following the format of the 1994/1995 study. Accordingly the current report has two parts: part one relates to OECD and part two applies to the World Bank. Each part provides: (a) a description of organizational, classification and remuneration structures and an analysis of similarities and differences with the United Nations common system and (b) remuneration comparisons with the United Nations common system. Much of the descriptive information was reported to the Commission as part of the 1994/1995 study and has been updated, where appropriate in the current document.

3. As was the case of the 1994/1995 comparisons, a set of modalities were chosen so that the same measurement criteria would be applied to all three organizations (i.e. OECD, World Bank and the United Nations). One of the major considerations in this regard was the place of the comparison. The headquarters of OECD is Paris, the World Bank is Washington and the United Nations is New York. Washington was again selected as the comparison location in the current study.

4. A further basis selected for the comparison related to the family status of officials being compared. A married official with one child was selected to ensure the inclusion of remuneration elements paid in recognition of a spouse or child. The year 2005 was selected to avoid projections of salary levels into 2006. It should be noted however that the World Bank fiscal year runs from mid-year to mid-year. Accordingly, the World Bank remuneration comparison was based on the 1 July 2004 to 30 June 2005 salary scale as a point of comparison. Since most Professional staff in all three organizations are expatriates, the comparison included expatriate remuneration elements, where appropriate.

PART ONE

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ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT

I. DESCRIPTION

5. OECD is a member of the coordinated organizations, a group of international organizations employing over 11,000 officials. Other members of the Coordinated Organizations are: the Council of Europe, the North Atlantic Treaty Organization, the Western European Union, the European Space Agency and the European Centre for Medium-range Weather Forecasts. These organizations share common conditions of work. OECD is the second-largest member of this group; it is made up of 30 countries from North America (Canada, Mexico and the United States of America); Europe (Austria, Belgium, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Iceland, Italy, Luxembourg, Norway, Netherlands, Poland, Portugal, Slovak Republic, Spain, Switzerland, Sweden, Turkey and the United Kingdom of Great Britain and Northern Ireland); and the Pacific (Australia, Japan, New Zealand and South Korea). More than 20 other countries have expressed interest in OECD membership.

6. The overall mission of OECD is to contribute to the development of the world economy by providing a forum for policy makers to meet and discuss policy issues, including stimulating and harmonizing members' efforts towards developing countries. Its mandate encompasses both member and non-member countries.

A. Organizational structure

7. The OECD secretariat consists of some 2,000 staff members located at its headquarters, Paris, and at information and publication centres in Bonn, Tokyo, Mexico City and Washington. Of these, approximately 950 (49 per cent) are officials similar to the Professional and higher categories of the common system.

8. The Organisation has 14 substantive directorates: Economics; Statistics; Environment; Development Cooperation; Trade; Financial and Enterprise Affairs; Education; Employment, Labour and Social Affairs; Science, Technology and Industry; Food, Agriculture and Fisheries; Public Governance and Territorial Development; the Centre for Tax Policy and Administration; the Centre for Entrepreneurship, SMEs and Local Development; and the Centre for Cooperation with Non-Members. The Executive Directorate regroups the support directorates and services such as Human Resources Management; Finance; Information Technology and Network. The Organisation also includes a number of autonomous or semi-autonomous bodies, such as: the International Energy Agency, the OECD Nuclear Energy Agency, the Development Centre, the Centre for Educational Research and Innovation and the European Conference of Ministers of Transport. ICSC/42/R.1 English Page 4

9. There are four organizational levels below the Secretary-General:

(a) The first level includes four Deputy Secretaries-General, The Deputy Secretaries-General provide advice and action on a full range of policy and management issues and oversee the work of the directories;

(b) The second level consists of Directorates and Services. Directorates are normally headed by a director at the A-7 grade level, often assisted by a deputy-director at the A-6 grade level. Heads of services are at the A-6 grade level. Directorates may be considered to correspond to departments in the United Nations common system;

(c) Divisions are the third organizational level. Heads of divisions are classified at the A-5 grade level. Larger divisions may be subdivided into sections headed by A-4 level staff members.

B. Classification or grade structure

10. There are three main categories of jobs: Professional, Administrative and Technical, and Technical and Maintenance. They are distinguished on the basis of educational requirements and recruitment source (international versus local).

11. The Professional category is subdivided into two categories: A grades for administrators and L grades for linguistic staff. There are seven grade levels for administrators, ranging from A-1 (junior level administrator) to A-7 (director of department), and five grade levels for linguistic staff, from L-1 (junior translator) to L-5 (deputy head of translation division). Staff in this category are internationally recruited and must hold a university degree.

12. The other two categories correspond to General Service and related categories of the common system and are not included in the present study as they were not in the 1994/1995 study. The Administrative and Technical category consists of administrative support staff (six levels). These are mainly locally recruited although non-local recruitment may be resorted to, e.g., English language secretaries.

13. The Technical and Maintenance category includes security and maintenance personnel (six levels), which is exclusively locally recruited.

14. The grade structure is determined on the basis of the duties and responsibilities of the job, i.e., the rank-in-post approach. The job classification system, developed in 1970, is a factor rating method supplemented by grade level descriptions.

15. Posts at the A-1 grade level are limited in number. This grade level is used for recruitment under the young professional’s programme, which is intended to promote the recruitment of the highest-quality professionals (postgraduate university level) and to increase mobility between directorates. Incumbents are recruited for a two-year period and work successively in two to three areas of the Organisation.

16. While the OECD grade structure differentiates between A-2 and A-3, in practice these two grade levels are linked. For most jobs the substantive level is considered to be A-3. In practice, incumbents are normally recruited at the A-2 grade level and subsequently promoted on the basis of time-in-grade and performance.

17. The grade structure of OECD jobs equivalent to common-system Professional levels is illustrated in tables 1 and 2 below.

Table 1

Grade structure of the OECD categories equivalent to the common-system Professional category

Category Grade Functional title Characteristics Administrators A-7 Director of Department Sound managerial experience, political judgement, and wide experience in national and international policy. A-6 Deputy Director/ Head of Service A-5 Head of Division Senior level in specialized field at international level. A-4 Head of Section/ Minimum 10 years' experience with Principal administrator organizational, supervisory and leadership skills. A-3 a / Administrator Preferably postgraduate degree, minimum of three years' experience. A-2 Administrator No longer in use except as a recruitment grade. A-1 Junior Professional Very limited in number, two-year appointment, rotation within OECD. Linguistic staff L-5 Deputy Head - Supervisory and leadership skills, Translation Division experience in intergovernmental organizations. L-4 Translation reviser/ Revision of technical texts. Interpreter Interpretation in two languages. L-3 Translator Professional experience in one of the major areas of OECD. L-2 Translator L-1 Junior translator Training post, few jobs if any.

a / Referred to as A-2/A-3. ICSC/42/R.1 English Page 6

C. Remuneration structure

18. The remuneration structure applicable to OECD staff in positions comparable to the Professional and higher categories of the United Nations common system was designed to recognize that most staff are expatriates. Salary scales are developed and adjusted in local currencies for 27 countries and are applied to staff of the Coordinated Organizations within those countries. The structure of the scale is identical for all locations. Each salary scale is developed taking into account an internal system of purchasing-power parities referenced to the base scale (Brussels). As in the common system, salary scales for the Coordinated Organizations are expressed net of taxes. The structure of the salary scale, effective 1 January 2005, in the United States and applicable for staff of the relevant categories (A and L) to the current exercise is shown in table 2. Table 3 shows the corresponding analysis for the base salary scale of the United Nations common system, effective 1 January 2005.

19. As may be noted from tables 2 and 3, the grade ranges (minimum to maximum steps) are generally wider for OECD than for the common system at most grades.

Table 2

OECD salary scale structure

OECD Inter-grade Grade range Inter-step Frequency of step increment grade differential at (minimum to differential at step I maximum) step I (%) (%) (%)

A-7 9.4 20.1 3.3 Annual to step IV, biennial thereafter to maximum step VI

A-6 18.2 24.9 2.8 Annual to step IV, biennial thereafter to maximum step VIII

A-5 15.9 35.0 2.8 Annual to step VI, biennial thereafter to maximum step XI

A-1 - 3.0 3.0 Only two steps, step II after one

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Table 3

United Nations salary scale structure

United Inter-grade Grade range Inter-step Frequency of step increment Nations differential at (minimum to differential at grade step I maximum) step I (D) (%) (%) (%) D-2 11.5 9.8 1.9 Biennial to maximum step VI D-1 11.7 14.9 1.9 Annual to step IV, biennial thereafter to maximum step IX P-5 18.4 22.6 1.9 Annual to step X, biennial thereafter to maximum step XIII P-4 19.1 30.4 2.1 Annual to step XII, biennial thereafter to maximum step XV P-3 20.6 34.0 2.4 Annual to step XIII, biennial thereafter to maximum step XV P-2 26.3 28.8 2.6 Annual to step XI, biennial thereafter to maximum step XII P-1 - 28.6 3.2 Annual to step X, maximum

D. Other characteristics

20. The basic characteristics of OECD in terms of the nature of the civil service, the nature of work, and the classification philosophy and career patterns are very similar to those of the United Nations common system. They are summarized below.

Nature of the civil service

21. OECD is an international civil service requiring staff members to work in a multicultural environment. Staff are recruited from among the nationals of 30 member countries on the basis of the highest standards of competence and integrity. There are no national quotas but the Organisation attempts to ensure an equitable distribution of posts among the member countries. This is similar to the United Nations common system, with the exception of the latter's wider membership. Another difference is the high concentration of OECD staff at its headquarters.

Nature of the work

22. The work of the Organisation is focused on economic theory and policy analysis. In addition to trained economists, OECD employs specialists in fields such as trade, development, financial and fiscal affairs, social affairs, employment and education, energy, including nuclear energy, environment, science and industrial policy, statistics and computer

/... ICSC/42/R.1 English Page 9 information systems. An analysis of the main functions of its substantive directorates illustrates considerable similarity to the activities of the common system. Examples include: analysis of trends and prospects in the world economy (United Nations); review of economic performance and policies (UNIDO); monitoring economic structural reforms (United Nations); statistics (United Nations, ILO); environmental questions (United Nations-UNEP, FAO, IMO, UNIDO); development cooperation (UNDP); trade (United Nations); international and national law (United Nations, ILO); science, technology and industry (UNIDO, IMO, ICAO); social affairs employment and education (ILO, UNESCO); food agriculture and fisheries (FAO); public management (United Nations, ILO); cooperation with European economies in transition (most common system organizations); energy, including nuclear energy (United Nations, UNIDO, IAEA); development centre (UNDP with all other organizations), educational research and innovation (UNESCO).

23. As in the common system, professional-level work in OECD requires a university education (preferably at the postgraduate level) and the use of two languages. English and French are the two working languages of the Organisation. Knowledge of other languages is considered an advantage. At senior levels, international experience is required.

Job classification

24. The job classification philosophy and structure is essentially the same as in the common system: (a) jobs are classified on the basis of duties and responsibilities using predetermined criteria; (b) a factor-rating system is used to distinguish between grade levels; (c) categories are distinguished on the basis of educational requirements and recruitment source; (d) the Professional category has seven grade levels. Although linguistic jobs have a slightly different remuneration scale, their grading patterns correspond to that of the common system.

Career patterns

25. Officials may be recruited under the age of 65. Apart from staff recruited under the young Professionals programme, the majority of staff recruited at the A and L grades are experienced professionals, generally over the age of 35. The mandatory age of separation is 65. As a rule, officials are initially appointed for a fixed term (usually of 2 or 3 years duration), the first six months being the probationary period. Fixed-term appointments may be converted to an indefinite-term appointment if the official has demonstrated adaptability by working on different subjects. These conditions, with the exception of the age of separation, are similar to those of the common system.

II. ESTABLISHMENT OF GRADE EQUIVALENCIES

Note: This section relates to the 1994/1995 study which was used as the base for the current study. It is presented here for informational purposes.

A. Methodological aspects ICSC/42/R.1 English Page 10

Scope of job data and data-collection process

26. A sample of some 100 job descriptions was selected by the ICSC secretariat following the common-system grading patterns. The selection was made on the basis of job titles and grade levels. Existing job descriptions and vacancy announcements were used. The sample was reviewed by OECD classification staff to ensure that jobs were valid and representative of the grade levels.

27. The sample was selected in order to reflect adequately: (a) the most populous occupational groups of the United Nations common system so as to cover a large proportion of common system jobs; and (b) the most populous common system grade levels (P-3 to P-5).

28. The final sample included 101 jobs at the A-1 to A-7 and L-2 to L-5 grade levels. It covered 14 of the most populous groups of the common system, corresponding to 63 per cent of common-system jobs.

Job evaluation and validation process

29. Each job was evaluated independently by two common-system classification specialists by applying the ICSC Master Standard. Individual results were compared and any differences in level were subject to a third review.

30. To enable OECD to assess the grade equivalency results, a briefing on the application of the ICSC Master Standard was provided by the ICSC secretariat to OECD classification and remuneration specialists in September 1994. The grade equivalency results were provided to OECD for comments.

B. Grade equivalency results

31. The results of the 1994 grade equivalency exercise confirmed previous estimates by the ICSC secretariat and by CCAQ. They were also identical to those used by the coordinated organizations' interorganizational study section on salaries and prices, which is responsible for the establishment of salaries for OECD and other organizations.

Table 4

Comparative summary of grade equivalencies

Common system ICSC in 1995 D-2 A-7 D-1 A-6 P-5 A-5 P-4 A-4 P-3 A-3

P-2 A-2 P-1 A-1

III. REMUNERATION COMPARISON BETWEEN THE ORGANISATION FOR ECONOMIC COOPERATION AND DEVELOPMENT AND THE COMMON SYSTEM

A. Cash remuneration

32. The secretariat conducted cash remuneration comparisons between OECD and the common system on the basis of the remuneration levels applicable for both services at Washington, D.C. The comparisons were made using:

(a) 2005 as the reference period;

(b) A married staff member with one dependent child serving in an expatriate capacity;

(c) On the United Nations side, the average remuneration levels for 2005 including a $1936 per annum child allowance;

(d) On the OECD side, base salary applicable in the United States (as of 1 January 2005) plus an expatriate allowance of 18.1 per cent of step one, a 6 per cent household allowance, a child allowance of $295.60 per month and an additional $83.15 per month allowance for a child of an expatriate staff member in both A and L categories.

33. The analysis is illustrated by way of a step-by-step approach shown in annex I. Steps 1 and 2 show the salary scale of the A and L categories incorporating the amounts specified in paragraph 32 above. Step 3 shows the salary weighting factors resulting from the 1994/1995 grade equivalency exercise which are used in calculating a single weighted average salary at each United Nations common-system grade. Step 4 provides the distributions of A and L categories of staff together with the average step within each grade for both categories. The average salaries per grade for each category were calculated by using the average step information, in conjunction with the salary scales provided in steps 1 and 2. Step 5 provides the weighted average calculation used to produce a single grade average salary for OECD at each common-system grade. Finally, step 6 presents the common-system/OECD remuneration comparison at each common- system grade with an overall weighted average ratio calculated in a format similar to that used for annual margin comparisons between the common system and the comparator.

34. The results indicate that OECD has a net remuneration advantage of 28.8 per cent over common-system salary levels. The 1994/1995 comparison result showed that OECD was ahead of the United Nations by 51.7 per cent. In this context it should be noted that several economy measures had been introduced since the 1994/1995 study. An official of OECD indicated that as a result of the economy measures OECD salaries had not kept pace even with those of other Coordinated Organizations. As may also be noted [from para. 32 (d) above] the expatriate allowance is now 18.1 per cent of step 1. In 1994/1995 the allowance ICSC/42/R.1 English Page 12 was 20 per cent of actual salaries. This factor alone has had a significant impact on the current results.

B. Benefits

35. The secretariat has not conducted a detailed analysis of the benefit structure of the coordinated organizations. The Commission may, however, wish to take note of the major provisions of relevant OECD schemes.

Retirement

36. The retirement provisions of the OECD scheme, as applicable to staff hired before 31 December 2001, are summarized as follows:

(a) Accrual rate of 2 per cent per annum;

(b) Normal retirement age of 60 with early retirement option at age 50 and mandatory retirement at age 65;

(c) Pension benefit adjustment linked to salary adjustments;

(d) Maximum pension benefit of 70 per cent of the final year's salary;

(e) Employee contribution of 8 per cent of pensionable remuneration;

(f) Provisions for death, disability and survivor's benefits;

(g) Pension benefits provided net of taxes (i.e., any taxes paid on pension benefits are reimbursable by OECD to the retiree in addition to the net pension).

As of 1 January 2001 a new plan applies to staff hired on or after that date. Normal retirement age is 63 after at least 10 years of service with a maximum retirement age of 65. Accrual rate is the same as prior plan along with a maximum of 70 per cent for 35 years of service. A reduced pension can be paid to retiring staff from the age of 51.

37. Major provisions of the United Nations Joint Staff Pension Fund (UNJSPF) are presented below:

(a) Accrual rate of 1.5 per cent per annum for the first five years, 1.75 per cent for the next five years and 2 per cent for all remaining years to a maximum of 25 (with effect from 1 January 1983);

(b) Retirement age of 60 (or 62) with early retirement option at age 55;

(c) Pension benefit adjustment linked to cost-of-living movements;

(d) Maximum pension benefit of 70 per cent of the final three years' pensionable remuneration;

(e) Employee contribution of 7.9 per cent of pensionable remuneration;

(f) Provisions for death, disability and survivors' benefits;

(g) Retiree responsible for payment of taxes due on periodic pension benefits.

Health insurance

38. The OECD health-care scheme provides that expenses are covered at either 92.5 or 100 per cent depending on the nature of the service/item, with maximum amount specified for each. Overall costs are shared between the staff member and the organization on the basis of one third/two thirds. Employee contribution is approximately 3 per cent of salary.

39. Annual leave is granted at the rate of 2.5 days per month, i.e., 30 days per annum. Holidays are based on local practice. In Paris, 12 official holidays are currently applicable. In Washington, local holidays as well as year-end holidays applicable in Paris are provided, resulting in a total of 17 days. Sick leave is granted up to four months at full pay. Home leave, as in the case of the common system, is granted every two years.

C. Benefit comparison conclusions

40. Without a full-fledged total compensation comparison of salaries and benefits of the common system vis - à - vis OECD, it is difficult to assess the relative worth of each benefit package. Based on benefit provisions only, however, it would seem that the health insurance cost-sharing ratio of 67/33 for OECD resulting in an employee contribution of approximately 3 per cent of salary is better than the United Nations (New York) scheme. OECD annual leave provisions appear broadly similar to those of the common system.

41. As regards pension schemes, provisions are broadly similar. It may be concluded, however, that the OECD scheme may be perceived as more generous than the UNJSPF scheme, inter alia , because of the tax reimbursable nature of the pension benefits provided by OECD and the inflation adjustment mechanism for benefits which is linked to salary adjustments rather than cost-of-living movements. ICSC/42/R.1 English Page 14

PART TWO

WORLD BANK

I. DESCRIPTION

42. The World Bank Group consists of five intergovernmental organizations: the International Bank for Reconstruction and Development (IBRD or Bank), the International Finance Corporation (IFC), the International Development Association (IDA), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID). The five organizations share a remuneration and classification structure; the present study concentrates on the Bank, which employs almost 90 per cent of the regular and fixed-term staff of the World Bank Group.

43. The International Monetary Fund (IMF) is a sister institution under the Bretton Woods Agreements, but is not part of the World Bank Group. To be eligible for membership of the World Bank Group, a member State must be a member of IMF. The Board of Governors of IMF and the World Bank have the same membership. Over the years, IBRD and IMF have developed principles of parallelism in regard to salaries and major benefits of their staff because they compete for similar services. However, since the late 1990’s the World Bank has made significant changes in its salary and allowances structure which the IMF has not mirrored.

A. Organizational structure

44. The World Bank consists of some 9,000 regular and fixed-term staff. A Chief Executive Officer, the President is responsible for the overall management of the World Bank Group institutions. Within the Bank, there are a number of Vice-Presidents in addition to the General Counsel and a number of special advisors. Each vice-presidency is divided into departments and departments are divided into divisions and sections or units.

B. Classification or grade structure

45. While the World Bank had a unified job classification structure based on the rank-in-post approach at the time of the 1994/1995 study, the introduction of the current broad banded salary structure has necessitated a review of the structure which is currently on-going. Accordingly, as in the case of the OECD calculation modalities, the current study placed reliance on the grade equivalency results of the 1994/1995 study in coming to conclusions on the UN/World Bank remuneration comparisons. In step 2 of annex II below, the correlation of the new broad banded structure with the previous grading structure is shown. This correlation served as the basis for the remuneration comparisons. While the World Bank did not and does not have a strict titling policy the following table was presented as part of the 1994/1995 study as an illustration of the kinds of positions at the various World Bank grades.

Table 5

Grade structure of higher levels

World Bank grade levels Titles 31 President of the World Bank Group 29-30 Vice President 28 Director of Department/Senior adviser/ Vice President (MIGA) 27 Chief of Division/Senior Adviser 26 Chief of Division/Chief of Unit or Section/Lead specialist or economist/Research adviser 25 Chief of Division/Principal officer or specialist/Coordinator/Chief of Unit/ Senior counsel 24 Senior officer/Senior specialist/ Project manager 22-23 Officer/Analyst 18-21 Officer/Analyst Research assistant/Operations assistant/ Technician

C. Remuneration structure

46. The remuneration structure of the World Bank consists of minimum and maximum salaries at each grade with progression from minimum to maximum based on performance. Unlike the common-system salary scale structure with step movement based on seniority, the World Bank salary structure reflects a range at each grade with overlapping salary amounts from one grade to the next. The majority of World Bank staff at levels equivalent to the Professional and higher categories of the common system are located in Washington, D.C. As a result, the salary scale for Washington, D.C. serves as the base scale for all world-wide locations of the Bank. Additions to the Washington scale are made in the form of allowances, to account for dependency/expatriate status of staff and other payments designed to recognize cost-of-living/housing cost differences between Washington, D.C. (the base of the World Bank system) and other duty stations. The structure of the scale is identical for all locations. Salary scales for the World Bank/common system are expressed net of taxes. The structure of the salary scale, effective 1 July 2004, for the categories of relevance to the current exercise is presented in table 5 above (see table 3 above for comparison to United Nations common-system scale structure). Table 5 shows World Bank grades I to E, encompassing the range of common-system grades P-1 to D-2 analysed in the current study. ICSC/42/R.1 English Page 16

47. As may be noted from tables 6 and 3, the grade ranges (minimum to maximum) of the World Bank scale are significantly wider than those of the United Nations common system as a result of the introduction of a broad banded salary structure by the World Bank.

Table 6

World Bank salary scale structure

Grade Inter-grade differential Grade range at minimum of grades (minimum to maximum) (%) (%) I 37.9 50 H 40 75.5 G 31 82 F 39.4 82 E - 82

D. Other characteristics

48. The basic characteristics of the World Bank in terms of the nature of the civil service, the nature of the work, and career patterns are very similar to those of the common system. They are summarized below.

Nature of the civil service

49. The World Bank is an international organization linked to the United Nations through a relationship agreement. As in the United Nations system, staff are recruited world wide. While in the common system some 38 per cent of Professional and higher category staff are located in the field (excluding project staff), the large majority of the World Bank staff are located at its headquarters, Washington D.C. However, since the late 1990’s there has been a concerted effort to expand the Bank’s presence in the field. This effort is continuing.

Nature of the work

50. Although the World Bank has a distinct financing function requiring particular expertise, only a small proportion (approximately 20 per cent) of jobs require knowledge and experience of finance/banking functions. Over the years, the work of the Bank has evolved and so has its need to broaden its base of expertise. At the time of the 1994 study the most populated occupations or disciplines were: accounting, administration and budget, economic development, economics, country representation, public affairs and information as well as a wide variety of technical specialties in fields such as agriculture, education, engineering, health, public administration, transport, urban development and sociology.

51. Professional-level work requires a university degree, as is the case in the common system. While knowledge of additional languages may constitute an advantage, only one language (English) is used in the Bank and is considered a minimum requirement.

II. ESTABLISHMENT OF GRADE EQUIVALENCIES

Note: This section relates to the 1994/1995 study which was used as the base for the current study with an interpolation of the new grading structure which was introduced in 1998. It is presented here for informational purposes.

A. Methodological aspects

Scope of job data and data-collection process

52. The same approach to selecting jobs was followed as for the OECD described above. The sample consisted of 102 jobs at grade levels 18 to 28. It covered 13 occupational groups. The sample: (a) covers the most populous occupational groups of the common system, thus reflecting a large proportion (59 per cent) of common-system jobs; and (b) reflects adequately the most populous grade levels of the common system (P-3 to P-5).

Job evaluation and validation process

53. Each job was evaluated independently by two classification specialists from the organizations of the common system by applying the ICSC Master Standard; individual results were compared and any differences in level were subject to a third review.

54. Results of the grade equivalencies were provided to the World Bank for comments. While the Bank could not undertake a formal validation exercise owing to workload constraints, results were reviewed by World Bank classification specialists, who expressed general agreement with them.

B. Grade equivalency results

Table 7

Comparative summary of grade equivalencies

United Nations grade ICSC in 1995 D-2 27-28 D-1 27 P-5 26 P-4 24 P-3 23 P-2 22 P-1 20-21 ICSC/42/R.1 English Page 18

III. REMUNERATION COMPARISON BETWEEN THE WORLD BANK AND THE COMMON SYSTEM

A. Cash remuneration

55. The secretariat conducted remuneration comparisons between the World Bank and the common system on the basis of remuneration levels applicable to both the World Bank and the United Nations in Washington, D.C. Comparisons were made using:

(a) 2005 as the reference period;

(b) A married staff member with one dependent child serving in an expatriate capacity;

(c) On the United Nations side, the average remuneration levels for 2005 including a $1,936 per annum child allowance;

(d) On the World Bank side, the base salary, plus spouse and child allowance.

56. A step-by-step analysis of the remuneration comparison is presented in annex II to the present paper. The World Bank salary scale which came into effect on 1 July 2004 is shown in step 1 of annex II along with the Market Reference Point and an indication of a representative job title for each grade. Step 2 of annex II shows the current broad banded grades as related to the previous (pre-1998) grade structure of the World Bank. Step 3 shows the weights to be applied to the salary components of the World Bank to derive an overall result. These weights were derived by comparing the 1994/1995 weightings to the revised broad banded salary scale structure. Step 4 shows the additions to World Bank salaries for comparison purposes, namely spouse and child’s allowance. Step 5 shows the averaging calculations using the weights from step 3. Step 6 presents the United Nations/World Bank remuneration comparison at each United Nations grade with an overall weighted average ratio calculated in a format similar to that used for annual margin comparisons between the United Nations and the comparator.

57. As may be noted from the results of step 6, the World Bank has a net remuneration advantage of 28.6 per cent over common-system salary levels. This result has been discussed with World Bank officials, who found the conclusion to be reflective of their own comparisons with the United Nations.

B. Benefits

58. As part of the Commission's review of this item, it may wish to take note of the major provisions of relevant World Bank schemes.

Retirement

59. The retirement provisions of the World Bank scheme reported to the Commission in 1995 are summarized as follows:

(a) Accrual rate of 2.2 per cent for the first 25 years of service and 1.8 per cent for the next 10 years of service;

(b) Retirement age of 55 to 62 without benefit reduction if age plus years of service equals 85 or more;

(c) Pension benefits adjusted annually linked to consumer price index movements;

(d) Maximum pension benefit of 73 per cent of the highest annual average gross salary;

(e) Employee contribution of 7 per cent of salary;

(f) Provisions for death, disability and survivor's benefits.

The above provisions apply to staff hired before 15 April 1998. Staff hired after that date enter a new pension scheme which reflects defined benefit (1% of net salary for each year service) and a defined contribution plan (5% employee contribution and 10% employer contribution). There is a separate long term disability plan.

Health insurance scheme

60. The World Bank medical insurance plan includes a number of options which, while basically covering the same medical expenses, differ in the amount of coverage, i.e., the deductibles and benefits available under each option. Premiums are split between the World Bank and staff on a 75/25 ratio.

61. Annual leave is granted on a sliding scale based on length of service, as follows:

Less than five years - 26 days Five years, less than 10 years - 28 days Ten years or more - 30 days

Sick leave

62. Sick leave is accumulated at the rate of 15 days per year with no maximum accumulation. ICSC/42/R.1 English Page 20

C. Benefit comparison conclusions

63. Without a full-fledged compensation comparison of salaries and benefits of the common system vis - à - vis the World Bank, it is difficult to assess the relative worth of these two benefit packages. Based on benefit provisions only, however, it would seem that the health insurance cost-sharing ratio of 75/25 for the World Bank is better than the United Nations (New York) cost-sharing ratio of 67/33, while common-system leave provisions (30 days of annual leave) regardless of length of service are better than in the World Bank. With regard to sick leave, it is not possible to assess the relative value of the two packages without examining in greater detail coverages provided under longer- term sickness provisions.

64. As may be noted above, the provisions of the World Bank and the United Nations pension schemes for staff hired before 15 April 1998 are broadly similar. However, the pension plan introduced for staff hired on or after 15 April 1998 seems clearly less generous.

CONCLUSIONS

65. The Commission is invited:

(a) To report to the General Assembly that:

(i) On the basis of an update of the 1994/1995 OECD and the World Bank study under the Noblemaire principle, remuneration comparisons show that:

- OECD cash remuneration is 28.8 per cent above United Nations common-system levels;

- World Bank cash remuneration is 28.6 per cent above United Nations common-system levels.

Annex I

STEP-BY-STEP DETAILS OF REMUNERATION COMPARISON BETWEEN OECD AND THE UNITED NATIONS COMMON SYSTEM

Step 1

OECD annual base salary scale for A category staff in United States including 18.1 per cent

of step 1 - expatriation, 6 per cent household, $295.60 per month per child/other dependant and

$83.15 per month expatriate child allowances

(Effective 1 January 2005 - in United States dollars)

Grade STEPS

I II III IV V VI VII VIII IX X XI

A-7 164 535 169 118 173 701 178 284 185 160 192 037

A-6 150 726 154 185 157 643 161 102 166 290 171 479 176 667 181 856

A-5 128 257 131 219 134 180 137 141 140 102 143 063 147 504 151 945 156 385 160 826 165 266

A-4 111 324 113 706 116 089 118 471 120 854 123 236 126 805 130 375 133 944 137 513 141 082

A-3 96 489 98 703 100 918 103 132 105 347 107 561 110 882 114 204 117 525 120 846 124 167

A-2 79 049 80 761 82 473 84 186 85 898 87 610 90 175 92 741 95 307 97 872 100 438

A-1 62 845 64 346 ------ICSC/62/R.12 English Page 22

Step 2

OECD annual base salary scale for A category staff in United States including 18.1 per cent

of step 1 - expatriation, 6 per cent household, $295.60 per month per child/other dependant and

$83.15 per month expatriate child allowances

(Effective 1 January 2005 - in United States dollars)

Grade STEPS

I II III IV V VI VII VIII IX X XI XII

L-5 117 499 121 360 125 220 129 081 132 941 136 802 140 662 144 523 148 383 152 244

L-4 103 884 107 279 110 674 114 069 117 464 120 859 124 254 127 649 131 044 134 439 137 834 141 229

L-3 98 691 101 909 105 127 108 345 111 563 114 782 118 000 121 218 124 436 127 654

L-2 80 269 82 857 85 444 88 031 90 618 93 206 95 793 98 380 100 967 103 555

L-1 52 712 54 821 ICSC/62/R.12 English Page 23

Step 3

OECD grade equivalency results for A and L categories of staff

Percentage weights for application to salaries

OECD grade United Nations grade

P-1 P-2 P-3 P-4 P-5 D-1 D-2

A-7 100

A-6 100

A-5 95

A-4 32 90

L-4 10

A-3 a / 85 63

A-2 11

A-1 100

a / A-3 corresponds to A-2/A-3. ICSC/62/R.12 English Page 24

Step 4 Average step of A and L categories as provided by OECD - effective 1 January 2005

Grade Number of Average Average salary a / staff step $ A-7 20 5 185 160 A-6 20 7 176 667 A-5 91 8 151 945 A-4 233 7 126 805 A-3 195 5 105 347 A-2 47 3 82 473 A-1 18 2 64 346

Grade Number of Average Average salary a / staff step $ L-5 2 10 152 244 L-4 10 11 137 834 L-3 3 8 121 218 L-2 - 7 95 793 L-1 - - - a / Average salary of A and L categories calculated by secretariat using average step and salary scales in steps 1 and 2. ICSC/62/R.12 English Page 25

Step 5

Calculation of average OECD salaries per common-system grade using average salaries in step 4 and grade equivalency study weights from step 3

P-1 P-2 P-3 P-4 P-5 D-1 D-2

Grade Average Weight $ Weight $ Weight $ Weight $ Weight $ Weight $ Weight $ (%) (%) (%) (%) (%) (%) (%) (%)

A-7 185 160 100 185 160

A-6 176 667 100 176 667

A-5 151 945 95 151 945

L-5 152 244 5 152 244

A-4 126 805 32 126 805 90 126 805

L-4 137 834 10 137 834

A-3 a / 105 347 85 105 347 63 105 347

L-3 121 218 5 121 218

A-2 82 473 11 82 473

L-2 95 793 4 95 793

A-1 64 346 100 64 346

Average 64 346 102 249 113 007 127 908 151 960 176 667 185 160

a / Weighted average calculated based on A-2/A-3 proportions. ICSC/62/R.12 English Page 26

Step 6 Comparison of average net remuneration of United Nations and OECD officials in Washington, D.C. by equivalent grades

(Margin for calendar year 2005)

Grade Net remuneration OECD/United Weights for Nations ratio calculation of (United overall ratio c / Nations = 100) % % United OECD b / Nations a / $ $ D-2 146 143 185 160 126.7 3.1 D-1 137 739 176 667 128.3 10.2 P-5 119 872 151 960 126.8 28 P-4 102 637 127 908 124.6 30.3 P-3 85 245 113 007 132.6 20.9 P-2 69 543 102 249 147.0 6.8 P-1 53 395 64 346 120.5 0.7 Weighted average ratio: 128.8

a / Average United Nations net salaries at dependency level by grade reflecting twelve months at multiplier 38.3 (January 2005 scale) and a children's allowance of $1,936.

b / Average OECD salaries based on average step/grade and 2005 grade equivalency study results. Includes the following: base salary, 18.1 per cent expatriation, 6 per cent household, $295.60 per month children/other dependant and $83.15 per month expatriate child allowances.

c/ Correspond to common system staff in grades P-1 (D) to D-2 (D), inclusive, serving at headquarters and established offices as at 31 December 2003. ICSC/62/R.12 English Page 27

Annex II

Step 1

World Bank Group Staff Salary Structure

(effective July 1, 2004)

Grades Minimum Market Maximum Representative Job Reference Titles Point

A 21,000 27,295 35,480 Office Assistant B 27,620 35,910 50,270 Team Assistant, Information Technician C 31,650 41,150 57,610 Program Assistant, Information Assistant D 38,180 49,630 69,480 Senior Program Assistant, Information Specialists, Budget Assistant E 48,620 63,200 88,480 Analyst F 67,800 88,140 123,400 Professional G 88,760 115,390 161,550 Senior Professional H 124,150 161,400 217,890 Managers and lead Professionals I 171,200 214,000 256,800 Directors and senior Advisors J 216,790 242,800 279,220 Vice Presidents K 242,500 271,600 282,460 Managing Directors and Senior Vice Presidents ICSC/62/R.12 English Page 28

Step 2

Current and previous grade correlation of World Bank salary structure

Current Broad Previous Grades Banded Grades A 11/12 B 13/14 C 15/16 D 17/18 E 18/19/20 F 21/22 G 23/24 H 25/26 I 27/28 J 29 K 30 ICSC/62/R.12 English Page 29

Step 3

United Nations approximate grade equivalencies with WB broad bands

(Percentage weights for application to salaries)

United Nations grade World Bank P-1 P-2 P-3 P-4 P-5 D-1 D-2 grade I 50 100 H 100 50 G 50 100 F 100 50 E 100 Total 100 100 100 100 100 100 100 ICSC/62/R.12 English Page 30

Step 4

Calculation of World Bank total net salary in Washington, D.C .

(In United States dollars)

World Bank Net base salary Spouse Child Total net salary grade average allowance a/ allowance b/ I 214 000 3 500 600 218 100 H 161 400 3 500 600 165 500 G 115 390 3 500 600 119 490 F 88 140 3 500 600 92 240 E 63 200 3 160 600 66 960

a / 5% of net base salary to a maximum of $3,500. If there is spouse income the amount is prorated.

b/ $600 per eligible child.

Step 5

Calculation of average World Bank salaries per common-system grade using total net salaries in step 5 and grade equivalency study weights from step 4

Grade Average P-1 P-2 P-3 P-4 P-5 D-1 D-2 $ Weight $ Weight $ Weight $ Weight $ Weight $ Weight $ Weight $ (%) (%) (%) (%) (%) (%) (%)

I 214 000 50 218 100 100 218 100

H 161 400 100 165 500 50 165 500

G 115 390 50 119 490 100 119 490

F 88 140 100 92 240 50 92 240

E 63 200 100 66 960

Weighted 66 960 92 240 105 865 119 490 165 500 191 800 218 100 average ICSC/62/R.12 English Page 32

Step 6

Comparison of average net remuneration of United Nations and World Bank officials in Washington, D.C. by equivalent grades

(Margin for calendar year 2005)

Grade Net remuneration World Bank/ Weights for United Nations ratio calculation of (United Nations = 100) overall ratio % c / % United Nations World Bank a / b / $ $ D-2 146 143 218 100 149.2 3.1 D-1 137 739 191 800 139.2 10.2 P-5 119 872 165 500 138.1 28.0 P-4 102 637 119 490 116.4 30.3 P-3 85 245 105 865 124.1 20.9 P-2 69 543 92 240 132.6 6.8 P-1 53 395 66 960 125.4 0.7 Weighted average ratio: 128.6

a / Average United Nations net salaries at dependency level by grade reflecting twelve months at multiplier 38.3 (January 2005 scale) and a children's allowance of $1,936.

b / Market Reference Point World Bank salaries based on approximate broad band average 1995 grade equivalency study results. Excludes mobility premium.

c / Correspond to common system staff in grades P-1 (D) to D-2 (D), inclusive, serving at headquarters and established offices as at 31 December 2003.