Central Bank unlocks secret of its staff pay

Date: 23/07/1998

By Tim Jones

WIM Duisenberg took a pay cut when he swapped his Amsterdam office for the presidency of the European Central Bank.

This accords with his professed desire, shared with the Dutch government, to scale back the high pay and perks which have become entrenched within the Brussels-based EU institutions.

When Duisenberg left the Nederlandsche Bank for the European Monetary Institute (the ECB's precursor) last summer, he was receiving an annual salary of 310,000 ecu including holiday pay. As chief of Europe's central bank, he is paid an estimated 240,000 ecu.

The 63-year-old Dutchman was stung into revealing the basis on which his new salary is calculated following complaints from MEPs that he had, in his own words, treated his wages as a "state secret".

A remuneration committee including Luxembourg Prime Minister Jean-Claude Juncker, Italian Treasury Minister Carlo Azeglio Ciampi, Portuguese Finance Minister Antonio de Sousa Franco and three ECB nominees decided that the president's pay should exceed that of a director-general in the European Commission by 40%.

They decided not to peg Duisenberg's salary to that of Commissioners since the six members of the ECB's executive board are classed as paid employees of the Union.

The 40% formula means that Duisenberg's wages outstrip those of Commission President Jacques Santer by a small margin and surpass US Federal Reserve Chairman Alan Greenspan by more than 100,000 ecu per year.

Although his gross salary is less than he received in Amsterdam, Duisenberg is paying less in taxes. All staff at the ECB, like their counterparts at the other Union institutions, pay the so-called Euro-tax which starts at 13%, averages 19% and rises to a maximum marginal rate of 45%. The Dutch government, on the other hand, imposes a wealth surcharge.

The committee decided that the ECB's Vice-President Christian Noyer would receive 20% more than a director-general (around 165,000 ecu). The other members of the executive board, Otmar Issing, Tommaso Padoa-Schioppa, Eugenio Domingo and Sirrka Hämäläinen, will get an extra 10% (150,000 ecu).

The disputes between staff and management which marked the final months of the EMI's life have been settled, with employees receiving packages of pay and terms almost equivalent to those of their counterparts in Brussels and Luxembourg.

Salaries for the 400-plus staff are estimated to average nearly 60,000 ecu per year each, subject to an average Euro-tax of 19% rather than the 40% or more which would have been levied by the German internal revenue authorities. Staff seconded from abroad will receive an extra 16% plus 5% if they move to Frankfurt with their families.

Central bank specialists in France, Spain and Portugal had complained that salaries and perks on offer at the ECB were insufficient to attract them to Frankfurt and, as a result, the Eurotower was filling up with people from the local Bundesbank.