ECB pursues ‘lean and fit’ image

Date: 02/04/1998

By Tim Jones

GERMANY and the Netherlands are trying to curb benefits for staff of the future European Central Bank to prevent the creation of a 'privileged' Brussels-style élite, according to central bankers.

They say Wim Duisenberg, the Dutch president of the Frankfurt-based European Monetary Institute which will be transformed into the ECB from July, is determined to ensure that the bank is seen by the general public as 'lean and fit'.

"The ECB can serve as a role model for a strong but efficient European administration," said Duisenberg in a keynote speech at the Davos world economic summit in January.

Making savings in the EU budget is a key election issue in the run-up to the 6 May Dutch general election.

The German government, which will be host to a major EU institution for the first time, has also resolved to bring some 'Teutonic' civil service values to the ECB and try to discard some of the privileges and benefits which have accrued to EU functionaries over the past 40 years.

"It is very important that an institution which will be calling continually for fiscal stringency and tightening of belts in member states is not seen as run by a bunch of over-privileged fonctionnaires," said a leading central banker.

EMI council members are all keen to avoid a repetition of the calamitous first years of the London-based European Bank for Reconstruction and Development, which spent a cool 50 million ecu on installing marble in its foyer.

However, warnings have come from several governments - especially the French, Italian, Spanish and Portuguese - that curbing benefits will make it difficult to recruit monetary specialists for the expected 200 or so new jobs which must be filled before the single currency begins in January.

They already find it hard to persuade their specialists to head for the EMI in Frankfurt, a city with a reputation, whether fair or unfair, for being grey, unfriendly and expensive.

This has led to suspicions in these countries that the German authorities' real motive is to pack the ECB with their own nationals or staff from northern Europe.

EMI staffing is already lopsided in favour of northern Europeans. Germans make up 27.7% of the institution's 353 staff, compared to their theoretical quota of 22.5%. Belgians account for 5.3% against a voting quota of 2.8%; Swedes 5.0% against 2.9%; and Finns 3.9% against 1.7%.

Meanwhile, French officials account for just 12.1% of staff compared to their 17% quota, Italians 8.2% against 15.9%, Spaniards 4.5% against 8.9%.

Commission officials receive a number of benefits to attract them to Brussels. They pay a special Euro-tax which averages 13% of their gross salary compared with a rate of more than 30% for Belgian taxpayers. Including all other contributions, an average Commission staffer loses 19% of his or her monthly income to the state, compared with around 40% for workers in the Belgian system.

EMI staff already benefit from a lower tax rate negotiated between the German government and the institute when it was established in 1994, although it is not as low as the rate for Commission and Parliament civil servants. EMI staff benefits are also less generous than those of Commission staff, who get subsidised fees for children at international schools and a special 16% pay allowance for working outside their home state.

In February, EMI staff members sent a memorandum to management expressing the hope that conditions would change once the ECB was established. The management and the staff committee are currently negotiating and hope to come up with a new package before the first recruitment adverts appear after May.