Human Resources Management:

Review of the pay and benefits system

Within the context of overall reform of human resources management and the new HRM Framework adopted by ICSC, the ICSC will undertake a review of the pay and benefits system with a view to reforming the current salary system. It is important to note that the pay system review does not address the level of salaries.

In this regard, the Commission has stated that "a competitive system of remuneration ... was critically needed." A distinction needs to be made between 'competitive remuneration' and a 'competitive system of remuneration'.

The need to restore competitiveness of conditions of service of international organizations was acknowledged by the Commission and the General Assembly as far back as 1989. The comprehensive study carried out by FICSA in 1992, The United Nations: An Uncompetitive Employer, presented an in-depth comparison of salaries in the largest international civil services which showed beyond a doubt that salary levels in the United Nations system were far lower than those in the other major international organizations. The administrations have continually signalled to the United Nations General Assembly, their respective Governing Bodies and the Commission that salary levels no longer enabled them to secure the "highest standards of efficiency, competence and integrity." Most recently, a paper examining factors affecting the high resignation rate of Professional staff from the United Nations is before the General Assembly.

The Commission has consistently failed to address the lack of competitiveness of common system salaries and related recruitment and retention problems. Furthermore, its cost-containment policies and approaches have only led to further deterioration of the situation. The ICSC itself has led the common system into its present situation.

The Federation therefore questions the appropriateness, timeliness and cost-effectiveness of convening focus groups on pay system reform that specifically exclude consideration of salary levels. If the Commission is determined to restore a competitive system of salaries, the first step must be a substantial real increase in those salaries.

While the two-year review of the pay and benefits system is being carried out, actual conditions of service will further erode. In addition, it is questionable whether the outcome of the focus groups will achieve the desired goal. From preliminary discussions at the inter-agency level on pay system reform, it would appear that the goal is to create a differentiated pay system that, for many reasons, is not best applied to an international civil service.

In that regard, one of the options that will be considered by the pay system review is broadbanding, which establishes broad pay ranges, through which staff can move about. Initial pay on entry into service would need to be negotiated.

Broadbanded pay systems have serious shortcomings. Broadbanding has been shown to discriminate against women and minorities; it opens the door to favouritism and patronage; it increases staff costs; it has not been shown to improve either efficiency or performance; it does not respect the principle of equal pay for work of equal value. In the private sector, broadbanding has been used only in companies that had an inordinate number of pay levels, say 32, which were reduced to six. The common system already has only five Professional level pay bands. There will also be difficulties implementing the Noblemaire principle if the common system shifts to broadbanding when the comparator has not done so. Despite the adoption in 1997 of the Model Performance-Based Organization (PBO) Bill, only one US government agency (IRS) has shifted to broadbanding. In addition, the PBO specifies that broadbanding will not be implemented for the Foreign Service, which is the most similar to the common system.

The urgent calls by both management and staff for pay increases have gone consistently unheeded. Had action been taken in 1989, when Member States in the General Assembly finally acknowledged that salaries were no longer competitive, the UN system would most likely not be in the present state of being unable to recruit and retain the best people. And in the interim, how many very good staff members have left the organizations for better paying - and more motivating - workplaces that provide more opportunities for career growth and satisfaction? The Commission's lack of responsiveness to the system's needs, as identified most appropriately by the administrations and the staff, has itself created today's rigidity and lack of competitiveness. It is therefore ironic that the General Assembly has asked that very same body to address the negative impact of its past political decisions, not by addressing the real problems but by creating new ones.