RESTRICTED
WORLD TRADE WT/BFA/W/1
27October 1995
ORGANIZATION(95-3325)
SALARY SCALE ARRANGEMENTS FOR THE
PROFESSIONAL STAFF INTHE WTO
Introduction
1. Under theproposal toestablish aWTO Pension Plan, thepresent USdollar pensionable
remuneration scalewould bereplaced byascalebased onnetsalary pluspostadjustment inGeneva,
grossed upusing thepresent ratesofinternal taxation andexpressed inSwiss francs. Contributions
would bebased onthatscaleandwould therefore belevied inSwiss francs andnolonger inUSdollars.
Since thesecontributions arededucted fromnetsalary, thenetsalary scaleshould nolonger beexpressed
inUSdollars butinSwiss francs. Ithasbeenasked whether suchachange would becompatible with
thenotion thattheWTO would continue tofollow thecommon system forsalary purposes. Thepresent
paper addresses thatquestion.
Netsalaries inthecommon system
2. Under thecommon system, netsalaries payable tostaffintheProfessional andhigher categories
comprise twocomponents, namely basesalary andpostadjustment. Bothamounts areexpressed in
United States dollars andconverted intoSwiss francs attheUnited Nations operational rateofexchange
forthemonth concerned.
3. Basesalary represents theminimum universally applicable salary scaleoftheUnited Nations
common system. Ifthecost-of-living atagiven dutystation isequal toorlessthanthebaselevel,
thebasesalary ispayable. Ifthecost-of-living ishigher thanthebaselevel, thebasesalary is
supplemented byacorresponding postadjustment.
4. Postadjustment serves adualpurpose. First, asindicated above, itprovides theadjustment
required tocompensate forthedifference incost-of-living between thedutystation andthebase.
Secondly, itensures thatexchange fluctuations donotunduly affect thepaylevel inlocal currency
terms.
5. Thesecond function, namely thatofcurrency adjustment, hasbeenthesubject ofclosescrutiny
inrecent years. Efforts havebeenmade tominimize theeffect ofcurrency fluctuations ontake-home
pay. Itcannowbesaidthatexchange ratefluctuations havearather negligible effect ontake-home
payasaresult ofthecorrections thathavebeenmade tothepostadjustment system. Month-to-month
variations arestrictly limited under theso-called 0.5percentrulewhich is"...designed tostabilize
salaries inlocalcurrency terms between cost-of-living adjustments (and) limits thechanges inlocal
currency payduetocurrency fluctuations toplusorminus 0.5percent."1
./.
1ThePostAdjustment System -What itis,howitworks. International CivilService Commission,
May1994, Section 5.1.2.WT/BFA/W/1
Page2
Netsalaries intheWTO
6. Thenetsalary scale fortheProfessional staffintheWTO would beestablished asfollows:
- assuming thattheWTO Pension Plan would beintroduced with effect from
1January 1996, anetsalary scale would beestablished bycombining intoasingle
amount thebasesalary andpostadjustment applicable inGeneva asofthatdate;
- future cost-of-living andother adjustments granted within thecommon system would
beincorporated intheWTO netsalary scale, inorder toensure nodeviation between
thecommon system andWTO scales;
- pending suchadjustments, theWTO netsalary scalewould remain constant inSwiss
franc terms.
Conclusion
7. Consequently, theintroduction intheWTO ofaProfessional salary scalewhich would beheld
constant inSwiss francterms between cost-of-living orother adjustments willnotconstitute adeviation
fromthecommon system since thecommon system hasitselfendeavoured toachieve thesame result
through thepostadjustment system.