Proposals for the Adjustment of The

AFRICAN DEVELOPMENT BANK ADB/BD/WP/2010/137/Rev.2 5 November 2010 Prepared by: CHRM Original: French Translated by: CLSD Reviewed by: CHRM Probable Date of Presentation to the Committee on Administrative and Human Resources Policy Issues (CAHR): FOR CONSIDERATION 8 November 2010 MEMORANDUM TO: THE BOARD OF DIRECTORS FROM: Cecilia AKINTOMIDE Secretary General SUBJECT: PROPOSALS FOR ADJUSTMENT OF SALARIES OF LOCALLY- RECRUITED STAFF (EFFECTIVE 1 JANUARY 2011) REVISED VERSION* Please find attached a revised version of the above-mentioned document, which takes into account recommendations made by Board members at the Informal Board meeting held on 26 October 2010. Attach: Cc.: The President *Questions on this document should be referred to: Mr. Kordje BEDOUMRA Vice President CSVP Ext 2052 Mrs. G. ARCHER-DAVIES Director CHRM Ext. 2031 Ms. J. WAMEYO Division Manager CHRM.2 Ext. 2166 Mr. M. SAIDIL MOCTAR Principal Compensation Officer CHRM.2 Ext. 3320 SCCD: W. A. A. The revisions take into account the following additional changes which are tracked in red in the document: STAFF AT POST IN ABIDJAN The salary adjustments for GS staff at post in Abidjan will be based on the results of the Abidjan market. In accordance with the recommendations of the consulting firm, Management proposes a weighted average salary increase of 5.1%. However the current salary structure is maintained for 2011. STAFF AT POST IN TUNIS In application of the dispositions contained in the Policy Framework governing the Status of Staff in the context of the Temporary Relocation Extended Mission Regime (ADB/BD/WP/2003/77) approved on 18 July 2003 and the Compensation Framework (ADB/BD/WP/123/REV4) approved on 15 July 2008, Management recommends (a) the maintaining of the current salary structure and (b) a weighted average salary increase of 3%. BUDGETARY IMPACT The budget impact has been further reduced from 797,926 UA to 624,536 UA. TABLES MODIFIED Tables (i), (ii) (iii), 5.3, 6.2.1 and 7.2 have been updated. PARAGRAPHS MODIFIED The EXECUTIVE SUMMARY and Chapter 7 - MEASURES ENVISAGED AND MANAGEMENT RECOMMENDATIONS have been updated. ANNEXE 1 The salary scale for HQ based support staff has been modified. AFRICAN DEVELOPMENT BANK PROPOSALS FOR ADJUSTMENT OF SALARIES OF LOCALLY-RECRUITED STAFF (EFFECTIVE 1 JANUARY 2011) TABLE OF CONTENTS Page EXECUTIVE SUMMARY 1 INTRODUCTION 7 SALARY REVIEW CONTEXT 9 COMPENSATION FRAMEWORK OBJECTIVES 11 LOCAL STAFF SERVICE CONDITIONS 13 CONSULTING FIRM’S FINDINGS AND RECOMMENDATIONS 14 MANAGEMENT’S ANALYSIS AND CONCLUSIONS 18 MEASURES ENVISAGED AND MANAGEMENT RECOMMENDATIONS 22 Annex 1 : Locally-Recruited Staff Salary Structures for 2011 Annex 2 : Lists of Comparators Addendum : Consulting Firm’s Report on the Salary Survey EXECUTIVE SUMMARY 1. The Bank’s compensation policy for locally recruited staff underscores the need to preserve its external competitiveness on the local market, while ensuring that the performance of each staff member is fully recognized. The new Compensation Framework (ADB/BD/WP/2007/123/Rev.4), adopted by the Board of Directors on 15 July 2008 is in keeping with these goals and aims to encourage employee productivity and better position the Bank to attract, motivate and retain the best talent by ensuring increased focus on results, equity, efficiency, competitiveness and long-term sustainability. The Board approved this compensation framework with two complementary pillars, namely (a) Strengthening of performance-based remuneration supported by an enhanced market position and (b) Rationalization of benefits and improving long-term sustainability. For the 2008-2012 period, the Board of Directors approved a positioning at the 75th percentile as the target market positioning for all locally-recruited staff. 2. 2010 was the first year of performance-based individual salary adjustments for locally recruited Field Office staff. On 15 April 2010, the Committee on Administrative Affairs and Human Resource Policy Issues of the Board (CAHR) endorsed Management’s proposal on the classification of positions for locally-recruited Field Office staff. 3. For the 2011 salary adjustment exercise, Management has: Recruited an international firm which has conducted a salary survey of comparators in all locations where the Bank employs local contract staff; Set up a committee comprising professional category staff from the Bank’s organizational units to analyze and improve on management’s recommendations. The Staff Council has also been consulted on the report. Had a discussion at the CAHR committee level and Informal Board on its proposals. 4. For Headquarters (HQ) locally recruited staff, the survey shows that the Bank’s salary structure and weighted average actual salaries lag the reference market average by 5.1% and 16.3% respectively. The consultant recommended an average actual salary increase of 5.1% which was lower than the actual gap in light of the significant numbers of newly hired staff in recent years. In so doing the consultant removed the gap that was due to staff turnover. 5. Management divided the Headquarters (HQ) locally recruited staff into two categories i.e. (a) staff based in Abidjan (b) Staff based in Tunis. LOCATION TOTAL POSITION Vs ABIDJAN POSITION Vs TUNIS SCALE SALARY SCALE SALARY ABIDJAN 36 5.1% 14.96% n/a n/a TUNIS 390 5.1% 16.43% -49.50 -39.91 TOTAL 426 5.1% 16.30 -49.50 -39.60 Out of the 390 total GS staff based in Tunis, 178 staff were relocated from Abidjan to Tunis and 212 staff have been recruited in Tunis. 6. In view of the underlying legal and policy framework, the use of Abidjan as reference for the GS staff salary adjustment was and continues to remain valid. To change this methodology would amount to introducing a new regime of expatriate status for the GS staff Page | 1 which may be financially more expensive for the Bank1. For the staff in Tunis, considering, the Bank’s length of stay in Tunis and the change in staff demographics whereby all the new staff have been recruited in Tunis since the relocation, management proposes a 3.0% weighted average increase in actual salaries which is more or less equivalent to the estimated rate of inflation in Tunisia2. 7. For the 36 staff based in Abidjan, Management proposed to maintain the current salary structure and to offer a weighted average salary increase of 5.1% as recommended by the consultant. 8. Based on the fact that the Bank is no longer recruiting new staff in Abidjan and that the current salary grid remains competitive vis-à-vis the Tunis market, Management proposes to maintain the salary scale at the 2010 levels. 9. For Field Office (FO) locally recruited staff, the survey shows that the salary structure is below the reference market target in 22 countries and higher in 3 countries. The survey also highlighted the differences between the Bank’s weighted average actual salaries and the targeted 75th percentile of the reference market, from -20.9% to 29.9%., according to category and local market. A salary structure for Zimbabwe Field Office has also been developed subsequent to the opening of the Field Office. 10. In light of these analyses, and in order to position Bank salaries at the targeted 75th percentile of the reference market, the Consulting Firm made recommendations for adjustments to locally recruited staff salary structures ranging from 0% à 10.8%. With regard to actual salaries, the Consulting Firm recommended weighted average increases ranging from 0% to 29.9%, according to category and local reference market positioning. 11. Based on the provisions of the Compensation Framework (ADB/BD/WP/2007/123/Rev4), Management proposes the following recommendations: Adjustment or the maintaining of the current salary structure of HQ and FO locally recruited staff to the 75th percentile of the reference market as indicated in Table (ii) in order to position the Bank at the targeted 75th percentile of the local reference market; Weighted average increases in the actual salaries of locally recruited staff, as indicated in Table (iii), to position the Bank at the targeted 75th percentile of the local reference market; Approval of an amount of Six Hundred and Twenty Four Thousand, Five Hundred and Thirty Six Units of Account (UA 624,536 ) as indicated in table (i) and its inclusion in the 2011 Budget to support the proposed adjustments and their impact on the total payroll (salaries, pensions, dependency allowances and medical contributions), in order to achieve the 75th market percentile target as approved by the Board of Directors; and Adoption of the salary scales in Annex 1, effective 1 January 2011. 1 Legal Note issued by the General Counsel ( Ref ADB/BD/WP/2003/77/Add 1) and ADB/BD/WP/2010/137/Rev.1/Add.2 2 Source. ESTA March 2010. Page | 2 12. Management invites the Board of Directors to note that:- the proposed increases will be applied on the basis of the 2010 performance evaluation results and the positioning of each staff member concerned on the salary scale and, in the case of staff recruited in 2010, in proportion to the period of employment at the Bank. The proposed measures -will be effective 1 January 2011. a review for the total compensation framework will also be launched for locally recruited staff. Page | 3 Table (i): Proposed Salary Adjustments – Budget Implications BUDGET IMPACT (UA) STRUCTURE ACTUAL LOCATION SALARIES TOTAL Algeria 0 1,999 1,999 Angola 0 0 0 Burkina Faso 0 21,510 21,510 Cameroon 0 17,999 17,999 Chad 0 907 907 DR Congo 0 38,111 38,111 Cote d'Ivoire 0 24,233 24,233 Tunisia 0 207,875 207,875 Egypt 0 0 0 Ethiopia 0 12,873 12,873 Gabon 0 7,959 7,959 Ghana 0 44,665 44,665 Kenya 0 5,267 5,267 Madagascar 0 0 0 Malawi 0 7,275 7,275 Mali 0 0 0 Morocco 0 3,724 3,724 Mozambique 0 0 0 Nigeria 2,913 0 2,913 Rwanda 0 0 0 Senegal 0 23,829 23,829 Sierra Leone 0 1,257 1,257 Sudan 0 0 0 South Africa 0 38,266 38,266 Tanzania 0 0 0 Uganda 0 0 0 Zambia 0 27,257 27,257 TOTAL 487,919 Pensions, Dependency Allowances and Medical Contributions 136,617 GRAND TOTAL 624,536 Staff members only receive structural salary adjustments if their salaries fall below the minimum of the new salary structure after the application of the performance based increase.

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